FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From To
------- -------
Commission File Number 1-3608
WARNER-LAMBERT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-1598912
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 Tabor Road, Morris Plains, New Jersey
(Address of principal executive offices)
07950
(Zip Code)
Registrant's telephone number, including area code: (201) 540-2000
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, and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of
the issuer's classes of Common Stock, as of the latest
practicable date.
CLASS Outstanding at April 30, 1997
----- -----------------------------
Common Stock, $1 par value 271,370,733
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1997 1996
--------- ------------
(Dollars in millions)
ASSETS:
Cash and cash equivalents $ 416.3 $ 390.8
Short-term investments 32.1 101.5
Receivables 1,344.7 1,303.9
Inventories 654.2 647.0
Prepaid expenses and other current assets 378.2 341.6
--------- ---------
Total current assets 2,825.5 2,784.8
Investments and other assets 496.6 496.6
Equity investments in affiliated companies 268.3 292.1
Property, plant and equipment 2,148.3 2,168.0
Intangible assets 1,417.3 1,455.8
--------- ---------
Total assets $ 7,156.0 $ 7,197.3
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Commercial paper $ 171.2 $ 172.8
Notes payable - banks and other 394.9 406.4
Accounts payable, trade 546.6 613.0
Accrued compensation 159.0 170.3
Other current liabilities 721.7 614.6
Federal, state and foreign income taxes 143.2 159.8
--------- ---------
Total current liabilities 2,136.6 2,136.9
Long-term debt 1,717.1 1,720.5
Other noncurrent liabilities 742.5 758.9
Shareholders' equity:
Preferred stock - none issued - -
Common stock - 320,660,536 shares issued 320.7 320.7
Capital in excess of par value 145.0 125.8
Retained earnings 3,537.2 3,436.2
Cumulative translation adjustments (320.2) (236.2)
Treasury stock, at cost: (1997 - 49,388,388
shares; 1996 - 49,456,251 shares) (1,122.9) (1,065.5)
--------- ---------
Total shareholders' equity 2,559.8 2,581.0
--------- ---------
Total liabilities and shareholders'
equity $ 7,156.0 $ 7,197.3
========= =========
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months
Ended March 31,
-----------------
1997 1996
---- ----
(Dollars in millions, except
per share amounts)
NET SALES $1,777.4 $1,829.2
COSTS AND EXPENSES:
Cost of goods sold 549.2 589.6
Selling, general and administrative 762.2 755.9
Research and development 133.9 129.7
Other expense (income), net 40.5 (34.9)
-------- --------
Total costs and expenses 1,485.8 1,440.3
-------- --------
INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS 291.6 388.9
Provision for income taxes 87.5 106.9
Minority interests - 32.5
-------- --------
NET INCOME $ 204.1 $ 249.5
======== ========
PER COMMON SHARE:
Net income $ .75 $ .92
======== ========
Cash dividends paid $ .38 $ .345
======== ========
Average number of common shares
outstanding (thousands) 271,310 271,178
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
-------------------
1997 1996
------- -------
(Dollars in millions)
OPERATING ACTIVITIES:
Net income $ 204.1 $ 249.5
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 62.7 51.5
Minority interests - 32.5
Gain on sale of business - (75.2)
Changes in assets and liabilities, net of
effects from disposition of business:
Receivables (77.8) (140.2)
Inventories (23.5) (12.0)
Accounts payable and
accrued liabilities 25.3 59.5
Other, net (9.5) (47.5)
------- -------
Net cash provided by operating activities 181.3 118.1
------- -------
INVESTING ACTIVITIES:
Purchases of investments (5.9) (112.1)
Proceeds from maturities/sales of investments 69.5 154.0
Capital expenditures (53.6) (59.6)
Proceeds from disposition of business - 142.4
Other, net (7.2) (5.6)
------- -------
Net cash provided by investing activities 2.8 119.1
------- -------
FINANCING ACTIVITIES:
Proceeds from borrowings 510.6 328.9
Principal payments on borrowings (509.5) (263.2)
Purchases of treasury stock (70.8) (51.3)
Cash dividends paid (103.1) (93.6)
Distributions paid to minority interests - (28.4)
Proceeds from stock option exercises 26.6 20.7
------- -------
Net cash used by financing activities (146.2) (86.9)
------- -------
Effect of exchange rate changes on cash
and cash equivalents (12.4) (2.4)
------- -------
Net increase in cash and cash equivalents 25.5 147.9
Cash and cash equivalents at beginning of year 390.8 295.8
------- -------
Cash and cash equivalents at end of period $ 416.3 $ 443.7
======= =======
See accompanying notes to consolidated financial statements.
WARNER-LAMBERT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: The interim financial statements presented herein should be read
in conjunction with Warner-Lambert Company's 1996 Annual Report.
NOTE B: The results of operations for the interim periods are not
necessarily indicative of the results for the full year.
NOTE C: In the opinion of management, all adjustments considered
necessary for a fair presentation of the results for the interim
periods have been included in the consolidated financial
statements.
NOTE D: Certain reclassifications have been made to the March 31, 1996
financial statements to conform with current year presentation.
Marketing expense and administrative and general expense
categories have been combined in one line item - Selling, general
and administrative in the accompanying Consolidated Statements of
Income. Also, intangible amortization and certain other expenses
have been reported in Other expense (income), net. Previously,
these items were reported in administrative and general expense.
NOTE E: In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings per Share," (EPS) which requires dual presentation
of basic and diluted EPS. The company will adopt this Statement
effective December 31, 1997. At March 31, 1997 no pro forma EPS
disclosures are provided as diluted EPS does not significantly
vary from basic EPS.
NOTE F: Major classes of inventories were as follows:
March 31, 1997 December 31, 1996
-------------- -----------------
(In millions)
Raw materials $134.6 $130.9
Finishing supplies 52.6 52.0
Work in process 70.1 69.2
Finished goods 396.9 394.9
------ ------
$654.2 $647.0
====== ======
NOTE G: Property, plant and equipment balances were as follows:
March 31, 1997 December 31, 1996
-------------- -----------------
(In millions)
Property, plant and equipment $ 3,619.0 $ 3,657.6
Less accumulated depreciation (1,470.7) (1,489.6)
--------- ---------
Net $ 2,148.3 $ 2,168.0
========= =========
NOTE H: Intangible asset balances were as follows:
March 31, 1997 December 31, 1996
-------------- -----------------
(In millions)
Goodwill $ 985.7 $1,001.6
Trademarks and other
intangibles 547.3 564.1
Less accumulated amortization (115.7) (109.9)
-------- --------
Net $1,417.3 $1,455.8
======== ========
NOTE I: Included in Other expense (income), net was interest expense of
$39.2 million and $29.2 million for the first quarters of 1997
and 1996, respectively.
NOTE J: In 1996, Warner-Lambert purchased Glaxo Wellcome plc's minority
interest in the Warner Wellcome joint venture operations. The
transaction was completed in the second half of the year. Total
consideration for the acquisition including estimated acquisition
costs was approximately $1.1 billion.
NOTE K: In March 1996, Warner-Lambert sold Warner Chilcott Laboratories,
its generic pharmaceutical business. The sale resulted in a
pretax gain of $75.2 million, which is included in Other expense
(income), net. On an after tax basis, the gain was $45.7 million
or $.17 per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
FIRST QUARTER ENDED MARCH 31, 1997
- -----------------------------------
COMPARED WITH CORRESPONDING PERIOD IN 1996
- ------------------------------------------
NET SALES
- ---------
Sales for the first quarter of 1997 of $1,777 million were 3 percent
below 1996 first quarter sales. Sales increased 1 percent, adjusting
for the unfavorable impact of foreign exchange rate changes of 3
percent and excluding the impact of the 1996 divestiture of the
Warner Chilcott generic pharmaceutical business of 1 percent. Unit
volume, excluding the divestiture, was virtually unchanged and price
increases added 1 percent. Sales of the Glaxo Wellcome Warner-
Lambert joint venture, including the heartburn medication, ZANTAC
75, are not reflected in reported sales results since the joint
venture is accounted for on an equity basis. If these sales had been
consolidated, sales would have increased an additional 2 percent.
U.S. sales increased $35 million or 4 percent to $818 million.
Adjusted for the Warner Chilcott divestiture, U.S. sales increased 7
percent. If sales of ZANTAC 75 were included, U.S. sales would have
increased an additional 3 percent. International sales fell $87
million or 8 percent to $959 million. At constant exchange rates,
international sales were 3 percent below the same period last year.
SEGMENT SALES Three Months Ended March 31,
------------------------------
Percent
Increase/
(Dollars in Millions) 1997 1996 (Decrease)
------ ------ --------
Pharmaceutical $ 686 $ 659 4 %
Consumer Health Care 662 701 (6)
Confectionery 429 469 (9)
------- ------
Consolidated Net Sales $1,777 $1,829 (3)%
======= ======
Pharmaceutical sales in the U.S. increased 13 percent to $367
million in the first quarter of 1997. Excluding the impact of the
Warner Chilcott divestiture, sales increased 19 percent. The sales
increase is primarily attributable to the successful launches of the
cholesterol-lowering agent LIPITOR and the type II diabetes drug
REZULIN. The company believes that these two products have the
potential to eventually reach $1 billion in worldwide sales. During
the quarter the company also launched the estrophasic oral
contraceptive ESTROSTEP and experienced continued sales growth of
the add-on epilepsy therapy NEURONTIN. International pharmaceutical
sales declined 5 percent to $319 million, but at constant exchange
rates sales increased 2 percent. During the quarter the company
began selling LIPITOR in the United Kingdom and in Canada, and in
Germany, labeled as SORTIS.
Consumer health care product sales in the U.S. fell 1 percent to
$326 million in the first quarter of 1997. If sales of ZANTAC 75
were included, the sales comparison would have been positively
impacted by 8 percent. International sales fell 9 percent to $336
million, or 4 percent at constant exchange rates. With the mid-1996
revision of the Glaxo Wellcome Warner-Lambert joint venture, sales
of ZOVIRAX cold sore cream are no longer recorded in the company's
consolidated sales. If international sales of the Glaxo Wellcome
Warner-Lambert joint venture were consolidated, the decline in
international sales would have been positively impacted by 4
percent. The company incurred a loss from this joint venture in the
first quarter of 1997. International sales of the company's TETRA
pet care products business fell 20 percent to $33 million, or 11
percent at constant exchange rates. Over two-thirds of this decline
is attributable to Japan, where sales fell due to market weakness
and the decrease in the value of the yen.
Confectionery sales in the U.S. fell 3 percent to $125 million in
the first quarter of 1997. International sales were $304 million, a
decrease of 11 percent, or 7 percent at constant exchange rates.
Approximately two-thirds of the international sales decline is
attributable to Japan, where sales fell due to intense competition,
market weakness and the decrease in the value of the yen.
COSTS AND EXPENSES
- ------------------
Cost of goods sold fell 7 percent compared with the first quarter of
1996. As a percentage of net sales, cost of goods sold fell to 30.9%
from 32.2% in 1996. The decline in the ratio was attributable to
productivity improvement and a favorable product mix in the consumer
health care segment throughout the world and in the pharmaceutical
segment in international locations.
Selling, general and administrative expense in the first quarter of
1997 increased 1 percent compared with the first quarter of 1996.
Management expects that the annual percentage increase in total
company expenses will be greater than that recorded in the first
quarter. Pharmaceutical segment expenses significantly increased to
support new product introductions. Expenses fell in the consumer
health care and confectionery segments due to the timing of certain
advertising and promotional activities. As a percentage of net
sales, selling, general and administrative expense for the quarter
increased to 42.9% compared with 41.3% for the same quarter last
year.
Research and development expense increased 3 percent in the first
quarter of 1997. As a percentage of net sales, research and
development expense was 7.5% in the first quarter of 1997 compared
with 7.1% in the first quarter of 1996. For 1997 the company plans
to invest $640 million in research and development, a projected
increase of 15 percent compared with 1996.
Other expense (income), net in the first quarter of 1997 included
increases in intangible amortization of $9 million and net interest
expense of $14 million primarily resulting from the company's
purchase of Glaxo Wellcome's interests in the Warner Wellcome joint
venture operations in mid-1996. Other expense (income), net in the
first quarter of 1996 included a gain on the sale of the Warner
Chilcott business of $75 million partially offset by a $15 million
provision for certain legal matters.
INCOME TAXES
- ------------
Three months ended March 31,
----------------------------
1997 1996
---- ----
Effective tax rate:
As reported 30.0% 27.5%
After minority interests 30.0% 30.0%
The increase in the company's tax rate on a reported basis of 2.5
percentage points reflects the absence of minority interests in
1997. The company's effective tax rate after minority interests of
30% for the first quarter was unchanged compared to the same period
in 1996.
NET INCOME
- ----------
Net income and earnings per share for the first quarter of 1997
decreased 18 percent. Adjusting 1996 for the gain on the sale of the
Warner Chilcott business and provisions for certain legal matters,
earnings per share decreased 5 percent. Based on current planning
assumptions, the company expects to report annual earnings per share
of at least $3.10 in 1997, 7 percent above the reported 1996 figure.
LIQUIDITY AND FINANCIAL CONDITION
- ---------------------------------
Selected data:
March 31, December 31,
1997 1996
------ ------
Net debt (in millions) $1,731 $1,712
Net debt to net capital(equity
and net debt) 40% 40%
Cash and cash equivalents were $416 million at March 31, 1997, an
increase of $25 million from December 31, 1996. The company also
held $136 million in nonequity securities, included in short-term
investments and investments and other assets, that management views
as cash equivalents, representing a decrease of $61 million from
December 31, 1996. Net debt (total debt less cash and cash
equivalents and other nonequity securities) increased $19 million
from December 31, 1996.
Cash provided by operating activities for the first quarter of 1997
of $181 million was more than sufficient to fund capital
expenditures of $54 million and pay dividends of $103 million.
All product names appearing in capital letters are registered
trademarks of Warner-Lambert Company, its affiliates, related
companies or its licensors. ZANTAC 75 and ZOVIRAX are registered
trademarks of Glaxo Wellcome, its affiliates, related companies or
licensors.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
In 1993, Warner-Lambert received a Complaint and Compliance Order
from the Environmental Protection Agency (the "EPA") seeking
penalties of $268,000 for alleged violations of the Resource
Conservation and Recovery Act, Boilers and Industrial Furnace
regulations. Warner-Lambert is contesting the allegations contained
within the Complaint and has entered into negotiations with the EPA
in an attempt to resolve these issues. Although it is too early to
predict the outcome of this action, Warner-Lambert does not at
present expect this litigation to have a material adverse effect on
its financial position, liquidity, cash flow or results of
operations.
Beginning in late 1993, Warner-Lambert, along with numerous other
pharmaceutical manufacturers and wholesalers, has been sued in a
number of state and federal antitrust lawsuits by retail pharmacies
seeking treble damages and injunctive relief. These actions arise
from alleged price discrimination by which the defendant drug
companies, acting alone or in concert, are alleged to have favored
institutions, managed care entities, mail order pharmacies and other
buyers with lower prices for brand name prescription drugs than
those afforded to plaintiff retailers. The federal cases have been
consolidated by the Judicial Panel on Multidistrict Litigation and
transferred to the U.S. District Court for the Northern District of
Illinois for pre-trial proceedings. In June 1996, the Court
approved Warner-Lambert's agreement to settle part of the
consolidated federal cases, specifically, the class action
conspiracy lawsuit, for a total of $15.1 million. This settlement
also provides injunctive relief which obligates Warner-Lambert,
among other things, not to refuse to discount its drugs to retail
pharmacies solely based on their status as retailers and to provide
retail pharmacies the opportunity to negotiate and earn discounts
comparable to those given to managed care entities if they can
demonstrate an ability to affect market share in the same or similar
manner that such managed care entities can. The settlement has been
appealed by three groups of plaintiff-class members and such appeal
is pending. Certain other rulings of the judge presiding in this
case have also been appealed. While these appeals are pending in
the U.S. Court of Appeals for the Seventh Circuit, in April, 1997, a
new purported class action was brought by the plaintiff-class
members who had previously settled their class action conspiracy
lawsuit. These plaintiffs are seeking injunctive relief which would
require Warner-Lambert to grant discounts to retail pharmacies. At
present, Warner-Lambert cannot predict the outcome of the remaining
federal lawsuits.
The state cases pending in California, brought by classes of
pharmacies and consumers, have been coordinated in the Superior
Court of California, County of San Francisco. Warner-Lambert has
also been named as a defendant in actions in state courts in
Alabama, Minnesota and Wisconsin brought by classes of pharmacies,
each arising from the same allegations of price discrimination. In
addition, the Company is named in class action complaints filed in
the states of Alabama, Arizona, Colorado, Florida, Kansas, Maine,
Michigan, Minnesota, New York, Tennessee, Washington and Wisconsin
and in the District of Columbia, brought by classes of consumers who
purchased brand name prescription drugs at retail pharmacies. These
cases also arise from the same allegations of price discrimination.
Warner-Lambert believes that these actions are without merit and
will defend itself vigorously. Although it is too early to predict
the outcome of the remaining actions, Warner-Lambert does not at
present expect this litigation to have a material adverse effect on
its financial position, liquidity, cash flow or results of
operations.
Warner-Lambert has been served with and has responded to a subpoena
by the Federal Trade Commission which is conducting an investigation
to determine whether Warner-Lambert and twenty-one other
pharmaceutical manufacturers have engaged in concerted activities to
raise the prices of pharmaceutical products in the United States.
Warner-Lambert is cooperating with this investigation and cannot at
present predict its outcome.
In 1994, Warner-Lambert received a civil enforcement action letter
and draft complaint from the Department of Justice (the
"Department") alleging violation of the Clean Water Act with regard
to the operation of the wastewater treatment plant at its Vega Baja,
Puerto Rico facility. Warner-Lambert is negotiating a resolution of
this matter with the Department, and while Warner-Lambert cannot
predict its outcome, it does not at present expect this matter to
have a material adverse effect on the Company's financial position,
liquidity, cash flow or results of operations.
In addition, the Environmental Crimes Section of the Department is
conducting an inquiry of Warner-Lambert and certain present and
former employees, relating to historical compliance of the Vega
Baja, Puerto Rico wastewater treatment facility with the Clean Water
Act and the discharge permit issued to the facility. Warner-Lambert
is cooperating fully with this inquiry, and while Warner-Lambert
cannot predict its outcome, it does not at present expect this
matter to have a material adverse effect on the Company's financial
position, liquidity, cash flow or results of operations.
Warner-Lambert is also involved in various administrative or
judicial proceedings related to environmental actions initiated by
the EPA under the Comprehensive Environmental Response, Compensation
and Liability Act (also known as Superfund) or by state authorities
under similar state legislation, or by third parties. While it is
not possible to predict with certainty the outcome of such matters
or the total cost of remediation, Warner-Lambert believes it is
unlikely that their ultimate disposition will have a material
adverse effect on Warner-Lambert's financial position, liquidity,
cash flow or results of operations for any year
Warner-Lambert Inc., a wholly-owned subsidiary of Warner-Lambert,
has been named as a defendant in class actions filed in Puerto Rico
Superior Court by current and former employees from the Vega Baja,
Carolina and Fajardo plants, as well as Kelly Services temporary
employees assigned to those plants. The lawsuits seek monetary
relief for alleged violations of local statutes and decrees relating
to meal period payments, minimum wage, overtime and vacation pay.
Warner-Lambert believes that these actions are without merit and
will defend these actions vigorously. Although it is too early to
predict the outcome of these actions, Warner-Lambert does not at
present expect these lawsuits to have a material adverse effect on
the Company's financial position, liquidity, cash flow or results of
operations.
In February 1997, Warner-Lambert, along with certain other
pharmaceutical companies and certain other manufacturers of calcium
containing products, was named as a defendant in separate lawsuits
filed in the Superior Court of California, City and County of San
Francisco by the Natural Resources Defense Council and the
California Attorney General. A third lawsuit was subsequently
commenced by a private plaintiff. The lawsuits seek monetary and
injunctive relief for the alleged failure by the Company to warn
consumers that certain products manufactured and sold by it
(including ROLAIDS) contain unsafe levels of lead. Warner-Lambert
believes that these actions are without merit and will defend itself
vigorously. Although it is too early to predict the outcome of
these actions, Warner-Lambert does not at present expect them to
have a material adverse effect on its financial position, liquidity,
cash flow or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Meeting of Shareholders of Warner-Lambert
was held on April 22, 1997.
(b) Proxies for such meeting were solicited pursuant to
the definitive Proxy Statement of Warner-Lambert relating to the
Annual Meeting of Shareholders held on April 22, 1997, which was
filed with the Securities and Exchange Commission via EDGARLINK
software on March 7, 1997.
(c) The following describes the matters voted upon at
such meeting and sets forth the number of votes cast for, against or
withheld and the number of abstentions as to each such matter. There
were no broker non-votes.
(i) Election of Directors:
Number of Shares
Number of Shares Withheld From
Nominee Voted For Voting For
- -------------------- ---------------- ----------------
Robert N. Burt 248,725,564 781,226
Donald C. Clark 248,643,216 863,574
Lodewijk J. R. de Vink 248,726,209 780,581
John A. Georges 248,711,049 795,741
Melvin R. Goodes 248,786,059 720,731
William H. Gray III 248,582,133 924,657
William R. Howell 248,646,238 860,552
LaSalle D. Leffall, Jr. 248,707,583 799,207
Patricia Shontz Longe 248,648,255 858,535
Alex J. Mandl 248,707,480 799,310
Lawrence G. Rawl 248,639,293 867,497
Michael I. Sovern 248,675,067 831,723
(ii) Appointment of Independent Accountants for 1997:
Number of Shares
Number of Shares Number of Shares Abstaining From
Voted For Voted Against Voting
----------- ------------- ----------
248,660,671 360,554 485,565
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
(4) Instruments defining the rights of security
holders, including indentures.
(a) Amended and Restated Rights Agreement,
dated as of March 25, 1997, between
Warner-Lambert Company and First Chicago
Trust Company of New York, as Rights
Agent (Incorporated by reference to
Warner-Lambert's Registration Statement
on Form 8-A, dated June 28, 1988, as
amended by Form 8-A/A, dated July 5, 1989
and by Form 8-A/A, dated March 27, 1997
(File No. 1-3608)).
(10) Material Contracts
(a) Warner-Lambert Company 1983 Stock Option
Plan, as amended to March 25, 1997.
(b) Warner-Lambert Company 1987 Stock Option
Plan, as amended to March 25, 1997.
(c) Warner-Lambert Company 1989 Stock Plan,
as amended to March 25, 1997.
(d) Warner-Lambert Company 1992 Stock Plan,
as amended to March 25, 1997.
(e) Warner-Lambert Company 1996 Stock Plan,
as amended to March 25, 1997.
(f) Warner-Lambert Company Executive
Severance Plan, as amended to March 25,
1997.
(12) Computation of Ratio of Earnings to Fixed
Charges.
(27) Financial Data Schedule (EDGAR filing only).
(b) Reports on Form 8-K
-------------------
A Current Report on Form 8-K, dated March 25, 1997,
was filed with the Securities and Exchange
Commission during the quarter ended March 31, 1997,
in connection with the amendment by the Board of
Directors of the Company of the Company's preferred
share purchase rights (originally declared as a
dividend on June 28, 1988), as more fully described
in the Amended and Restated Rights Agreement dated
as of March 25, 1997, between the Company and First
Chicago Trust Company of New York, as Rights Agent.
S I G N A T U R E S
-------------------
Pursuant to the requirements 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.
WARNER-LAMBERT COMPANY
(Registrant)
Date: May 12, 1997 By: Ernest J. Larini
----------------
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 12, 1997 By: Joseph E. Lynch
---------------
Vice President and Controller
(Principal Accounting Officer)
EXHIBIT INDEX
-------------
Exhibit No. Exhibit
- ----------- -------
(4) Instruments defining the rights of security
holders, including indentures.
(a) Amended and Restated Rights Agreement,
dated as of March 25, 1997, between
Warner-Lambert Company and First Chicago
Trust Company of New York, as Rights
Agent (Incorporated by reference to
Warner-Lambert's Registration Statement
on Form 8-A, dated June 28, 1988, as
amended by Form 8-A/A, dated July 5, 1989
and by Form 8-A/A, dated March 27, 1997
(File No. 1-3608)).
(10) Material Contracts
(a) Warner-Lambert Company 1983 Stock Option
Plan, as amended to March 25, 1997.
(b) Warner-Lambert Company 1987 Stock Option
Plan, as amended to March 25, 1997.
(c) Warner-Lambert Company 1989 Stock Plan,
as amended to March 25, 1997.
(d) Warner-Lambert Company 1992 Stock Plan,
as amended to March 25, 1997.
(e) Warner-Lambert Company 1996 Stock Plan,
as amended to March 25, 1997.
(f) Warner-Lambert Company Executive Severance
Plan, as amended to March 25, 1997.
(12) Computation of Ratio of Earnings to Fixed
Charges.
(27) Financial Data Schedule (filed electronically).
WARNER-LAMBERT COMPANY
1983 STOCK OPTION PLAN
AS AMENDED TO MARCH 25, 1997
WARNER-LAMBERT COMPANY
1983 STOCK OPTION PLAN
There is hereby established a 1983 Stock Option Plan (the
"Plan"). The Plan provides for the grant to certain employees of
Warner-Lambert Company or of a subsidiary thereof of options to
purchase ("Options") and rights to acquire ("Rights") shares of
stock of Warner-Lambert Company and for the issuance, transfer or
sale of such stock upon the exercise of such Options or Rights.
The term "Company" as used in the Plan shall include Warner-
Lambert Company and any present or future subsidiary thereof.
1. Purpose. The purpose of the Plan is to provide
additional incentive to the officers and other key employees of
the Company, who are primarily responsible for the management and
growth of the Company or otherwise materially contribute to the
conduct and direction of its business, operations and affairs, in
order to strengthen their desire to remain in the employ of the
Company, stimulate their efforts on behalf of the Company and to
retain and attract persons of competence, and, by encouraging
ownership of a stock interest in Warner-Lambert Company, to gain
for the organization the advantages inherent in employees having
a sense of proprietorship.
2. The Stock. The aggregate number of shares of stock
which may be issued, transferred or sold upon the exercise of
Options and Rights granted under the Plan shall not, except as
such number may be adjusted in accordance with paragraph (f) of
Article 6 hereof, exceed 6,000,000 shares of Common Stock of
Warner-Lambert Company ("Common Stock") which may be either
authorized and unissued shares or issued shares reacquired by the
Company. Notwithstanding the above limitation, if any Option
granted under the Plan shall expire, terminate or be cancelled
for any reason without having been exercised in full, the
corresponding number of unpurchased shares shall again be
available for the purposes of the Plan; provided, however, that
if such expired, terminated or cancelled Option shall have been a
"Reference Option", as defined in paragraph (a) of Article 8
hereof, none of such unpurchased shares shall again become
available for purposes of the Plan to the extent that the related
Right granted under the Plan is exercised.
3. Employees. The term "Employees", as used in the Plan,
shall mean officers and other employees of the Company (including
officers and other employees who are also directors) within the
classes referred to in Article 1 hereof.
4. Eligibility. (a) Options shall be granted only to
persons who, at the time of the grant of the Option, are
Employees of the Company. A person to whom an Option is granted
hereunder is hereinafter sometimes referred to as an "Optionee".
A committee of the Board of Directors of Warner-Lambert Company,
constituted as provided in Article 9 hereof (hereinafter called
the "Committee"), will determine the Employees who are to be
granted Options under the Plan and the number of shares subject
to each Option.
(b) Rights shall be granted only to persons (hereinafter
referred to as "Grantees") who, at the time of the grant of the
Right, are Employees of the Company and who are, or concurrently
become, holders of an Option, which at the time of such grant of
the Right has not yet been exercised in full or expired, to
purchase shares of Common Stock (a) granted pursuant to the Plan
or another stock option plan of the Company or (b) granted
pursuant to a stock option plan of another corporation and
assumed by Warner-Lambert Company (with all such options referred
to in clauses (a) and (b) hereinafter referred to as "Outstanding
Options"). In determining the total number of shares of Common
Stock deemed issuable pursuant to an Outstanding Option in
accordance with the preceding sentence, fractions of shares shall
be disregarded and no cash shall be payable with respect thereto.
The Committee will determine which of the Employees among the
holders of Outstanding Options are to be granted Rights under the
Plan and the number of shares of Common Stock subject to each
Right.
5. Subsidiary. The term "Subsidiary," as used herein,
shall be deemed to mean any corporation (other than Warner-
Lambert Company) in an unbroken chain of corporations beginning
with and including Warner-Lambert Company if, at the time of the
granting of an Option or Right, each of the corporations other
than the last corporation in said unbroken chain owns stock
possessing 50 percent or more of the total combined voting power
of all classes of stock in one of the other corporations in such
chain.
6. General Terms of Options and Rights.
(a) Consideration. The Committee shall determine the
consideration to Warner-Lambert Company for the granting of
Options and Rights under the Plan, as well as the conditions, if
any, which it may deem appropriate to ensure that such
consideration will be received by, or will accrue to, Warner-
Lambert Company, and, in the discretion of the Committee, such
consideration need not be the same, but may vary for Options and
Rights granted under the Plan at the same time or from time to
time.
(b) Number of Options and Rights which may be granted to,
and number of shares which may be acquired by, Employees. The
Committee may grant more than one Option or Right to an
individual during the life of the Plan and, subject to the
requirements of Section 422A of the Internal Revenue Code of
1954, as amended (the "Code"), with respect to incentive stock
options, such Option or Right may be in addition to, in tandem
with, or in substitution for, options or rights previously
granted under the Plan or under another stock plan of Warner-
Lambert Company or any Subsidiary or of another corporation and
assumed by Warner-Lambert Company.
The Committee may permit the voluntary surrender of all or a
portion of any Option granted under the Plan or any prior plan to
be conditioned upon the granting to the Employee of a new Option
for the same or a different number of shares as the Option
surrendered, or may require such voluntary surrender as a
condition precedent to a grant of a new Option to such Employee.
Such new Option shall be exercisable at the price, during the
period, and in accordance with any other terms or conditions
specified by the Committee at the time the new Option is granted,
all determined in accordance with the provisions of the Plan
without regard to the price, period of exercise, or any other
terms or conditions of the Option surrendered (except as
otherwise provided in paragraph (g) of Article 7 hereof).
No one individual shall be permitted to exercise an Option
or a Right under this Plan if, or to the extent that, the sum of
(i) the number of shares of Common Stock that the
Employee would acquire upon the exercise of the Option, or
the number of shares subject to the Reference Option related
to the Right which is to be exercised, plus
(ii) the number of shares of Common Stock that the
Employee has previously acquired pursuant to the exercise of
options granted to the Employee under the Plan or any other
stock option plans of Warner-Lambert Company or any
Subsidiary or of any corporation and assumed by Warner-
Lambert Company, plus
(iii) the number of shares of Common Stock that the
Employee would have acquired had such employee exercised an
option related to a right, granted under the Plan or any
other stock option or alternate stock plan of Warner-Lambert
Company, which the Employee has previously exercised,
exceeds 600,000 shares. Such numbers may be adjusted in accor-
dance with the provisions of paragraph (f) of this Article 6.
(c) Period of grant of Options and Rights. Options and
Rights under the Plan may be granted at any time after the Plan
has been approved by the stockholders of Warner-Lambert Company.
However, no Option or Right shall be granted under the Plan
after April 25, 1993.
(d) Option and Right Agreements. Warner-Lambert Company
shall effect the grant of Options and Rights under the Plan, in
accordance with determinations made by the Committee, by
execution of instruments in writing, in a form approved by the
Committee. Each Option and Right shall contain such terms and
conditions (which need not be the same for all Options and
Rights, whether granted at the same time or at different times)
as the Committee shall deem to be appropriate and not
inconsistent with the provisions of the Plan, and such terms and
conditions shall be agreed to in writing by the Optionee and
Grantee. The Committee may, in its sole discretion, and subject
to such terms and conditions as it may adopt, accelerate the date
or dates on which some or all outstanding Options and Rights may
be exercised. Options and Rights shall be exercised by
submitting to Warner-Lambert Company a signed copy of a notice of
exercise in a form to be supplied by Warner-Lambert Company. The
exercise of an Option or Right shall be effective on the date on
which Warner-Lambert Company receives such notice at its
principal corporate offices.
(e) Non-Transferability of Option or Right. No Option or
Right granted under the Plan to an Employee shall be transferable
by the Employee or otherwise than by will or by the laws of
descent and distribution, and such Option and Right shall be
exercisable, during the Employee's lifetime, only by such
Employee.
(f) Effect of change in Common Stock. In the event of a
reorganization, recapitalization, liquidation, stock split, stock
dividend, combination of shares, merger or consolidation, or the
sale, conveyance, lease or other transfer by Warner-Lambert
Company of all or substantially all of its property, or any other
change in the corporate structure or shares of Warner-Lambert
Company, pursuant to any of which events the then outstanding
shares of the Common Stock are split up or combined, or are
changed into, become exchangeable at the holder's election for,
or entitle the holder thereof to, other shares of stock, or in
the case of any other transaction described in section 425(a) of
the Code, the Committee may change the number and kind of shares
available under the Plan and any outstanding Option and Right
(including substitution of shares of another corporation), and
the price of any Option and the Fair Market Value determined
under Articles 7 and 8 hereof in such manner as it shall deem
equitable; provided, however, that in no event may any change be
made to an incentive stock option which would constitute a
"modification" within the meaning of section 425(h)(3) of the
Code. Options granted under the Plan shall contain such
provisions as are consistent with the foregoing with respect to
adjustments to be made in the number and kind of shares covered
thereby and in the option price per share in the event of any
such change.
(g) Optionees and Grantees not stockholders. An Optionee
or Grantee or legal representative thereof shall have none of the
rights of a stockholder with respect to shares subject to Options
or Rights until such shares shall be issued, transferred or sold
upon exercise of the Option or Right.
(h) Change in Control of Warner-Lambert Company. (I) As
used in the Plan, a "Change in Control of Warner-Lambert Company"
shall be deemed to have occurred if (i) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Act")) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of Warner-Lambert Company representing
20% or more of the combined voting power of Warner-Lambert
Company's then outstanding securities, (ii) upon the consummation
of a merger, consolidation, sale or disposition of all or
substantially all of Warner-Lambert Company's assets or a plan of
liquidation which is approved by stockholders of Warner-Lambert
Company (a "Transaction"), or (iii) the composition of the Board
of Directors of Warner-Lambert Company (the "Board") at any time
during any consecutive twenty-four (24) month period changes such
that the Continuity Directors (as hereinafter defined) cease for
any reason to constitute at least fifty-one percent (51%) of the
Board. For purposes of the foregoing clause (iii), "Continuity
Directors" means those members of the Board who either (a) were
directors at the beginning of such consecutive twenty-four (24)
month period, or (b)(1) filled a vacancy during such twenty-four
(24) month period created by reason of (x) death, (y) a medically
determinable physical or mental impairment which renders the
director substantially unable to function as a director or (z)
retirement at the last mandatory retirement age in effect for at
least two (2) years, and (2) were elected, nominated or voted for
by at least fifty-one percent (51%) of the current directors who
were also directors at the commencement of such twenty-four (24)
month period.
(II) As used in the Plan, a "Merger of Equals" shall mean
either: (a) a Change in Control of Warner-Lambert Company,
pursuant to the terms of which the stockholders of Warner-Lambert
Company receive consideration, including securities, with an
Aggregate Value (as defined below) not greater than 115 percent
of the average closing price of the Common Stock of Warner-
Lambert Company on the Composite Tape for New York Stock Exchange
issues for the twenty business days immediately preceding the
earlier of the execution of the definitive agreement pertaining
to the transaction or the public announcement of the transaction;
or (b) any other Change in Control of Warner-Lambert Company
which the Board of Directors, in its sole discretion, determines
to be a "Merger of Equals" for the purposes of this provision.
For purposes of this section, "Aggregate Value" shall mean the
consideration to be received by the stockholders of Warner-
Lambert Company equal to the sum of (A) cash, (B) the value of
any securities and (C) the value of any other non-cash
consideration. The value of securities received shall equal the
average closing price of the security on the principal security
exchange on which such security is listed for the twenty business
days immediately preceding the earlier of the execution of the
definitive agreement pertaining to the transaction or the public
announcement of the transaction. For securities not traded on a
security exchange, and for any other non-cash consideration that
is received, the value of such security or such non-cash
consideration shall be determined by the Board of Directors.
(i) Fair Market Value. As used in the Plan, the term "Fair
Market Value" shall be the mean between the high and low sales
prices for Common Stock of Warner-Lambert Company on the
Composite Tape for New York Stock Exchange issues on the date the
calculation thereof shall be made with such adjustments, if any,
as shall be made. In the event the date of calculation shall be
on a date which shall not be a trading date on the New York Stock
Exchange, determination of Fair Market Value shall be made as of
the first date prior thereto which shall have been a trading date
on the New York Stock Exchange. Notwithstanding the foregoing,
upon the exercise of Right during the 30-day period following
Warner-Lambert Company obtaining actual knowledge of a Change in
Control of Warner-Lambert Company, "Fair Market Value" of a share
of Common Stock on the Valuation Date shall be equal to the
higher of (i) the highest closing sale price, regular way, per
share of Common Stock of Warner-Lambert Company on the Composite
Tape for New York Stock Exchange issues during the period
commencing 30 days prior to such change in control and ending
immediately prior to such exercise or (ii) if the Change in
Control of Warner-Lambert Company occurs as a result of a tender
or exchange offer or approval by stockholders of Warner-Lambert
Company of a Transaction, then the highest price per share of
Common Stock of Warner-Lambert Company pursuant thereto. Any
consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to the
exchange offer shall be valued at the valuation placed thereon by
the Board of Directors of Warner-Lambert Company. Adjustments,
if any, shall be made in accordance with paragraph (f) of this
Article 6.
(j) Types of Options. Options granted under the Plan shall
be in the form of (i) incentive stock options as defined in
Section 422A of the Code, or (ii) options not qualifying under
such section, or both, in the discretion of the Committee. The
status of each Option shall be identified in the Option
agreement.
7. Terms of Options.
(a) Option Price. The price or prices per share for shares
of Common Stock to be sold pursuant to an Option shall be such as
shall be fixed by the Committee but not less in any case than
the Fair Market Value per share for such stock on the date of the
granting of the Option, subject to adjustment pursuant to
paragraph (f) of Article 6 hereof.
For the purposes of this Article 7, the date of the granting
of an Option under the Plan shall be the date fixed by the
Committee as the date for such Option for the Employee who is to
be the recipient thereof.
(b) Period of Option and certain limitations on right to
exercise.
(i) Notwithstanding any other provision contained in
this Plan, no part of an Option may be exercised unless the
Optionee remains in the continuous employ of the Company for
one year from the date the Option is granted except that
upon the occurrence of a Change in Control of Warner-Lambert
Company (as hereinafter defined) all Options may be
exercised without giving effect to the one year limitation
and the limitations, if any, which may have been imposed by
the Committee pursuant to paragraph (b)(ii) of this Article
7 with respect to the percent of the total number of shares
to which the Option relates which may be purchased from time
to time during the Option Period.
(ii) Options will be exercisable thereafter over the
Option Period, which, in the case of each Option, shall be a
period of not more than ten years from the date of the grant
of such Option, and, subject to the provisions of paragraph
(d) of Article 6, will be exercisable, at such times and in
such amounts as determined by the Committee at the time each
Option is granted. Notwithstanding any other provision
contained in this Plan, no Option shall be exercisable after
the expiration of the Option Period. Except as provided in
paragraphs (c), (d) and (e) of this Article 7, no Option may
be exercised unless the Optionee is then in the employ of
the Company and shall have been continuously so employed
since the date of the grant of such Option. The Plan shall
not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it
interfere in any way with the Employee's right or the
Company's right to terminate employment at any time.
(c) Termination of employment before age 55. An Optionee
whose employment terminates before age 55, by reason other than
death, shall, but only within the three-month period after the
date of such termination of employment and in no event after the
expiration of the Option Period, be entitled to exercise such
Option and then only if and to the extent that the Optionee was
entitled to exercise the Option at the date of the termination of
employment, giving effect to the limitations, if any, which may
have been imposed by the Committee pursuant to paragraph (b)(ii)
of this Article 7 with respect to the percent of the total number
of shares to which the Option relates which may be purchased from
time to time during the Option Period.
(d) Termination of employment on or after age 55. An
Optionee whose employment terminates on or after age 55, by
reason other than death, shall be entitled to exercise such
Option if the Optionee was entitled to exercise the Option at the
date of the termination, without, however, giving effect to the
limitations, if any, which may have been imposed by the Committee
pursuant to paragraph (b)(ii) of this Article 7 with respect to
the percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination, but in
no event after the expiration of the Option Period.
(e) Death of Optionee. If an Optionee should die:
(i) while in the employ of the Company, the Option
theretofore granted shall, if the Optionee was entitled to
exercise the Option at the date of death, be exercisable by
the estate of the Optionee, or by a person who acquired the
right to exercise such Option by bequest or inheritance or
by reason of the death of the Optionee, without, however,
giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to paragraph (b)(ii)
of this Article 7 with respect to the percent of the total
number of shares to which the Option relates which may be
purchased from time to time during the Option Period;
provided, however, that such Option shall be exercisable
until the later of (i) the three-year period after
termination of employment, or (ii) the period after
termination of employment which is equal to the number of
full months that the Option has been outstanding prior to
such termination and in no event after the expiration of the
Option Period;
(ii) within the three-month period after the date of
the termination of employment before age 55, the Option
theretofore granted shall be exercisable by the estate of
the Optionee, or by a person who acquired the right to
exercise such Option by bequest or inheritance or by reason
of the death of the Optionee, but then only if and to the
extent that the Optionee was entitled to exercise the Option
at the date of death, giving effect to the limitations, if
any, which may have been imposed by the Committee pursuant
to paragraph (b)(ii) of this Article 7 with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable only within the twelve-month period next
succeeding the death of the Optionee, but in no event after
the expiration of the Option Period; or
(iii) after the date of the termination of employment
on or after age 55, the Option theretofore granted shall, if
the Optionee was entitled to exercise the Option at the date
of death, be exercisable by the estate of the Optionee, or
by a person who acquired the right to exercise such Option
by bequest or inheritance or by reason of the death of the
Optionee, without, however, giving effect to the
limitations, if any, which may have been imposed by the
Committee pursuant to paragraph (b)(ii) of this Article 7
with respect to the percent of the total number of shares to
which the Option relates which may be purchased from time to
time during the Option Period; provided, however, that such
Option shall be exercisable until the latest of (i) the
three-year period after termination of employment, (ii) the
period after termination of employment which is equal to the
number of full months that the Option has been outstanding
prior to such termination, or (iii) the twelve-month period
after the death of the Optionee provided that such date
occurs before the later of (i) or (ii), but in no event
after the expiration of the Option Period.
(f) Payment for shares. Payment for shares of Common Stock
purchased shall be made in full at the time of exercise of the
Option and no loan or advance shall be made by the Company for
the purpose of financing, in whole or in part, the purchase of
optioned shares. Payment of the Option Price shall be made in
cash or, with the consent of the Committee, in whole or in part
in Common Stock of Warner-Lambert Company valued, for this
purpose, at the Fair Market Value of such Common Stock on the
trading date on the New York Stock Exchange immediately preceding
the date of exercise. Prior to the distribution of Common Stock
to which the Optionee shall become entitled, there shall first be
deducted all applicable withholding taxes unless the Committee
shall have authorized other arrangements.
(g) Incentive Stock Options. Options granted in the form
of incentive stock options shall be subject, in addition to the
foregoing provisions of this Article 7, to the following
provisions:
(i) Annual Limit. The aggregate Fair Market Value
(determined at the time of grant) of the Common Stock for
which any Employee may be granted incentive stock options in
any calendar year (under the Plan or under any other stock
plan of Warner-Lambert Company or any Subsidiary) shall not
exceed $100,000 plus any unused limit carryover available to
such year. For this purpose, the unused limit carryover is
one-half of the amount by which $100,000 exceeds the
aggregate Fair Market Value of Common Stock for which the
Optionee was granted incentive stock options in any calendar
year after 1980. The amount of the unused limit carryover
may be taken into account in each of the three succeeding
calendar years but only to the extent that such carryover
has not been used in prior calendar years. The amount of
incentive stock options granted in any calendar year shall
be treated as first using up the $100,000 annual limitation
and then using up unused limit carryovers in the order of
the calendar years in which the carryovers arose.
(ii) Sequential Exercise. Each incentive stock option
shall by its terms not be exercisable while there is
outstanding any incentive stock option which was granted,
before the granting of such Option, to such Optionee to
purchase Common Stock or stock of any Subsidiary (determined
at the time of granting of such Option). An incentive stock
option shall be treated as outstanding until such Option is
exercised in full or expires by reason of lapse of time.
(iii) Ten Percent Shareholder. No incentive stock
option shall be granted to any individual who, at the time
of the proposed grant, owns Common Stock possessing more
than ten percent of the total combined voting power of all
classes of stock of Warner-Lambert Company or any
Subsidiary.
The Company intends that Options designated by the Committee as
incentive stock options shall constitute incentive stock options
under Section 422A of the Code. Should any of the foregoing
provisions not be necessary in order to so comply or should any
additional provisions be required, the Board of Directors of
Warner-Lambert Company may amend the Plan accordingly, without
the necessity of obtaining the approval of stockholders of
Warner-Lambert Company.
(h) Rollover Options. Notwithstanding anything herein to
the contrary, in the event of a Merger of Equals all Options
granted hereunder shall become immediately exercisable by the
Optionee and the Options shall be converted into options to
purchase the stock of the company which other shareholders of
Warner-Lambert Company receive in the transaction (the "Rollover
Options"). The Rollover Options shall be subject to the same
terms and conditions as those applicable to the Options held
prior to the Merger of Equals, including, but not limited to,
exercisability and Option Period, except as hereinafter provided.
If the Aggregate Value consists only of shares of a publicly
traded security ("New Security"), each Rollover Option shall
entitle the holder to purchase the number of shares of New
Security which is equal to the product of (a) the Exchange Ratio
(as hereinafter defined) and (b) the number of shares of Common
Stock subject to the Option immediately prior to the effective
date of the Merger of Equals (rounded to the nearest full number
of shares). The exercise price for each Rollover Option shall be
the exercise price per share of each Option divided by the
Exchange Ratio (rounded to the nearest full cent). For purposes
hereof, "Exchange Ratio" shall mean the ratio for exchanging
Common Stock held by the stockholders of Warner-Lambert Company
for shares of New Security which is set forth in the definitive
agreement pertaining to the transaction. If the Aggregate Value
consists of consideration other than New Securities, the Board
shall make appropriate adjustments to the number of Rollover
Options and the exercise price thereof. In addition, with
respect to Options granted after March 25, 1997, if an optionee
who is not 55 years old is terminated within three (3) years
following the Merger of Equals (for a reason other than
"Termination for Just Cause," as defined in the Warner-Lambert
Company Enhanced Severance Plan), such optionee's Options shall
remain exercisable notwithstanding such termination of employment
by the Company or any successor or its affiliates and such
Options shall be exercisable until two years following the
termination of employment, but in no event after the expiration
of the Option Period.
8. Terms of Rights. Each Right granted under the Plan
shall be subject to the following terms and conditions:
(a) Relation to Option. Each Right shall relate
specifically to an Outstanding Option, other than an incentive
stock option, then held by, or concurrently granted to, the
Grantee (hereinafter referred to as the "Reference Option").
Upon exercise of a Right an amount shall be payable from Warner-
Lambert Company, determined in accordance with paragraph (c) of
this Article 8. The Reference Option shall terminate to the
extent that the related Right is exercised.
(b) Exercise of Right. A Right shall become exercisable at
such time, and in respect of such number of shares of Common
Stock, as the Reference Option is then exercisable and such Right
shall terminate upon termination of the Reference Option,
provided, however, that no Right shall be exercisable unless the
Grantee shall have remained in the continuous employ of the
Company for one year from the date the Right was granted except
that upon the occurrence of a Change in Control of Warner-Lambert
Company, all Rights may be exercised without giving effect to the
one year limitation and the limitations, if any, which may have
been imposed by the Committee pursuant to paragraph (b)(ii) of
Article 7 with respect to the percent of the total number of
shares to which the Right relates which may be purchased from
time to time during the Option Period; provided, however, that
Rights which have been held for less than six months on the date
of the occurrence of a Change in Control by Grantees who at the
time of the occurrence of the Change in Control are subject to
the reporting requirements of Section 16(a) of the Act may be
exercised only during the thirty (30) day period beginning six
months after the date of grant of the Right, notwithstanding the
termination of the Grantee's employment with the Company, and
without giving effect to the one year limitation and the
limitations, if any, which may have been imposed by the Committee
pursuant to paragraph (b)(ii) of Article 7 with respect to the
percent of the total number of shares to which the Right relates
which may be purchased from time to time during the Option
Period. Except as provided in this paragraph (b) and in
paragraphs (d) and (e) of this Article 8, no Right shall be
exercisable unless at the time of such exercise the Grantee shall
be in the employ of the Company. The date on which the exercise
of a Right is effective shall hereinafter be referred to as the
Valuation Date.
(c) Determination and payment of amount payable upon
exercise of Right. Upon the exercise of a Right the amount
payable shall be equal to:
(i) If the price per share of Common Stock that would
be payable by the Grantee upon the exercise of the Reference
Option ("Option Price") is less than the Fair Market Value
of a share of Common Stock on the date the related Right was
granted (this difference being referred to as the "Spread"),
100% of the Spread but not exceeding the difference between
the Option Price and the Fair Market Value of a share of
Common Stock on the Valuation Date; plus
(ii) 125% of the amount by which the Fair Market Value
of a share of Common Stock on the Valuation Date exceeds the
Fair Market Value on the date the Right was granted;
multiplied by the number of shares with respect to which the
Right is being exercised; provided, however, that (x) the
Committee may grant Rights which provide that upon exercise the
amount payable shall be equal to 100% of the amount by which the
Fair Market Value of a share of Common Stock on the Valuation
Date exceeds the Fair Market Value on the date the Right was
granted, and (y) the amount payable shall not exceed an amount
equal to the number of shares with respect to which the Right is
being exercised multiplied by the Fair Market Value of a share of
Common Stock on the Valuation Date.
The amount payable on exercise of a Right shall be payable
in cash, shares of Common Stock valued at their Fair Market Value
as of the Valuation Date, or in any combination thereof;
provided, however, that the form of payment shall be in the sole
discretion of the Committee, and prior to the payment of the
amount payable, whether in shares of Common Stock, cash or any
combination thereof, there shall first be deducted all applicable
withholding taxes, with such deduction being first applied
against the amount of cash, if any, which may be payable unless
the Committee shall have authorized other arrangements. In the
event that any payment in the form of both cash and shares of
Common Stock is made to a person subject to the reporting
requirements of Section 16(a) of the Act, the cash portion of
such payment shall be made upon the Grantee becoming taxable in
respect of the Common Stock received upon exercise of the Right.
Notwithstanding the foregoing, a payment, in whole or in part,
of cash may be made to a person subject to the reporting
requirements of Section 16(a) of the Act upon exercise of a Right
only if the Right is exercised (i) during the period beginning
on the third business day following the date of release for
publication of the quarterly or annual summary statements of
sales and earnings of the Company and ending on the twelfth
business day following such date, or (ii) during any other period
in which cash may be paid under the provisions of Rule 16b-3
promulgated pursuant to the Act. In addition, a payment of cash
shall be made to a person subject to the reporting requirements
of Section 16(a) of the Act who has held the Right at least six
months from the date of its grant promptly following a Change in
Control of Warner-Lambert Company which Change in Control is
outside the control of any person subject to such reporting
requirements within the meaning of the aforesaid Rule 16b-3. The
Company intends that this provision shall comply with the
requirements of Rule 16b-3 under the Act during the term of the
Plan. Should this provision not be necessary to comply with the
requirements of such Rule or should any additional provision be
necessary in order to comply with the requirements of such Rule,
the Board of Directors of Warner-Lambert Company may amend the
Plan accordingly, without the necessity of obtaining the approval
of stockholders of Warner-Lambert Company. Any fraction of a
share resulting from the above calculation shall be disregarded.
(d) Termination of Employment. If, prior to the expiration
of a Reference Option, the employment of the Grantee by the
Company should terminate, by reason other than death, the related
Right shall terminate, except that if, after a Grantee shall have
remained in the employ of the Company for one year after the date
of the grant of the Right, such Grantee's employment should
terminate on or after age 55, the Right theretofore granted shall
be exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Reference Option has been outstanding prior to such
termination, but in no event after the expiration of the Option
Period, without, however, giving effect to the limitations, if
any, which may have been imposed by the Committee pursuant to
paragraph (b)(ii) of Article 7 hereof.
(e) Death of Grantee. If a Grantee should die prior to the
termination of the Reference Option:
(i) while in the employ of the Company, the Right
theretofore granted shall, if the Grantee was entitled to
exercise the Right at the date of death, be exercisable by
the estate of the Grantee, or by a person who acquired the
right to exercise such Right by bequest or inheritance or by
reason of the death of the Grantee, without, however, giving
effect to the limitations, if any, which may have been
imposed by the Committee pursuant to paragraph (b)(ii) of
Article 7 hereof with respect to the percent of the total
number of shares to which the Right relates which may be
purchased from time to time during the Option Period;
provided, however, that such Right shall be exercisable
until the later of (i) the three-year period after
termination of employment, or (ii) the period after
termination of employment which is equal to the number of
full months that the Reference Option has been outstanding
prior to such termination, but in no event after the
expiration of the Option Period; or
(ii) after the date of the termination of employment
on or after age 55, the Right theretofore granted shall, if
the Grantee was entitled to exercise the Right at the date
of death, be exercisable by the estate of the Grantee, or by
a person who acquired the right to exercise such Right by
bequest or inheritance or by reason of the death of the
Grantee, without, however, giving effect to the limitations,
if any, which may have been imposed by the Committee
pursuant to paragraph (b)(ii) of Article 7 hereof with
respect to the percent of the total number of shares to
which the Right relates which may be purchased from time to
time during the Option Period; provided, however, that such
Right shall be exercisable until the latest of (i) the
three-year period after termination of employment, (ii) the
period after termination of employment which is equal to the
number of full months that the Reference Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Grantee provided such
death occurs before the later of (i) or (ii), but in no
event after the expiration of the Option Period.
(f) Notwithstanding anything herein to the contrary,
Limited Rights may be granted hereunder by the Committee with
respect to the Options granted under the Plan (which are not
Reference Options), which shall entitle the holder to receive a
payment of cash promptly following a Change in Control of Warner-
Lambert Company which Change in Control is outside the control of
any person subject to the reporting requirements of Section 16(a)
of the Act within the meaning of Rule 16b-3 under the Act. Such
payment of cash shall be made to a person subject to the
reporting requirements of Section 16(a) of the Act only if such
person has held such Limited Right at least six months from the
date of its grant. Promptly following any such Change in
Control, the Optionee shall be entitled to receive a cash payment
equal to the excess of the Fair Market Value of a share of Common
Stock on the Valuation Date over the Option Price of the related
Option multiplied by the number of shares with respect to which
the Limited Right is being exercised (in such case the method of
determining the Fair Market Value in the third sentence of
Section 6(i) shall apply). Limited Rights shall expire on the
first to occur of the date of exercise or expiration of the right
of exercise of the Limited Right or of the related Option.
Further, upon exercise of a Limited Right, the related Option
shall be cancelled. The Board of Directors reserves the right to
cancel all outstanding Limited Rights in accordance with Sections
11 and 12 of the Executive Severance Plan. Except as otherwise
provided herein, the provisions of the Plan relating to Rights
shall also apply to Limited Rights.
9. Administration of the Plan. The Plan shall be
administered under the supervision of the Board of Directors of
Warner-Lambert Company by a Committee consisting of not less than
three Directors of Warner-Lambert Company, who shall be appointed
by, and shall serve at the pleasure of, the Board of Directors.
No person who is or, within one year prior thereto, has been the
holder of an Option or a Right under the Plan may be a member of
the Committee, and no person may be granted an Option or a Right
while a member of the Committee. A majority of the Committee
shall constitute a quorum and the acts of a majority of the
members present at any meeting at which a quorum is present,
expressed from time to time by a vote at a meeting (including a
meeting held by telephone conference call or in which one or more
members of the Committee participate by telephone), or acts
approved in writing by a majority of the Committee, shall be the
acts of the Committee.
In addition to the Committee's discretionary authority set
forth in other Articles hereof, the Committee is authorized to
establish such rules and regulations for the proper
administration of the Plan as it may deem advisable and not
inconsistent with the provisions of the Plan. Unless otherwise
determined by the Board of Directors, all questions arising under
the Plan or under any rule or regulation with respect to the Plan
adopted by the Committee, whether such questions involve an
interpretation of the Plan or otherwise, shall be decided by the
Committee, and its decisions shall be conclusive and binding in
all cases.
The Committee shall determine the Employees to whom Options
and Rights under the Plan are to be granted and the number of
shares to be covered by each Option granted and the Reference
Option to which each Right is to relate. In selecting the
individuals to whom Options or Rights shall be granted, as well
as in determining the number of shares subject to each Option and
the Reference Option to which each Right is to relate, the
Committee shall consider the positions and responsibilities of
the Employees being considered, the nature of the services and
accomplishments of each, the value to the Company of their
services, their present and potential contribution to the success
of the Company, the anticipated number of years of service
remaining, and such other factors as the Committee may deem
relevant.
The Committee shall establish the provisions which shall
govern in the event of the death, disability, or termination of
an Optionee or Grantee, which provisions may be different than
the provisions otherwise described herein with respect to death,
disability and termination. If, for any reason, the Committee
shall determine that it is not desirable because of the
incapacity of the person who shall be entitled to receive any
payments hereunder, to make such payments directly to such
person, the Committee may apply such payment for the benefit of
such person in any way that the Committee shall deem advisable or
may make any such payment to any third person who, in the
judgment of the Committee, will apply such payment for the
benefit of the person entitled thereto. In the event of such
payment, the Company, the Board of Directors and the Committee
shall be discharged from all further liability therefor. An
Employee's employment shall be deemed terminated for purposes of
the Plan as of the date benefit payments would have commenced
under the Warner-Lambert Long Term Disability Benefits Plan had
the Optionee or Grantee been enrolled in such plan, except as
otherwise provided herein. Absence on leave approved by the
Company shall not be considered an interruption of employment for
any purpose of the Plan.
In addition, and not in limitation of the authority of the
Committee, the Stock Option Committee (as hereinafter defined)
may grant pre-employment Options and Rights, in accordance with
the provisions of the Plan, including the establishment of the
terms and conditions thereof and the consideration to Warner-
Lambert Company therefor, to Employees who, at the time of the
grant, are not subject to the reporting requirements of Section
16(a) of the Act. The Stock Option Committee, whose members need
not be Directors, shall be appointed by, and shall serve at the
pleasure of, the Committee. A majority of the Stock Option
Committee shall constitute a quorum and the acts of a majority of
the members present at any meeting at which a quorum is present,
expressed from time to time by a vote at a meeting (including a
meeting held by telephone conference call or in which one or more
members of the Stock Option Committee participate by telephone),
or acts approved in writing by a majority of the Stock Option
Committee shall be the acts of the Stock Option Committee.
Notwithstanding the foregoing, the Stock Option Committee may not
undertake any action which the provisions of Rule 16b-3,
promulgated pursuant to the Act, require to be undertaken by
"disinterested persons" (as defined in said Rule) as a condition
of the continued qualification of the Plan under Rule 16b-3.
An Optionee or Grantee subject to the reporting requirements
of Section 16(a) of the Act may satisfy all withholding tax
requirements incident to the exercise of Options or Rights
wherein Common Stock is received upon such exercise, by electing
to have a sufficient number of shares of Common Stock (valued for
this purpose at the Fair Market Value of such Common Stock on the
trading date on the New York Stock Exchange on which such taxes
are due) withheld to fulfill such tax obligations (hereinafter a
"Withholding Election"); provided, however, that the Withholding
Election shall be subject to the disapproval of the Committee and
further provided that the Withholding Election is made (i) during
the period beginning on the third business day following the date
of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the
twelfth business day following such date, (ii) six months before
the Option or Rights exercise becomes taxable, or (iii) during
any other period in which a Withholding Election may be made
under the provisions of Rule 16b-3 promulgated pursuant to the
Act. Any fraction of a share of Common Stock required to satisfy
such tax obligations shall be disregarded and the amount due
shall be paid instead in cash by the Optionee or Grantee. The
Company intends that this Withholding Election provision shall
comply with the requirements of Rule 16b-3 under the Act during
the term of the Plan. Should this provision not be necessary to
comply with the requirements of such Rule or should any
additional provision be necessary in order to comply with the
requirements of such Rule, the Board of Directors of Warner-
Lambert Company may amend the Plan accordingly, without the
necessity of obtaining the approval of stockholders of Warner-
Lambert Company.
This Plan shall be governed by the law of the State of New
York (regardless of the law that might otherwise govern under
applicable New York principles of conflicts of laws).
10. Amendment and Discontinuance of the Plan; Cancellation
of Rights. (a) The Board of Directors of Warner-Lambert Company
may at any time alter, suspend or terminate the Plan, but, except
in accordance with the provisions of paragraph (f) of Article 6,
paragraph (b) of this Article 10 and Article 11 hereof, no change
shall be made which will have a material adverse effect upon any
Option or Right previously granted unless the consent of the
Optionee or the Grantee is obtained; provided, however, that
except in the case of adjustment made pursuant to paragraph (f)
of Article 6 hereof, the Board of Directors may not, without
further approval of the stockholders, (i) increase the maximum
number of shares for which Options or Rights may be granted under
the Plan or which may be purchased by any individual Employee,
(ii) decrease the minimum Option Price provided in the Plan,
(iii) increase the total number of shares which may be issued or
transferred pursuant to Rights granted under the Plan, or (iv)
change the class of Employees eligible to receive Options or
Rights.
(b) The Board of Directors shall have the power to cancel
all Rights theretofore granted pursuant to the Plan, in the event
that it shall determine, giving consideration to all the
circumstances, that the ultimate federal income tax effects or
accounting effects of the grant or exercise of Rights under the
Plan would not be in the best interests of the Company.
(c) Notwithstanding anything in this Article 10 to the
contrary, the Committee may adopt any amendment to the Plan which
(i)(A) does not increase Plan liabilities by an amount in excess
of five million dollars ($5,000,000) and does not increase Plan
expense by an amount in excess of five hundred thousand dollars
($500,000) or (B) is required by an applicable law, regulation or
ruling, (ii) can be undertaken by the Board of Directors under
the terms of the Plan, (iii) does not involve a termination or
suspension of the Plan, and (iv) does not affect the limitations
contained in this sentence and does not affect the composition or
compensation of the Committee.
(d) Notwithstanding the foregoing provisions of this
Article 10, no person may be divested of the ownership of Common
Stock previously issued, sold or transferred under the Plan.
11. Listing and Other Conditions. As long as the Common
Stock is listed on the New York Stock Exchange, the issue of any
shares of stock pursuant to an Option or Right granted under the
Plan shall be conditioned upon the shares so to be issued being
listed on such Exchange. Warner-Lambert Company will make
application for listing on such Exchange unlisted shares subject
to Options and Rights under the Plan, but shall have no
obligation to issue such shares unless and until such shares are
so listed, and the right to exercise any Option or Right with
respect to such shares shall be suspended until such listing has
been effected.
If at any time counsel to Warner-Lambert Company shall be of
the opinion that any sale or delivery of shares of Common Stock
pursuant to an Option or Right granted under the Plan is or may
in the circumstances be unlawful under the statutes, rules or
regulations of any applicable jurisdiction, Warner-Lambert
Company shall have no obligation to make such sale or delivery,
or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933 or
otherwise with respect to shares of stock or Options or Rights
under the Plan, and the right to exercise any such Option or
Right shall be suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful.
Upon termination of any period of suspension under this
Article 11, any Option or Right affected by such suspension which
shall not then have expired or terminated shall be reinstated as
to all shares available upon exercise of the Option or Right
before such suspension and as to shares which would otherwise
have become available for purchase during the period of such
suspension, but no such suspension shall extend any Option
Period.
12. Approval; Effective Date.
(a) Effective Date. This document restates in its entirety
the 1983 Stock Option Plan, as adopted by the stockholders of the
Company at the Annual Meeting of Stockholders on April 26, 1983,
and as amended by all amendments to the Plan since that date.
(b) 1984 Amendments. The amendments adopted by the Board
of Directors on June 26, 1984 shall be applicable to all Options
and Rights then outstanding.
PG1N5002.DOC 5/5/97 C-4/1
PG1N5002.DOC 5/5/97 C-4/3
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PG1N5002.DOC 5/5/97 C-4/22
WARNER-LAMBERT COMPANY
1987 STOCK OPTION PLAN
AS AMENDED TO MARCH 25, 1997
<PAGE>
WARNER-LAMBERT COMPANY
1987 STOCK OPTION PLAN
There is hereby established a 1987 Stock Option Plan (the
"Plan"). The Plan provides for the grant to certain employees
of Warner-Lambert Company or of a subsidiary thereof of options
to purchase ("Options") and rights to acquire ("Rights") shares
of stock of Warner-Lambert Company and for the issuance,
transfer or sale of such stock upon the exercise of such
Options or Rights. The term "Company" as used in the Plan
shall include Warner-Lambert Company and any present or future
subsidiary thereof.
1. Purpose. The purpose of the Plan is to provide
additional incentive to the officers and other key employees of
the Company, who are primarily responsible for the management
and growth of the Company or otherwise materially contribute to
the conduct and direction of its business, operations and
affairs, in order to strengthen their desire to remain in the
employ of the Company, stimulate their efforts on behalf of the
Company and to retain and attract persons of competence, and,
by encouraging ownership of a stock interest in Warner-Lambert
Company, to gain for the organization the advantages inherent
in employees having a sense of proprietorship.
2. The Stock. The aggregate number of shares of stock
which may be issued, transferred or sold upon the exercise of
Options and Rights granted under the Plan shall not, except as
such number may be adjusted in accordance with paragraph (f) of
Article 6 hereof, exceed 6,000,000 shares of Common Stock of
Warner-Lambert Company ("Common Stock") which may be either
authorized and unissued shares or issued shares reacquired by
the Company. Notwithstanding the above limitation, if any
Option granted under the Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full,
the corresponding number of unpurchased shares shall again be
available for the purposes of the Plan; provided, however, that
if such expired, terminated or cancelled Option shall have been
a "Reference Option", as defined in paragraph (a) of Article 8
hereof, none of such unpurchased shares shall again become
available for purposes of the Plan to the extent that the
related Right granted under the Plan is exercised.
3. Employees. The term "Employees," as used in the
Plan, shall mean officers and other employees of the Company
(including officers and other employees who are also directors)
within the classes referred to in Article 1 hereof.
4. Eligibility. (a) Options shall be granted only to
persons who, at the time of the grant of the Option, are
Employees of the Company. A person to whom an Option is
granted hereunder is hereinafter sometimes referred to as an
"Optionee." A committee of the Board of Directors of Warner-
Lambert Company, constituted as provided in Article 9
<PAGE>
hereof (hereinafter called the "Committee"), will determine the
Employees who are to be granted Options under the Plan and the
number of shares subject to each Option.
(b) Rights shall be granted only to persons (hereinafter
referred to as "Grantees") who, at the time of the grant of the
Right, are Employees of the Company and who are, or
concurrently become, holders of an Option, which at the time of
such grant of the Right has not yet been exercised in full or
expired, to purchase shares of Common Stock (a) granted
pursuant to the Plan or another stock option plan of the
Company or (b) granted pursuant to a stock option plan of
another corporation and assumed by Warner-Lambert Company (with
all such options referred to in clauses (a) and (b) hereinafter
referred to as "Outstanding Options"). In determining the
total number of shares of Common Stock deemed issuable pursuant
to an Outstanding Option in accordance with the preceding
sentence, fractions of shares shall be disregarded and no cash
shall be payable with respect thereto. The Committee will
determine which of the Employees among the holders of
Outstanding Options are to be granted Rights under the Plan and
the number of shares of Common Stock subject to each Right.
5. Subsidiary. The term "Subsidiary," as used herein,
shall be deemed to mean any corporation (other than Warner-
Lambert Company) in an unbroken chain of corporations beginning
with and including Warner-Lambert Company if, at the time of
the granting of an Option or Right, each of the corporations
other than the last corporation in said unbroken chain owns
stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
6. General Terms of Options and Rights.
(a) Consideration. The Committee shall determine the
consideration to Warner-Lambert Company for the granting of
Options and Rights under the Plan, as well as the conditions,
if any, which it may deem appropriate to ensure that such
consideration will be received by, or will accrue to, Warner-
Lambert Company, and, in the discretion of the Committee, such
consideration need not be the same, but may vary for Options
and Rights granted under the Plan at the same time or from time
to time.
(b) Number of Options and Rights which may be granted to,
and number of shares which may be acquired by, Employees. The
Committee may grant more than one Option or Right to an
individual during the life of the Plan and, subject to the
requirements of Section 422A of the Internal Revenue Code of
1986 (the "Code"), with respect to incentive stock options,
such Option or Right may be in addition to, in tandem with, or
in substitution for, options or rights previously granted under
the Plan or under another stock plan of Warner-Lambert Company
or any Subsidiary or of another corporation and assumed by
Warner-Lambert Company.
The Committee may permit the voluntary surrender of all or
a portion of any Option granted under the Plan or any prior
plan to be conditioned upon the granting to the Employee of a
new Option for the same or a different number of shares as the
Option surrendered, or may require such voluntary surrender as
a condition precedent to a grant of a new Option to such
Employee. Such new Option shall be exercisable at the price,
during the period, and in accordance with any other terms or
conditions specified by the Committee at the time the new
Option is granted, all determined in accordance with the
provisions of the Plan without regard to the price, period of
exercise, or any other terms or conditions of the Option
surrendered (except as otherwise provided in paragraph (g) of
Article 7 hereof).
(c) Period of grant of Options and Rights. Options and
Rights under the Plan may be granted at any time after the Plan
has been approved by the stockholders of Warner-Lambert
Company. However, no Option or Right shall be granted under
the Plan after April 28, 1992.
(d) Option and Right Agreements. Warner-Lambert Company
shall effect the grant of Options and Rights under the Plan, in
accordance with determinations made by the Committee, by
execution of instruments in writing, in a form approved by the
Committee. Each Option and Right shall contain such terms and
conditions (which need not be the same for all Options and
Rights, whether granted at the same time or at different times)
as the Committee shall deem to be appropriate and not
inconsistent with the provisions of the Plan, and such terms
and conditions shall be agreed to in writing by the Optionee
and Grantee. The Committee may, in its sole discretion, and
subject to such terms and conditions as it may adopt,
accelerate the date or dates on which some or all outstanding
Options and Rights may be exercised. Options and Rights shall
be exercised by submitting to Warner-Lambert Company a signed
copy of a notice of exercise in a form to be supplied by
Warner-Lambert Company. The exercise of an Option or Right
shall be effective on the date on which Warner-Lambert Company
receives such notice at its principal corporate offices.
(e) Non-Transferability of Option or Right. No Option or
Right granted under the Plan to an Employee shall be
transferable by the Employee or otherwise than by will or by
the laws of descent and distribution, and such Option and Right
shall be exercisable, during the Employee's lifetime, only by
such Employee.
(f) Effect of change in Common Stock. In the event of a
reorganization, recapitalization, liquidation, stock split,
stock dividend, combination of shares, merger or consolidation,
or the sale, conveyance, lease or other transfer by Warner-
Lambert Company of all or substantially all of its property, or
any other change in the corporate structure or shares of
Warner-Lambert Company, pursuant to any of which events the
then outstanding shares of the Common Stock are split up or
combined, or are changed into, become exchangeable at the
holder's election for, or entitle the holder thereof to, other
shares of stock, or in the case of any other transaction
described in section 425(a) of the Code, the Committee may
change the number and kind of shares available under the Plan
and any outstanding Option and Right (including substitution of
shares of another corporation), and the price of any Option and
the Fair Market Value determined under Articles 7 and 8 hereof
in such manner as it shall deem equitable; provided, however,
that in no event may any change be made to an incentive stock
option which would constitute a "modification" within the
meaning of section 425(h)(3) of the Code. Options granted
under the Plan shall contain such provisions as are consistent
with the foregoing with respect to adjustments to be made in
the number and kind of shares covered thereby and in the option
price per share in the event of any such change.
(g) Optionees and Grantees not stockholders. An Optionee
or Grantee or legal representative thereof shall have none of
the rights of a stockholder with respect to shares subject to
Options or Rights until such shares shall be issued,
transferred or sold upon exercise of the Option or Right.
(h) Change in Control of Warner-Lambert Company. (I) As
used in the Plan, a "Change in Control of Warner-Lambert
Company" shall be deemed to have occurred if (i) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Act")) is or
becomes the beneficial owner (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of Warner-
Lambert Company representing 20% or more of the combined voting
power of Warner-Lambert Company's then outstanding securities,
(ii) upon the consummation of a merger, consolidation, sale or
disposition of all or substantially all of Warner-Lambert
Company's assets or a plan of liquidation which is approved by
stockholders of Warner-Lambert Company (a "Transaction"), or
(iii) the composition of the Board of Directors of Warner-
Lambert Company (the "Board") at any time during any
consecutive twenty-four (24) month period changes such that the
Continuity Directors (as hereinafter defined) cease for any
reason to constitute at least fifty-one percent (51%) of the
Board. For purposes of the foregoing clause (iii), "Continuity
Directors" means those members of the Board who either (a) were
directors at the beginning of such consecutive twenty-four (24)
month period, or (b)(1) filled a vacancy during such twenty-
four (24) month period created by reason of (x) death, (y) a
medically determinable physical or mental impairment which
renders the director substantially unable to function as a
director or (z) retirement at the last mandatory retirement age
in effect for at least two (2) years, and (2) were elected,
nominated or voted for by at least fifty-one percent (51%) of
the current directors who were also directors at the
commencement of such twenty-four (24) month period.
(II) As used in the Plan, a "Merger of Equals" shall mean
either: (a) a Change in Control of Warner-Lambert Company,
pursuant to the terms of which the stockholders of Warner-
Lambert Company receive consideration, including securities,
with an Aggregate Value (as defined below) not greater than 115
percent of the average closing price of the Common Stock of
Warner-Lambert Company on the Composite Tape for New York Stock
Exchange issues for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction; or (b) any other Change in
Control of Warner-Lambert Company which the Board of Directors,
in its sole discretion, determines to be a "Merger of Equals"
for the purposes of this provision. For purposes of this
section, "Aggregate Value" shall mean the consideration to be
received by the stockholders of Warner-Lambert Company equal to
the sum of (A) cash, (B) the value of any securities and (C)
the value of any other non-cash consideration. The value of
securities received shall equal the average closing price of
the security on the principal security exchange on which such
security is listed for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction. For securities not traded on
a security exchange, and for any other non-cash consideration
that is received, the value of such security or such non-cash
consideration shall be determined by the Board of Directors.
(i) Fair Market Value. As used in the Plan, the term
"Fair Market Value" shall be the mean between the high and low
sales prices for Common Stock of Warner-Lambert Company on the
Composite Tape for New York Stock Exchange issues on the date
the calculation thereof shall be made with such adjustments, if
any, as shall be made. In the event the date of calculation
shall be on a date which shall not be a trading date on the New
York Stock Exchange, determination of Fair Market Value shall
be made as of the first date prior thereto which shall have
been a trading date on the New York Stock Exchange.
Notwithstanding the foregoing, upon the exercise of a Right
during the 30-day period following Warner-Lambert Company
obtaining actual knowledge of a Change in Control of Warner-
Lambert Company, "Fair Market Value" of a share of Common Stock
on the Valuation Date shall be equal to the higher of (i) the
highest closing sale price, regular way, per share of Common
Stock of Warner-Lambert Company on the Composite Tape for New
York Stock Exchange issues during the period commencing 30 days
prior to such change in control and ending immediately prior to
such exercise or (ii) if the Change in Control of Warner-
Lambert Company occurs as a result of a tender or exchange
offer or approval by stockholders of Warner-Lambert Company of
a Transaction, then the highest price per share of Common Stock
of Warner-Lambert Company pursuant thereto. Any consideration
other than cash forming a part or all of the consideration for
Common Stock to be paid pursuant to the exchange offer shall be
valued at the valuation placed thereon by the Board of
Directors of Warner-Lambert Company. Adjustments, if any,
shall be made in accordance with paragraph (f) of this Article
6.
(j) Types of Options. Options granted under the Plan
shall be in the form of (i) incentive stock options as defined
in Section 422A of the Code, or (ii) options not qualifying
under such section, or both, in the discretion of the
Committee. The status of each Option shall be identified in
the Option agreement.
7. Terms of Options.
(a) Option Price. The price or prices per share for
shares of Common Stock to be sold pursuant to an Option shall
be such as shall be fixed by the Committee but not less in any
case than the Fair Market Value per share for such stock on the
date of the granting of the Option, subject to adjustment
pursuant to paragraph (f) of Article 6 hereof.
For the purposes of this Article 7, the date of the
granting of an Option under the Plan shall be the date fixed by
the Committee as the date for such Option for the Employee who
is to be the recipient thereof.
(b) Period of Option and certain limitations on right to
exercise.
(i) Notwithstanding any other provision contained in
this Plan, no part of an Option may be exercised unless
the Optionee remains in the continuous employ of the
Company for one year from the date the Option is granted
except that upon the occurrence of a Change in Control of
Warner-Lambert Company (as hereinafter defined) all
Options may be exercised without giving effect to the one
year limitation and the limitations, if any, which may
have been imposed by the Committee pursuant to paragraph
(b)(ii) of this Article 7 with respect to the percent of
the total number of shares to which the Option relates
which may be purchased from time to time during the Option
Period.
(ii) Options will be exercisable thereafter over the
Option Period, which, in the case of each Option, shall be
a period of not more than ten years and one day from the
date of the grant of such Option, and, subject to the
provisions of paragraph (d) of Article 6, will be
exercisable, at such times and in such amounts as
determined by the Committee at the time each Option is
granted. Notwithstanding any other provision contained in
this Plan, no Option shall be exercisable after the
expiration of the Option Period. Except as provided in
paragraphs (c), (d) and (e) of this Article 7, no Option
may be exercised unless the Optionee is then in the employ
of the Company and shall have been continuously so
employed since the date of the grant of such Option. The
Plan shall not confer upon any Optionee any right with
respect to continuation of employment by the Company, nor
shall it interfere in any way with the Employee's right or
the Company's right to terminate employment at any time.
(c) Termination of employment before age 55. An Optionee
whose employment terminates before age 55, by reason other than
death, shall, but only within the three-month period after the
date of such termination of employment and in no event after
the expiration of the Option Period, be entitled to exercise
such Option and then only if and to the extent that the
Optionee was entitled to exercise the Option at the date of the
termination of employment, giving effect to the limitations, if
any, which may have been imposed by the Committee pursuant to
paragraph (b)(ii) of this Article 7 with respect to the percent
of the total number of shares to which the Option relates which
may be purchased from time to time during the Option Period.
(d) Termination of employment on or after age 55. An
Optionee whose employment terminates on or after age 55, by
reason other than death, shall be entitled to exercise such
Option if the Optionee was entitled to exercise the Option at
the date of the termination, without, however, giving effect to
the limitations, if any, which may have been imposed by the
Committee pursuant to paragraph (b)(ii) of this Article 7 with
respect to the percent of the total number of shares to which
the Option relates which may be purchased from time to time
during the Option Period; provided, however, that such Option
shall be exercisable until the later of (i) the three-year
period after termination of employment, or (ii) the period
after termination of employment which is equal to the number of
full months that the Option has been outstanding prior to such
termination, but in no event after the expiration of the Option
Period.
(e) Death of Optionee. If an Optionee should die:
(i) while in the employ of the Company, the Option
theretofore granted shall, if the Optionee was entitled to
exercise the Option at the date of death, be exercisable
by the estate of the Optionee, or by a person who acquired
the right to exercise such Option by bequest or
inheritance or by reason of the death of the Optionee,
without, however, giving effect to the limitations, if
any, which may have been imposed by the Committee pursuant
to paragraph (b)(ii) of this Article 7 with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during
the Option Period; provided, however, that such Option
shall be exercisable until the later of (i) the three-year
period after termination of employment, or (ii) the period
after termination of employment which is equal to the
number of full months that the Option has been outstanding
prior to such termination and in no event after the
expiration of the Option Period;
(ii) within the three-month period after the date of
the termination of employment before age 55, the Option
theretofore granted shall be exercisable by the estate of
the Optionee, or by a person who acquired the right to
exercise such Option by bequest or inheritance or by
reason of the death of the Optionee, but then only if and
to the extent that the Optionee was entitled to exercise
the Option at the date of death, giving effect to the
limitations, if any, which may have been imposed by the
Committee pursuant to paragraph (b)(ii) of this Article 7
with respect to the percent of the total number of shares
to which the Option relates which may be purchased from
time to time during the Option Period; provided, however,
that such Option shall be exercisable only within the
twelve-month period next succeeding the death of the
Optionee, but in no event after the expiration of the
Option Period; or
(iii) after the date of the termination of
employment on or after age 55, the Option theretofore
granted shall, if the Optionee was entitled to exercise
the Option at the date of death, be exercisable by the
estate of the Optionee, or by a person who acquired the
right to exercise such Option by bequest or inheritance or
by reason of the death of the Optionee, without, however,
giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to paragraph
(b)(ii) of this Article 7 with respect to the percent of
the total number of shares to which the Option relates
which may be purchased from time to time during the Option
Period; provided, however, that such Option shall be
exercisable until the latest of (i) the three-year period
after termination of employment, (ii) the period after
termination of employment which is equal to the number of
full months that the Option has been outstanding prior to
such termination, or (iii) the twelve-month period after
the death of the Optionee provided that such death occurs
before the later of (i) or (ii), but in no event after the
expiration of the Option Period.
(f) Payment for shares. Payment for shares of Common
Stock purchased shall be made in full at the time of exercise
of the Option and no loan or advance shall be made by the
Company for the purpose of financing, in whole or in part, the
purchase of optioned shares. Payment of the Option Price shall
be made in cash or, with the consent of the Committee, in whole
or in part in Common Stock of Warner-Lambert Company valued,
for this purpose, at the Fair Market Value of such Common Stock
on the trading date on the New York Stock Exchange immediately
preceding the date of exercise. Prior to the distribution of
Common Stock to which the Optionee shall become entitled, there
shall first be deducted all applicable withholding taxes unless
the Committee shall have authorized other arrangements.
(g) Incentive Stock Options. Options granted in the form
of incentive stock options shall be subject, in addition to the
foregoing provisions of this Article 7, to the following
provisions:
(i) Annual Limit. The aggregate Fair Market Value
(determined at the time of grant) of the Common Stock with
respect to which incentive stock options granted after
December 31, 1986, may be exercisable for the first time
by any Optionee during any calendar year (under the Plan
or under any other stock plan of Warner-Lambert Company or
any Subsidiary) shall not exceed $100,000.
(ii) Ten Percent Shareholder. No incentive stock
option shall be granted to any individual who, at the time
of the proposed grant, owns Common Stock possessing more
than ten percent of the total combined voting power of all
classes of stock of Warner-Lambert Company or any
Subsidiary.
(iii) Option Period. No incentive stock option shall
be exercisable after the expiration of ten years from the
date of grant.
The Company intends that Options designated by the Committee as
incentive stock options shall constitute incentive stock
options under Section 422A of the Code. Should any of the
foregoing provisions not be necessary in order to so comply or
should any additional provisions be required, the Board of
Directors may amend the Plan accordingly, without the necessity
of obtaining the approval of stockholders of Warner-Lambert
Company.
(h) Rollover Options. Notwithstanding anything herein to
the contrary, in the event of a Merger of Equals all Options
granted hereunder shall become immediately exercisable by the
Optionee and the Options shall be converted into options to
purchase the stock of the company which other shareholders of
Warner-Lambert Company receive in the transaction (the
"Rollover Options"). The Rollover Options shall be subject to
the same terms and conditions as those applicable to the
Options held prior to the Merger of Equals, including, but not
limited to, exercisability and Option Period, except as
hereinafter provided. If the Aggregate Value consists only of
shares of a publicly traded security ("New Security"), each
Rollover Option shall entitle the holder to purchase the number
of shares of New Security which is equal to the product of (a)
the Exchange Ratio (as hereinafter defined) and (b) the number
of shares of Common Stock subject to the Option immediately
prior to the effective date of the Merger of Equals (rounded to
the nearest full number of shares). The exercise price for
each Rollover Option shall be the exercise price per share of
each Option divided by the Exchange Ratio (rounded to the
nearest full cent). For purposes hereof, "Exchange Ratio"
shall mean the ratio for exchanging Common Stock held by the
stockholders of Warner-Lambert Company for shares of New
Security which is set forth in the definitive agreement
pertaining to the transaction. If the Aggregate Value consists
of consideration other than New Securities, the Board shall
make appropriate adjustments to the number of Rollover Options
and the exercise price thereof. In addition, with respect to
Options granted after March 25, 1997, if an optionee who is not
55 years old is terminated within three (3) years following the
Merger of Equals (for a reason other than "Termination for Just
Cause," as defined in the Warner-Lambert Company Enhanced
Severance Plan), such optionee's Options shall remain
exercisable notwithstanding such termination of employment by
the Company or any successor or its affiliates and such Options
shall be exercisable until two years following the termination
of employment, but in no event after the expiration of the
Option Period.
8. Terms of Rights. Each Right granted under the Plan
shall be subject to the following terms and conditions:
(a) Relation to Option. Each Right shall relate
specifically to an Outstanding Option, other than an incentive
stock option, then held by, or concurrently granted to, the
Grantee (hereinafter referred to as the "Reference Option").
Upon exercise of a Right an amount shall be payable from
Warner-Lambert Company, determined in accordance with paragraph
(c) of this Article 8. The Reference Option shall terminate to
the extent that the related Right is exercised.
(b) Exercise of Right. A Right shall become exercisable
at such time, and in respect of such number of shares of Common
Stock, as the Reference Option is then exercisable and such
Right shall terminate upon termination of the Reference Option,
provided, however, that no Right shall be exercisable unless
the Grantee shall have remained in the continuous employ of the
Company for one year from the date the Right was granted except
that upon the occurrence of a Change in Control of Warner-
Lambert Company, all Rights may be exercised without giving
effect to the one year limitation and the limitations, if any,
which may have been imposed by the Committee pursuant to
paragraph (b)(ii) of Article 7 with respect to the percent of
the total number of shares to which the Right relates which may
be purchased from time to time during the Option Period;
provided, however, that Rights which have been held for less
than six months on the date of the occurrence of a Change in
Control by Grantees who at the time of the occurrence of the
Change in Control are subject to the reporting requirements of
Section 16(a) of the Act may be exercised only during the
thirty (30) day period beginning six months after the date of
grant of the Right, notwithstanding the termination of the
Grantee's employment with the Company, and without giving
effect to the one year limitation and the limitations, if any,
which may have been imposed by the Committee pursuant to
paragraph (b)(ii) of Article 7 with respect to the percent of
the total number of shares to which the Right relates which may
be purchased from time to time during the Option Period.
Except as provided in this paragraph (b) and in paragraphs (d)
and (e) of this Article 8, no Right shall be exercisable unless
at the time of such exercise the Grantee shall be in the employ
of the Company. The date on which the exercise of a Right is
effective shall hereinafter be referred to as the Valuation
Date.
(c) Determination and payment of amount payable upon
exercise of Right. Upon the exercise of a Right the amount
payable shall be equal to:
(i) if the price per share of Common Stock that
would be payable by the Grantee upon the exercise of the
Reference Option ("Option Price") is less than the Fair
Market Value of a share of Common Stock on the date the
related Right was granted (this difference being referred
to as the "Spread"), 100% of the Spread but not exceeding
the difference between the Option Price and the Fair
Market Value of a share of Common Stock on the Valuation
Date; plus
(ii) 125% of the amount by which the Fair Market
Value of a share of Common Stock on the Valuation Date
exceeds the Fair Market Value on the date the Right was
granted;
multiplied by the number of shares with respect to which the
Right is being exercised; provided, however, that (x) the
Committee may grant Rights which provide that upon exercise the
amount payable shall be equal to 100% of the amount by which
the Fair Market Value of a share of Common Stock on the
Valuation Date exceeds the Fair Market Value on the date the
Right was granted, and (y) the amount payable shall not exceed
an amount equal to the number of shares with respect to which
the Right is being exercised multiplied by the Fair Market
Value of a share of Common Stock on the Valuation Date.
The amount payable on exercise of a Right shall be payable
in cash, shares of Common Stock valued at their Fair Market
Value as of the Valuation Date, or in any combination thereof;
provided, however, that the form of payment shall be in the
sole discretion of the Committee, and prior to the payment of
the amount payable, whether in shares of Common Stock, cash or
any combination thereof, there shall first be deducted all
applicable withholding taxes, with such deduction being first
applied against the amount of cash, if any, which may be
payable unless the Committee shall have authorized other
arrangements. In the event that any payment in the form of
both cash and shares of Common Stock is made to a person
subject to the reporting requirements of Section 16(a) of the
Act, the cash portion of such payment shall be made upon the
Grantee becoming taxable in respect of the Common Stock
received upon exercise of the Right. Notwithstanding the
foregoing, a payment, in whole or in part, of cash may be made
to a person subject to the reporting requirements of Section
16(a) of the Act upon exercise of a Right only if the Right is
exercised (i) during the period beginning on the third business
day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of
the Company and ending on the twelfth business day following
such date, or (ii) during any other period in which cash may be
paid under the provisions of Rule 16b-3 promulgated pursuant to
the Act. In addition, a payment of cash shall be made to a
person subject to the reporting requirements of Section 16(a)
of the Act who has held the Right at least six months from the
date of its grant promptly following a Change in Control of
Warner-Lambert Company which Change in Control is outside the
control of any person subject to such reporting requirements
within the meaning of the aforesaid Rule 16b-3. The Company
intends that this provision shall comply with the requirements
of Rule 16b-3 under the Act during the term of the Plan.
Should this provision not be necessary to comply with the
requirements of such Rule or should any additional provision be
necessary in order to comply with the requirements of such
Rule, the Board of Directors of Warner-Lambert Company may
amend the Plan accordingly, without the necessity of obtaining
the approval of stockholders of Warner-Lambert Company. Any
fraction of a share resulting from the above calculation shall
be disregarded.
(d) Termination of Employment. If, prior to the expira-
tion of a Reference Option, the employment of the Grantee by
the Company should terminate, by reason other than death, the
related Right shall terminate, except that if, after a Grantee
shall have remained in the employ of the Company for one year
after the date of the grant of the Right, such Grantee's
employment should terminate on or after age 55, the Right
theretofore granted shall be exercisable until the later of (i)
the three-year period after termination of employment, or (ii)
the period after termination of employment which is equal to
the number of full months that the Reference Option has been
outstanding prior to such termination, but in no event after
the expiration of the Option Period, without, however, giving
effect to the limitations, if any, which may have been imposed
by the Committee pursuant to paragraph (b)(ii) of Article 7
hereof.
(e) Death of Grantee. If a Grantee should die prior to
the termination of the Reference Option:
(i) while in the employ of the Company, the Right
theretofore granted shall, if the Grantee was entitled to
exercise the Right at the date of death, be exercisable by
the estate of the Grantee, or by a person who acquired the
right to exercise such Right by bequest or inheritance or
by reason of the death of the Grantee, without, however,
giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to paragraph
(b)(ii) of Article 7 hereof with respect to the percent of
the total number of shares to which the Right relates
which may be purchased from time to time during the Option
Period; provided, however, that such Right shall be
exercisable until the later of (i) the three-year period
after termination of employment, or (ii) the period after
termination of employment which is equal to the number of
full months that the Reference Option has been outstanding
prior to such termination, but in no event after the
expiration of the Option Period; or
(ii) after the date of the termination of employment
on or after age 55, the Right theretofore granted shall,
if the Grantee was entitled to exercise the Right at the
date of death, be exercisable by the estate of the
Grantee, or by a person who acquired the right to exercise
such Right by bequest or inheritance or by reason of the
death of the Grantee, without, however, giving effect to
the limitations, if any, which may have been imposed by
the Committee pursuant to paragraph (b)(ii) of Article 7
hereof with respect to the percent of the total number of
shares to which the Right relates which may be purchased
from time to time during the Option Period; provided,
however, that such Right shall be exercisable until the
latest of (i) the three-year period after termination of
employment, (ii) the period after termination of
employment which is equal to the number of full months
that the Reference Option has been outstanding prior to
such termination, or (iii) the twelve-month period after
the death of the Grantee provided such death occurs before
the later of (i) or (ii), but in no event after the
expiration of the Option Period.
(f) Notwithstanding anything herein to the contrary,
Limited Rights may be granted hereunder by the Committee with
respect to the Options granted under the Plan (which are not
Reference Options), which shall entitle the holder to receive a
payment of cash promptly following a Change in Control of
Warner-Lambert Company which Change in Control is outside the
control of any person subject to the reporting requirements of
Section 16(a) of the Act within the meaning of Rule 16b-3 under
the Act. Such payment of cash shall be made to a person
subject to the reporting requirements of Section 16(a) of the
Act only if such person has held such Limited Right at least
six months from the date of its grant. Promptly following any
such Change in Control, the Optionee shall be entitled to
receive a cash payment equal to the excess of the Fair Market
Value of a share of Common Stock on the Valuation Date over the
Option Price of the related Option multiplied by the number of
shares with respect to which the Limited Right is being
exercised (in such case the method of determining the Fair
Market Value in the third sentence of Section 6(i) shall
apply). Limited Rights shall expire on the first to occur of
the date of exercise or expiration of the right of exercise of
the Limited Right or of the related Option. Further, upon
exercise of a Limited Right, the related Option shall be
cancelled. The Board of Directors reserves the right to cancel
all outstanding Limited Rights in accordance with Sections 11
and 12 of the Executive Severance Plan. Except as otherwise
provided herein, the provisions of the Plan relating to Rights
shall also apply to Limited Rights.
9. Administration of the Plan. The Plan shall be
administered under the supervision of the Board of Directors of
Warner-Lambert Company by a Committee consisting of not less
than three Directors of Warner-Lambert Company, who shall be
appointed by, and shall serve at the pleasure of, the Board of
Directors. No person who is or, within one year prior thereto,
has been the holder of an Option or a Right under the Plan may
be a member of the Committee, and no person may be granted an
Option or a Right while a member of the Committee. A majority
of the Committee shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a
quorum is present, expressed from time to time by a vote at a
meeting (including a meeting held by telephone conference call
or in which one or more members of the Committee participate by
telephone), or acts approved in writing by a majority of the
Committee, shall be the acts of the Committee.
In addition to the Committee's discretionary authority set
forth in other Articles hereof, the Committee is authorized to
establish such rules and regulations for the proper
administration of the Plan as it may deem advisable and not
inconsistent with the provisions of the Plan. Unless otherwise
determined by the Board of Directors, all questions arising
under the Plan or under any rule or regulation with respect to
the Plan adopted by the Committee, whether such questions
involve an interpretation of the Plan or otherwise, shall be
decided by the Committee, and its decisions shall be conclusive
and binding in all cases.
The Committee shall determine the Employees to whom
Options and Rights under the Plan are to be granted and the
number of shares to be covered by each Option granted and the
Reference Option to which each Right is to relate. In
selecting the individuals to whom Options or Rights shall be
granted, as well as in determining the number of shares subject
to each Option and the Reference Option to which each Right is
to relate, the Committee shall consider the positions and
responsibilities of the Employees being considered, the nature
of the services and accomplishments of each, the value to the
Company of their services, their present and potential
contribution to the success of the Company, the anticipated
number of years of service remaining, and such other factors as
the Committee may deem relevant.
The Committee shall establish the provisions which shall
govern in the event of the death, disability or termination of
an Optionee or Grantee, which provisions may be different than
the provisions otherwise described herein with respect to
death, disability and termination. If, for any reason, the
Committee shall determine that it is not desirable because of
the incapacity of the person who shall be entitled to receive
any payments hereunder, to make such payments directly to such
person, the Committee may apply such payment for the benefit of
such person in any way that the Committee shall deem advisable
or may make any such payment to any third person who, in the
judgment of the Committee, will apply such payment for the
benefit of the person entitled thereto. In the event of such
payment, the Company, the Board of Directors and the Committee
shall be discharged from all further liability therefor. An
Employee's employment shall be deemed terminated for purposes
of the Plan as of the date benefit payments would have
commenced under the Warner-Lambert Long Term Disability Benefit
Plan had the Optionee or Grantee been enrolled in such plan,
except as otherwise provided herein. Absence on leave approved
by the Company shall not be considered an interruption of
employment for any purpose of the Plan.
In addition, and not in limitation of the authority of the
Committee, the Stock Option Committee (as hereinafter defined)
may grant pre-employment Options and Rights, in accordance with
the provisions of the Plan, including the establishment of the
terms and conditions thereof and the consideration to Warner-
Lambert Company therefor, to Employees who, at the time of the
grant, are not subject to the reporting requirements of Section
16(a) of the Act. The Stock Option Committee, whose members
need not be Directors, shall be appointed by, and shall serve
at the pleasure of, the Committee. A majority of the Stock
Option Committee shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a
quorum is present, expressed from time to time by a vote at a
meeting (including a meeting held by telephone conference call
or in which one or more members of the Stock Option Committee
participate by telephone), or acts approved in writing by a
majority of the Stock Option Committee, shall be the acts of
the Stock Option Committee. Notwithstanding the foregoing, the
Stock Option Committee may not undertake any action which the
provisions of Rule 16b-3, promulgated pursuant to the Act,
require to be undertaken by "disinterested persons" (as defined
in said Rule) as a condition of the continued qualification of
the Plan under Rule 16b-3.
An Optionee or Grantee subject to the reporting
requirements of Section 16(a) of the Act may satisfy all
withholding tax requirements incident to the exercise of
Options or Rights wherein Common Stock is received upon such
exercise, by electing to have a sufficient number of shares of
Common Stock (valued for this purpose at the Fair Market Value
of such Common Stock on the trading date on the New York Stock
Exchange on which such taxes are due) withheld to fulfill such
tax obligations (hereinafter a "Withholding Election");
provided, however, that the Withholding Election shall be
subject to the disapproval of the Committee and further
provided that the Withholding Election is made (i) during the
period beginning on the third business day following the date
of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on
the twelfth business day following such date, (ii) six months
before the Option or Rights exercise becomes taxable, or (iii)
during any other period in which a Withholding Election may be
made under the provisions of Rule 16b-3 promulgated pursuant to
the Act. Any fraction of a share of Common Stock required to
satisfy such tax obligations shall be disregarded and the
amount due shall be paid instead in cash by the Optionee or
Grantee. The Company intends that this Withholding Election
provision shall comply with the requirements of Rule 16b-3
under the Act during the term of the Plan. Should this
provision not be necessary to comply with the requirements of
such Rule or should any additional provision be necessary in
order to comply with the requirements of such Rule, the Board
of Directors of Warner-Lambert Company may amend the Plan
accordingly, without the necessity of obtaining the approval of
stockholders of Warner-Lambert Company.
This Plan shall be governed by the law of the State of New
York (regardless of the law that might otherwise govern under
applicable New York principles of conflicts of laws).
10. Amendment and Discontinuance of the Plan;
Cancellation of Rights. (a) The Board of Directors of Warner-
Lambert Company may at any time alter, suspend or terminate the
Plan, but, except in accordance with the provisions of
paragraph (f) of Article 6, paragraph (b) of this Article 10
and Article 11 hereof, no change shall be made which will have
a material adverse effect upon any Option or Right previously
granted unless the consent of the Optionee or the Grantee is
obtained; provided, however, that except in the case of
adjustment made pursuant to paragraph (f) of Article 6 hereof,
the Board of Directors may not, without further approval of the
stockholders, (i) increase the maximum number of shares for
which Options or Rights may be granted under the Plan, (ii)
decrease the minimum Option Price provided in the Plan, (iii)
increase the total number of shares which may be issued or
transferred pursuant to Rights granted under the Plan, or
(iv) change the class of Employees eligible to receive Options
or Rights.
(b) The Board of Directors shall have the power to cancel
all Rights theretofore granted pursuant to the Plan, in the
event that it shall determine, giving consideration to all the
circumstances, that the ultimate federal income tax effects or
accounting effects of the grant or exercise of Rights under the
Plan would not be in the best interests of the Company.
(c) Notwithstanding anything in this Article 10 to the
contrary, the Committee may adopt any amendment to the Plan
which (i)(A) does not increase Plan liabilities by an amount in
excess of five million dollars ($5,000,000) and does not
increase Plan expense by an amount in excess of five hundred
thousand dollars ($500,000) or (B) is required by an applicable
law, regulation or ruling, (ii) can be undertaken by the Board
of Directors under the terms of the Plan, (iii) does not
involve a termination or suspension of the Plan, (iv) does not
affect the limitations contained in this sentence, and (v) does
not affect the composition or compensation of the Committee.
(d) Notwithstanding the foregoing provisions of this
Article 10, no person may be divested of the ownership of
Common Stock previously issued, sold or transferred under the
Plan.
11. Listing and other conditions. As long as the Common
Stock is listed on the New York Stock Exchange, the issue of
any shares of stock pursuant to an Option or Right granted
under the Plan shall be conditioned upon the shares so to be
issued being listed on such Exchange. Warner-Lambert Company
will make application for listing on such Exchange unlisted
shares subject to Options and Rights under the Plan, but shall
have no obligation to issue such shares unless and until such
shares are so listed, and the right to exercise any Option or
Right with respect to such shares shall be suspended until such
listing has been effected.
If at any time counsel to Warner-Lambert Company shall be
of the opinion that any sale or delivery of shares of Common
Stock pursuant to an Option or Right granted under the Plan is
or may in the circumstances be unlawful under the statutes,
rules or regulations of any applicable jurisdiction, Warner-
Lambert Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to
maintain any qualification or registration under the Securities
Act of 1933 or otherwise with respect to shares of stock or
Options or Rights under the Plan, and the right to exercise any
such Option or Right shall be suspended until, in the opinion
of said counsel, such sale or delivery shall be lawful.
Upon termination of any period of suspension under this
Article 11, any Option or Right affected by such suspension
which shall not then have expired or terminated shall be
reinstated as to all shares available upon exercise of the
Option or Right before such suspension and as to shares which
would otherwise have become available for purchase during the
period of such suspension, but no such suspension shall extend
any Option Period.
12. Approval; Effective Date.
Effective Date. The Plan shall become effective upon
approval by the stockholders of Warner-Lambert Company at the
Annual Meeting of Stockholders to be held in 1987.
WARNER-LAMBERT COMPANY
1989 STOCK PLAN
AS AMENDED TO MARCH 25, 1997
<PAGE>
WARNER-LAMBERT COMPANY
1989 STOCK PLAN
ARTICLE I
Purpose of Plan
Section 1.1. Purpose. The purpose of the 1989 Stock Plan
is to provide additional incentive to the officers and other
employees of the Company (as hereinafter defined) and to
recognize and reward efforts and accomplishments in order to
strengthen the desire of employees to remain with the Company,
stimulate their efforts on behalf of the Company and attract
and retain persons of competence, and, by encouraging ownership
of a stock interest in the Company, to gain for the
organization the advantages inherent in employees having a
sense of proprietorship.
ARTICLE II
Definitions
Section 2.1. Definitions. Whenever used herein, unless
the context otherwise indicates, the following terms shall have
the respective meaning set forth below:
Act: The Securities Exchange Act of 1934, as amended.
Board of Directors (or Board): The Board of Directors of
Warner-Lambert.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The committee appointed to administer the Plan
in accordance with Section 11.1 hereof.
Common Stock: Common Stock, par value $1.00 per share, of
Warner-Lambert.
Company: Warner-Lambert and its Subsidiaries.
Employee: Officers and other employees of the Company
(including such persons who are also members of the Board of
Directors).
Fair Market Value: As used in the Plan, the term "Fair
Market Value" shall be the mean between the high and low sales
prices for Common Stock of Warner-Lambert Company on the
Composite Tape for New York Stock Exchange issues on the date
the calculation thereof shall be made. In the event the date
of calculation shall be on a date which shall not be a trading
date on the New York Stock Exchange, determination of Fair
Market Value shall be made as of the first date prior
theretowhich shall have been a trading date on the New York
Stock Exchange.
Grantee: A Participant to whom Rights have been granted
in accordance with the provisions of Articles IV and VI hereof.
Option: The grant to Participants of options to purchase
shares of Common Stock in accordance with the provisions of
Articles IV and V hereof.
Optionee: A Participant to whom Options have been granted
in accordance with the provisions of Articles IV and V hereof.
Option Period: The period of time during which an Option
may be exercised in accordance with the provisions hereof.
Option Price: The price per share payable to the Company
for shares of Common Stock upon the exercise of an Option.
Participant: Each Employee to whom a Stock Award is
granted under the Plan.
Performance Awards: Awards made to Employees in
accordance with the provisions of Article VIII hereof.
Plan: The Warner-Lambert Company 1989 Stock Plan.
Reference Option: An Option, other than an incentive
stock option, to which a Right shall relate.
Reporting Person: A person subject to the reporting
requirements of Section 16(a) of the Act.
Restricted Period: The period of time from the date of
grant of Restricted Stock until the lapse of restrictions
attached thereto.
Restricted Stock: Common Stock granted under the Plan
which is subject to restrictions in accordance with the
provisions of Article VII hereof.
Right: The grant to Participants of rights to acquire
shares of Common Stock in accordance with the provisions of
Articles IV and VI hereof.
Spread: The amount by which the Option Price that would
be payable by the Grantee upon the exercise of the Reference
Option is less than the Fair Market Value of a share of Common
Stock on the date the related Right was granted.
Stock Award: A grant of Options, Rights, Restricted Stock
or Performance Awards in accordance with the provisions hereof.
Subsidiary: Any corporation (other than Warner-Lambert)
in an unbroken chain of corporations beginning with and
including Warner-Lambert if, at the time of the granting of a
Stock Award, each of the corporations other than the last
corporation in said unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
Valuation Date: The date on which the exercise of a Right
is effective.
Warner-Lambert: Warner-Lambert Company or any successor
to it in ownership of substantially all of its assets, whether
by merger, consolidation or otherwise.
Article III
Eligibility and Grants
Section 3.1. Eligibility and Grants. The Committee shall
determine the Employees who shall be granted Stock Awards and
the number of shares thereof. The Committee may make more than
one grant to an Employee during the life of the Plan. Each
grant shall be evidenced by a written instrument duly executed
by or on behalf of the Company.
Section 3.2. Share Limitation. The aggregate number of
shares of Common Stock which may be issued under the Plan shall
not exceed 8,000,000 shares of Common Stock which may be either
authorized and unissued shares or issued shares reacquired by
the Company. Notwithstanding the above limitation, if any
Option granted under the Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full,
the corresponding number of unpurchased shares shall again be
available for the purposes of the Plan; provided, however, that
if such expired, terminated or cancelled Option shall have been
a Reference Option, none of such unpurchased shares shall again
become available for purposes of the Plan to the extent that
the related Right granted under the Plan is exercised.
Further, if any shares of Common Stock granted hereunder are
forfeited or such award otherwise terminates without the
delivery of such shares upon the lapse of restrictions, the
shares subject to such grant, to the extent of such forfeiture
or termination, shall again be available under the Plan. In
addition, any shares of Common Stock issued under the Plan
through the assumption or substitution of outstanding grants
from an acquired company shall not reduce the shares available
under the Plan.
ARTICLE IV
General Terms of Options and Rights
Section 4.1. Consideration. The Committee shall
determine the consideration to the Company for the granting of
Options and Rights under the Plan, as well as the conditions,
if any, which it may deem appropriate to ensure that such
consideration will be received by, or will accrue to, the
Company, and, in the discretion of the Committee, such
consideration need not be the same, but may vary for Options
and Rights granted under the Plan at the same time or from time
to time.
Section 4.2. Number of Options and Rights.
(a) The Committee may grant more than one Option or
Right to an individual during the life of the Plan and, subject
to the requirements of Section 422A of the Code with respect to
incentive stock options, such Option or Right may be in
addition to, in tandem with, or in substitution for, options or
rights previously granted under the Plan or under another stock
plan of the Company or of another corporation and assumed by
Warner-Lambert.
(b) The Committee may permit the voluntary surrender
of all or a portion of any Option granted under the Plan or any
prior plan to be conditioned upon the granting to the Employee
of a new Option for the same or a different number of shares as
the Option surrendered, or may require such voluntary surrender
as a condition precedent to a grant of a new Option to such
Employee. Such new Option shall be exercisable at the price,
during the period, and in accordance with any other terms or
conditions specified by the Committee at the time the new
Option is granted.
Section 4.3. Option and Right Agreements. The Company
shall effect the grant of Options and Rights under the Plan, in
accordance with determinations made by the Committee, by
execution of instruments in writing, in a form approved by the
Committee. Each Option and Right shall contain such terms and
conditions (which need not be the same for all Options and
Rights, whether granted at the same time or at different times)
as the Committee shall deem to be appropriate. The Committee
may, in its sole discretion, and subject to such terms and
conditions as it may adopt, accelerate the date or dates on
which some or all outstanding Options and Rights may be
exercised. Except as otherwise provided by the Committee,
Options and Rights shall be exercised by submitting to Warner-
Lambert a signed copy of a notice of exercise in a form to be
supplied by Warner-Lambert and the exercise of an Option or
Right shall be effective on the date on which Warner-Lambert
receives such notice at its principal corporate offices.
Section 4.4. Non-Transferability of Option or Right. No
Option or Right granted under the Plan to an Employee shall be
transferable by the Employee otherwise than by will or by the
laws of descent and distribution, and such Option and Right
shall be exercisable, during the Employee's lifetime, only by
such Employee.
Section 4.5. Optionees and Grantees not Stockholders. An
Optionee or Grantee or legal representative thereof shall have
none of the rights of a stockholder with respect to shares
subject to Options or Rights until such shares shall be issued
upon exercise of the Option or Right.
Section 4.6. Certain Events. (a) As used in the Plan, a
"Change in Control of Warner-Lambert Company" shall be deemed
to have occurred if (i) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Act is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of Warner-Lambert Company
representing 20% or more of the combined voting power of
Warner-Lambert Company's then outstanding securities, (ii) upon
the consummation of a merger, consolidation, sale or
disposition of all or substantially all of Warner-Lambert
Company's assets or plan of liquidation which is approved by
shareholders of Warner-Lambert Company (a "Transaction"), or
(iii) the composition of the Board of Directors of Warner-
Lambert Company (the "Board") at any time during any
consecutive twenty-four (24) month period changes such that the
Continuity Directors (as hereinafter defined) cease for any
reason to constitute at least fifty-one percent (51%) of the
Board. For purposes of the foregoing clause (iii), "Continuity
Directors" means those members of the Board who either (a) were
directors at the beginning of such consecutive twenty-four (24)
month period, or (b)(1) filled a vacancy during such twenty-
four (24) month period created by reason of (x) death, (y) a
medically determinable physical or mental impairment which
renders the director substantially unable to function as a
director or (z) retirement at the last mandatory retirement age
in effect for at least two (2) years, and (2) were elected,
nominated or voted for by at least fifty-one percent (51%) of
the current directors who were also directors at the
commencement of such twenty-four (24) month period.
Notwithstanding the provisions of Article II hereof, upon the
exercise of a Right during the 30-day period following Warner-
Lambert Company obtaining actual knowledge of a Change in
Control of Warner-Lambert Company, "Fair Market Value" of a
share of Common Stock on the Valuation Date shall be equal to
the higher of (i) the highest closing sale price per share of
Common Stock of Warner-Lambert Company on the Composite Tape
for New York Stock Exchange issues during the period commencing
30 days prior to such Change in Control and ending immediately
prior to such exercise or (ii) if the Change in Control of
Warner-Lambert Company occurs as a result of a tender or
exchange offer or approval by stockholders of Warner-Lambert
Company of a Transaction, then the highest price per share of
Common Stock of Warner-Lambert Company pursuant thereto. Any
consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to the
exchange offer shall be valued at the valuation placed thereon
by the Board of Directors. Adjustments, if any, shall be made
in accordance with Section 10.1 hereof.
(b) As used in the Plan, a "Merger of Equals" shall mean
either: (a) a Change in Control of Warner-Lambert Company,
pursuant to the terms of which the stockholders of Warner-
Lambert Company receive consideration, including securities,
with an Aggregate Value (as defined below) not greater than 115
percent of the average closing price of the Common Stock of
Warner-Lambert Company on the Composite Tape for New York Stock
Exchange issues for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction; or (b) any other Change in
Control of Warner-Lambert Company which the Board of Directors,
in its sole discretion, determines to be a "Merger of Equals"
for the purposes of this provision. For purposes of this
section, "Aggregate Value" shall mean the consideration to be
received by the stockholders of Warner-Lambert Company equal to
the sum of (A) cash, (B) the value of any securities and (C)
the value of any other non-cash consideration. The value of
securities received shall equal the average closing price of
the security on the principal security exchange on which such
security is listed for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction. For securities not traded on
a security exchange, and for any other non-cash consideration
that is received, the value of such security or such non-cash
consideration shall be determined by the Board of Directors.
ARTICLE V
Terms and Conditions of Options
Section 5.1. Types of Options. Options granted under the
Plan shall be in the form of (i) incentive stock options as
defined in Section 422A of the Code, or (ii) options not
qualifying under such section, or both, in the discretion of
the Committee. The status of each Option shall be identified
in the Option agreement.
Section 5.2. Option Price. The Option Price shall be
such as shall be fixed by the Committee but not less in any
case than the Fair Market Value per share for such stock on the
date of the granting of the Option, subject to adjustment
pursuant to Section 10.1 hereof. The date of the granting of
an Option under the Plan shall be the date fixed by the
Committee as the date for such Option for the Employee who is
to be the recipient thereof.
Section 5.3. Period of Option.
(a) No part of an Option may be exercised unless the
Optionee remains in the continuous employ of the Company for
one year from the date the Option is granted except that upon
the occurrence of a Change in Control of Warner-Lambert Company
all Options may be exercised without giving effect to the one-
year limitation and the limitations, if any, which may have
been imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Option relates which may be purchased from time to time
during the Option Period.
(b) Options will be exercisable thereafter over the
Option Period, which, in the case of each Option, shall be a
period determined by the Committee (provided, however, that the
term of an incentive stock option shall be a period of not more
than ten years from the date of the grant of such Option), and
will be exercisable at such times and in such amounts as
determined by the Committee at the time each Option is granted.
Notwithstanding any other provision contained in this Plan, no
Option shall be exercisable after the expiration of the Option
Period. Except as provided in Sections 5.4, 5.5 and 5.6
hereof, no Option may be exercised unless the Optionee is then
in the employ of the Company and shall have been continuously
so employed since the date of the grant of such Option.
Section 5.4. Termination of Employment Before Age 55. An
Optionee whose employment terminates before age 55, by reason
other than death, shall be entitled to exercise such Option,
only within the three-month period after the date of such
termination of employment and in no event after the expiration
of the Option Period, and then only if and to the extent that
the Optionee was entitled to exercise the Option at the date of
the termination of employment, giving effect to the
limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period.
Section 5.5. Termination of Employment On or After Age
55. An Optionee whose employment terminates on or after age
55, by reason other than death, shall be entitled to exercise
such Option if the Optionee was entitled to exercise the Option
at the date of the termination, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination, but
in no event after the expiration of the Option Period.
Section 5.6. Death of Optionee. If an Optionee should
die:
(a) while in the employ of the Company, the Option
theretofore granted shall, if the Optionee was entitled to
exercise the Option at the date of death, be exercisable by the
estate of the Optionee, or by a person who acquired the right
to exercise such Option by bequest or inheritance or by reason
of the death of the Optionee, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination and
in no event after the expiration of the Option Period;
(b) within the three-month period after the date of
the termination of employment before age 55, the Option
theretofore granted shall be exercisable by the estate of the
Optionee, or by a person who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death
of the Optionee, but then only if and to the extent that the
Optionee was entitled to exercise the Option at the date of
death, giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Option relates which may be purchased from time to time
during the Option Period; provided, however, that such Option
shall be exercisable only within the twelve-month period next
succeeding the death of the Optionee and in no event after the
expiration of the Option Period; or
(c) after the date of the termination of employment
on or after age 55, the Option theretofore granted shall, if
the Optionee was entitled to exercise the Option at the date of
death, be exercisable by the estate of the Optionee, or by a
person who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the
Optionee, without, however, giving effect to the limitations,
if any, which may have been imposed by the Committee pursuant
to Section 5.3(b) with respect to the percent of the total
number of shares to which the Option relates which may be
purchased from time to time during the Option Period; provided,
however, that such Option shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Optionee provided such
death occurs before the later of (i) or (ii), but in no event
after the expiration of the Option Period.
Section 5.7. Payment for shares. Payment for shares of
Common Stock purchased shall be made in full at the time of
exercise of the Option. Nothing herein shall be construed to
prohibit the Company from making a loan or advance to the
Optionee for the purpose of financing, in whole or in part, the
purchase of optioned shares. Payment of the Option Price shall
be made in cash or, with the consent of the Committee, in whole
or in part in Common Stock, Stock Awards or other
consideration. Payment may also be made by delivering a
properly executed exercise notice together with irrevocable
instructions to a third party to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise
price.
Section 5.8. Incentive Stock Options. Options granted in
the form of incentive stock options shall be subject, in
addition to the foregoing provisions, to the following
provisions:
(a) Annual Limit. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of the
Common Stock with respect to which incentive stock options are
exercisable for the first time by any Optionee during any
calendar year (under the Plan or under any other stock plan of
the Company) exceeds $100,000, such options shall be treated as
options which are not incentive stock options.
(b) Ten Percent Shareholder. No incentive stock
option shall be granted to any individual who, at the time of
the proposed grant, owns Common Stock possessing more than ten
percent of the total combined voting power of all classes of
stock of Warner-Lambert or any Subsidiary.
(c) Option Period. No incentive stock option shall
be exercisable after the expiration of ten years from the date
of grant.
The Company intends that Options designated by the Committee as
incentive stock options shall constitute incentive stock
options under Section 422A of the Code. Should any of the
foregoing provisions not be necessary in order to so comply or
should any additional provisions be required, the Committee may
amend the Plan accordingly, without the necessity of obtaining
the approval of stockholders of Warner-Lambert.
Section 5.9. Rollover Options. Notwithstanding anything
herein to the contrary, in the event of a Merger of Equals all
Options granted hereunder shall become immediately exercisable
by the Optionee and the Options shall be converted into options
to purchase the stock of the company which other shareholders
of Warner-Lambert Company receive in the transaction (the
"Rollover Options"). The Rollover Options shall be subject to
the same terms and conditions as those applicable to the
Options held prior to the Merger of Equals, including, but not
limited to, exercisability and Option Period, except as
hereinafter provided. If the Aggregate Value consists only of
shares of a publicly traded security ("New Security"), each
Rollover Option shall entitle the holder to purchase the number
of shares of New Security which is equal to the product of (a)
the Exchange Ratio (as hereinafter defined) and (b) the number
of shares of Common Stock subject to the Option immediately
prior to the effective date of the Merger of Equals (rounded to
the nearest full number of shares). The exercise price for
each Rollover Option shall be the exercise price per share of
each Option divided by the Exchange Ratio (rounded to the
nearest full cent). For purposes hereof, "Exchange Ratio"
shall mean the ratio for exchanging Common Stock held by the
stockholders of Warner-Lambert Company for shares of New
Security which is set forth in the definitive agreement
pertaining to the transaction. If the Aggregate Value consists
of consideration other than New Securities, the Board shall
make appropriate adjustments to the number of Rollover Options
and the exercise price thereof. In addition, with respect to
Options granted after March 25, 1997, if an optionee who is not
55 years old is terminated within three (3) years following the
Merger of Equals (for a reason other than "Termination for Just
Cause," as defined in the Warner-Lambert Company Enhanced
Severance Plan), such optionee's Options shall remain
exercisable notwithstanding such termination of employment by
the Company or any successor or its affiliates and such Options
shall be exercisable until two years following the termination
of employment, but in no event after the expiration of the
Option Period.
ARTICLE VI
Terms of Rights
Section 6.1. Relation to Option. Each Right shall relate
specifically to a Reference Option, then held by, or
concurrently granted to, the Grantee. Upon exercise of a Right
an amount shall be payable from Warner-Lambert, determined in
accordance with Section 6.3 hereof. The Reference Option shall
terminate to the extent that the related Right is exercised.
Section 6.2. Exercise of Right. A Right shall become
exercisable at such time, and in respect of such number of
shares of Common Stock, as the Reference Option is then
exercisable and such Right shall terminate upon termination of
the Reference Option, provided, however, that no Right shall be
exercisable unless the Grantee shall have remained in the
continuous employ of the Company for one year from the date the
Right was granted, except that upon the occurrence of a Change
in Control of Warner-Lambert Company, all Rights may be
exercised without giving effect to the one-year limitation and
the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period; provided, however, that Rights which have been
held for less than six months on the date of the occurrence of
a Change in Control by Grantees who at the time of the
occurrence of the Change in Control are Reporting Persons may
be exercised only during the thirty (30) day period beginning
six months after the date of grant of the Right,
notwithstanding the termination of the Grantee's employment
with the Company, and without giving effect to the one-year
limitation and the limitations, if any, which may have been
imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Right relates which may be purchased from time to time
during the Option Period. Except as provided in this Section
6.2, and in Sections 6.5 and 6.6, no Right shall be exercisable
unless at the time of such exercise the Grantee shall be in the
employ of the Company.
Section 6.3. Amount Payable Upon Exercise of Right. Upon
the exercise of a Right the amount payable shall be equal to:
(i) 100% of the Spread but not exceeding the
difference between the Option Price and the Fair Market
Value of a share of Common Stock on the Valuation Date;
plus
(ii) 125% of the amount by which the Fair Market
Value of a share of Common Stock on the Valuation Date
exceeds the Fair Market Value on the date the Right was
granted;
multiplied by the number of shares with respect to which the
Right is being exercised; provided, however, that (x) the
Committee may grant Rights which provide that upon exercise the
amount payable shall be equal to 100% of the amount by which
the Fair Market Value of a share of Common Stock on the
Valuation Date exceeds the Fair Market Value on the date the
Right was granted, and (y) the amount payable shall not exceed
an amount equal to the number of shares with respect to which
the Right is being exercised multiplied by the Fair Market
Value of a share of Common Stock on the Valuation Date.
Section 6.4. Form of Payment. The amount payable on
exercise of a Right shall be payable in cash, shares of Common
Stock valued at their Fair Market Value as of the Valuation
Date, or in any combination thereof; provided, however, that
the form of payment shall be in the sole discretion of the
Committee. In the event that any payment in the form of both
cash and shares of Common Stock is made to a Reporting Person,
the cash portion of such payment shall be made upon the Grantee
becoming taxable in respect of the Common Stock received upon
exercise of the Right. Notwithstanding the foregoing, a
payment, in whole or in part, of cash may be made to a
Reporting Person upon exercise of a Right only if the Right is
exercised (i) during the period beginning on the third business
day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of
the Company and ending on the twelfth business day following
such date, or (ii) during any other period in which cash may be
paid under the provisions of Rule 16b-3 promulgated pursuant to
the Act. In addition, a payment of cash shall be made to a
person subject to the reporting requirements of Section 16(a)
of the Act who has held the Right at least six months from the
date of its grant promptly following a Change in Control of
Warner-Lambert Company which Change in Control is outside the
control of any person subject to such reporting requirements
within the meaning of the aforesaid Rule 16b-3. The Company
intends that this provision shall comply with the requirements
of Rule 16b-3 under the Act. Should this provision not be
necessary to comply with the requirements of such Rule or
should any additional provision be necessary in order to comply
with the requirements of such Rule, the Committee may amend the
Plan accordingly, without the necessity of obtaining the
approval of stockholders of the Company. Any fraction of a
share resulting from the above calculation shall be
disregarded.
Section 6.5. Termination of Employment. If, prior to the
expiration of a Reference Option, the employment of the Grantee
by the Company should terminate, by reason other than death,
the related Right shall terminate, except that if, after a
Grantee shall have remained in the employ of the Company for
one year after the date of the grant of the Right, such
Grantee's employment should terminate on or after age 55, the
Right theretofore granted shall be exercisable until the later
of (i) the three-year period after termination of employment,
or (ii) the period after termination of employment which is
equal to the number of full months that the Reference Option
has been outstanding prior to such termination, but in no event
after the expiration of the Option Period, without, however,
giving effect to the limitations, if any, which may have been
imposed by the Committee pursuant to Section 5.3(b) hereof.
Section 6.6. Death of Grantee. If a Grantee should die
prior to the termination of the Reference Option:
(a) while in the employ of the Company, the Right
theretofore granted shall, if the Grantee was entitled to
exercise the Right at the date of death, be exercisable by the
estate of the Grantee, or by a person who acquired the right to
exercise such Right by bequest or inheritance or by reason of
the death of the Grantee, without, however, giving effect to
the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) hereof with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period; provided, however, that such Right shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Reference Option has been outstanding prior to such
termination, but in no event after the expiration of the Option
Period; or
(b) after the date of the termination of employment
on or after age 55, the Right theretofore granted shall, if the
Grantee was entitled to exercise the Right at the date of
death, be exercisable by the estate of the Grantee, or by a
person who acquired the right to exercise such Right by bequest
or inheritance or by reason of the death of the Grantee,
without, however, giving effect to the limitations, if any,
which may have been imposed by the Committee pursuant to
Section 5.3(b) hereof with respect to the percent of the total
number of shares to which the Right relates which may be
purchased from time to time during the Option Period; provided,
however, that such Right shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Reference Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Grantee provided such death
occurs before the later of (i) or (ii), but in no event after
the expiration of the Option Period.
Section 6.7. Limited Rights. Notwithstanding anything
herein to the contrary, Limited Rights may be granted hereunder
by the Committee with respect to the options granted under this
Plan or any other stock option plan of the Company (which are
not Reference Options under any such plan) which shall entitle
the holder to receive a payment of cash promptly following a
Change in Control of Warner-Lambert Company which Change in
Control is outside the control of any person subject to the
reporting requirements of Section 16(a) of the Act within the
meaning of Rule 16b-3 under the Act. Such payment of cash
shall be made to a person subject to the reporting requirements
of Section 16(a) of the Act only if such person has held such
Limited Right at least six months from the date of its grant.
Promptly following any such Change in Control, the Optionee
shall be entitled to receive a cash payment equal to the excess
of the Fair Market Value of a share of Common Stock on the
Valuation Date over the Option Price of the related Option
multiplied by the number of shares with respect to which the
Limited Right is being exercised (in such case the method of
determining the Fair Market Value in the second sentence of
Section 4.6(a) shall apply). Limited Rights shall expire on
the first to occur of the date of exercise or expiration of the
right of exercise of the Limited Right or of the related
Option. Further, upon exercise of a Limited Right, the related
Option shall be cancelled. The Board of Directors reserves the
right to cancel all outstanding Limited Rights in accordance
with Sections 11 and 12 of the Executive Severance Plan.
Except as otherwise provided herein, the provisions of the Plan
relating to Rights shall also apply to Limited Rights.
ARTICLE VII
Terms And Conditions Of Restricted Stock
Section 7.1. General. The restrictions set forth in
Section 7.2 shall apply to each grant of Restricted Stock for
the duration of the Restricted Period.
Section 7.2. Restrictions. A stock certificate
representing the number of shares of Restricted Stock granted
shall be registered in the Participant's name but shall be held
in custody by the Company for the Participant's account. The
Participant shall have all rights and privileges of a
stockholder as to such Restricted Stock, including the right to
receive dividends and the right to vote such shares, except
that, subject to the provisions of Section 7.3, the following
restrictions shall apply: (i) the Participant shall not be
entitled to delivery of the certificate until the expiration of
the Restricted Period; (ii) none of the shares of Restricted
Stock may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period; (iii)
the Participant shall, if requested by the Company, execute and
deliver to the Company, a stock power endorsed in blank; and
(iv) all of the shares of Restricted Stock still subject to
restrictions shall be forfeited and all rights of the
Participant to such shares shall terminate without further
obligation on the part of the Company if the Participant ceases
to be an Employee prior to the expiration of the Restricted
Period applicable to such shares. Upon the forfeiture (in
whole or in part) of shares of Restricted Stock, such forfeited
shares shall become treasury shares of the Company without
further action by the Participant. The Participant shall have
the same rights and privileges, and be subject to the same
restrictions, with respect to any shares received pursuant to
Section 10.1 hereof.
Section 7.3. Terms and Conditions. The Committee shall
establish the terms and conditions, which need not be the same
for all grants made under the Plan, applicable to the
Restricted Stock, and which may include restrictions based upon
periods of time, performance (corporate, group, individual or
otherwise), combinations thereof or such other restrictions as
the Committee shall determine to be appropriate. The Committee
may provide for the restrictions to lapse with respect to a
portion or portions of the Restricted Stock at different times
or upon the occurrence of different events and the Committee
may waive, in whole or in part, any or all restrictions
applicable to a grant of Restricted Stock. Restricted Stock
awards may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
Section 7.4. Delivery of Restricted Shares. At the end
of the Restricted Period as herein provided, a stock
certificate for the number of shares of Restricted Stock with
respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the Participant or
the Participant's beneficiary or estate, as the case may be.
The Company shall not be required to deliver any fractional
share of Common Stock but shall pay, in lieu thereof, the fair
market value (measured as of the date the restrictions lapse)
of such fractional share to the Participant or the
Participant's beneficiary or estate, as the case may be.
Notwithstanding the foregoing, the Committee may authorize the
delivery of the Restricted Stock to a Participant during the
Restricted Period, in which event any stock certificates in
respect of shares of Restricted Stock thus delivered to a
Participant during the Restricted Period applicable to such
shares shall bear an appropriate legend referring to the terms
and conditions, including the restrictions, applicable thereto.
Section 7.5. Certain Events.
(a) In the event of a Change in Control of Warner-
Lambert Company the rights and privileges of Participants
hereunder shall be governed by the following clause (i), clause
(ii) or clause (iii), as appropriate:
(i) Value of Restricted Stock. All shares of
Restricted Stock then outstanding shall be immediately
forfeited and shall revert to the Company as treasury
shares and, in lieu thereof, each Participant shall
receive a cash payment equal to the Value of the
Restricted Stock (as hereinafter defined); provided,
however, that if the Participant is a Reporting Person at
the time of the Change in Control of Warner-Lambert
Company, the provisions of clause (ii) shall govern the
rights and privileges of such Participant.
(ii) Reporting Persons. All shares of
Restricted Stock previously granted to Participants who
are Reporting Persons at the time of the Change in Control
of Warner-Lambert Company which Change in Control is
outside the control of any Reporting Person within the
meaning of Rule 16b-3 under the Act, and which are then
outstanding and have been outstanding for a period of at
least six (6) months, shall be immediately forfeited and
shall revert to the Company as treasury shares and, in
lieu thereof, such Participant shall receive a cash
payment equal to the Value of the Restricted Stock.
(iii) Lapse of Restrictions. In the event that
clause (ii) shall not become operational with respect to a
Participant who is a Reporting Person, all restrictions
applicable to shares of Restricted Stock previously
granted to such Participant and then outstanding shall
expire and such shares shall thereupon be delivered to the
Participant free of all restrictions.
(b) As used in the Plan, the "Value of the
Restricted Stock" shall be the higher of (a) the highest
closing price per share of Common Stock on the Composite Tape
for New York Stock Exchange issues during the 30 day period
prior to the Change in Control of Warner-Lambert Company, or
(b) if the Change in Control of Warner-Lambert Company occurs
as a result of a tender or exchange offer or approval by the
stockholders of the Company of a Transaction, then the highest
price per share of Common Stock pursuant thereto, multiplied by
the total number of shares of Restricted Stock granted to such
Participant and then outstanding, regardless of whether the
restrictions applicable thereto shall have previously lapsed.
Any consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to an
exchange offer shall be valued at the valuation placed thereon
by the Board of Directors. Adjustments, if any, shall be made
in accordance with Section 10.1 hereof.
ARTICLE VIII
Terms and Conditions of Performance Awards
Section 8.1. Terms and Conditions. The Committee may
grant Performance Awards, determine the consideration therefor,
which may include prior efforts and accomplishments, and
establish the terms and conditions thereof, which may include
provisions based upon periods of time, performance (corporate,
group, individual or otherwise), combinations thereof or such
other provisions as the Committee may determine to be
appropriate. Performance Awards may consist of shares of
Common Stock or awards that are valued by reference to shares
of Common Stock, cash or such other measure as the Committee
shall determine. Performance Awards may provide for payment in
shares of Common Stock, cash, other property or any combination
thereof as determined by the Committee. Shares of Common Stock
issued pursuant to this Section 8.1 may be issued for no cash
consideration or for such minimum consideration as may be
required by applicable law. The Committee shall determine
whether payment shall be made in a lump sum, installments or
deferred. With respect to Performance Awards which are valued
by reference to shares of Common Stock, the Committee shall
also determine whether the Participant may be entitled to
receive a payment of, or credit equivalent to, any dividends
payable with respect to such shares of Common Stock and the
terms and conditions applicable thereto. Further, if a payment
of cash is to be made on a deferred basis, the Committee shall
establish whether interest shall be credited, the rate thereof
and any other terms and conditions applicable thereto.
ARTICLE IX
Regulatory Compliance and Listing
Section 9.1. Regulatory Compliance and Listing. The
issuance or delivery of any Stock Awards and shares of Common
Stock pursuant thereto may be postponed by the Company for such
periods as may be required to comply with any applicable
requirements under the Federal securities laws, any applicable
listing requirements of any national securities exchange or any
requirements under any other law or regulation applicable
thereto, and the Company shall not be obligated to issue or
deliver any such awards or 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.
ARTICLE X
Adjustment in Event of Changes in Capitalization
Section 10.1. Adjustments. In the event of a
recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, rights offering,
separation, reorganization, liquidation, or the sale,
conveyance, lease or other transfer by Warner-Lambert of all or
substantially all of its property, or any other change in the
corporate structure or shares of the Company, the Committee may
make such equitable adjustments to prevent dilution or
enlargement of rights as it may deem appropriate in the number
and class of shares authorized to be granted hereunder,
including adjustment to the share limitation of Section 3.2
hereof, and change the number and kind of shares available
under any outstanding Option and Right (including substitution
of shares of another corporation), and the price of any Option
and the Fair Market Value in such manner as it shall deem
equitable; provided, however, that in no event may any change
be made to an incentive stock option which would constitute a
"modification" within the meaning of section 425(h)(3) of the
Code. Options granted under the Plan shall contain such
provisions as are consistent with the foregoing with respect to
adjustments to be made in the number and kind of shares covered
thereby and in the Option Price in the event of any such
change.
<PAGE>
ARTICLE XI
Administration
Section 11.1. Administration.
(a) The Plan shall be administered by a committee
consisting of not less than three members of the Board of
Directors, who shall be appointed by, and shall serve at the
pleasure of, the Board of Directors. No person who is or,
within one year prior thereto, has been eligible to receive a
Stock Award under the Plan may be a member of the Committee,
and no person may be granted a Stock Award while a member of
the Committee. A majority of the Committee shall constitute a
quorum and the acts of a majority of the members present at any
meeting at which a quorum is present, expressed from time to
time by a vote at a meeting (including a meeting held by
telephone conference call or in which one or more members of
the Committee participate by telephone), or acts approved in
writing by a majority of the Committee, shall be the acts of
the Committee.
(b) In addition to the Committee's discretionary
authority set forth in other Articles hereof, the Committee is
authorized to establish such rules and regulations for the
proper administration of the Plan as it may deem advisable and
not inconsistent with the provisions of the Plan. All
questions arising under the Plan or under any rule or
regulation with respect to the Plan adopted by the Committee,
whether such questions involve an interpretation of the Plan or
otherwise, shall be decided by the Committee, and its decisions
shall be conclusive and binding in all cases.
(c) The Committee shall determine the Employees to
whom Stock Awards under the Plan are to be granted, the terms
and conditions applicable thereto and the number of shares to
be covered by each award. In selecting the individuals to whom
Stock Awards shall be granted, as well as in determining the
terms and conditions applicable thereto and the number of
shares subject to each grant, the Committee shall consider the
positions and responsibilities of the Employees being
considered, the nature of the services and accomplishments of
each, the value to the Company of their services, their present
and potential contribution to the success of the Company, the
anticipated number of years of service remaining and such other
factors as the Committee may deem relevant. The Committee may
obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee.
Section 11.2. Stock Awards Committee. In addition, and
not in limitation of the authority of the Committee, the Stock
Awards Committee (as hereinafter constituted) may grant Stock
Awards, in accordance with the provisions of the Plan,
including the establishment of the terms and conditions thereof
and the consideration to the Company therefor, to Employees
who, at the time of the grant, are not Reporting Persons. The
Stock Awards Committee, whose members need not serve on the
Board of Directors, shall be appointed by, and shall serve at
the pleasure of, the Committee. A majority of the Stock Awards
Committee shall constitute a quorum and the acts of a majority
of the members present at any meeting at which a quorum is
present, expressed from time to time by a vote at a meeting
(including a meeting held by telephone conference call or in
which one or more members of the Stock Awards Committee
participate by telephone), or acts approved in writing by a
majority of the Stock Awards Committee, shall be the acts of
the Stock Awards Committee. Notwithstanding the foregoing, the
Stock Awards Committee may not undertake any action which the
provisions of Rule 16b-3, promulgated pursuant to the Act,
require to be undertaken by "disinterested persons" (as defined
in said Rule) as a condition of the continued qualification of
the Plan under Rule 16b-3.
ARTICLE XII
Termination or Amendment of the Plan
Section 12.1. Termination or Amendment.
(a) The Board may at any time terminate the Plan and
may from time to time alter or amend the Plan or any part
thereof (including any amendment deemed necessary to ensure
that the Company may comply with any regulatory requirement
referred to in Article IX); provided, however, that, unless
otherwise required by law, the rights of a Participant with
respect to Stock Awards granted prior to such termination,
alteration or amendment may not be impaired without the consent
of such Participant and, provided further, without the approval
of the Company's stockholders, no alteration or amendment may
be made which would (i) increase the aggregate number of shares
of Common Stock that may be issued under the Plan (except by
operation of Article X), or (ii) change the category of
employees eligible to receive Stock Awards under the Plan. The
Company intends that the Plan shall comply with the
requirements of Rule 16b-3 promulgated pursuant to the Act.
Should any provisions hereof not be necessary in order to
comply with the requirements of such Rule or should any
additional provisions be necessary in order to so comply, the
Committee may amend the Plan accordingly, without the necessity
of obtaining the approval of the Company's stockholders.
(b) The Committee may at any time adopt any
amendment to the Plan which (i)(A) does not increase Plan
liabilities by an amount in excess of five million dollars
($5,000,000) and does not increase Plan expense by an amount in
excess of five hundred thousand dollars ($500,000) or (B) is
required by an applicable law, regulation or ruling, (ii) can
be undertaken by the Board of Directors under the terms of the
Plan, (iii) does not involve a termination of the Plan, (iv)
does not affect the limitations contained in this sentence, and
(v) does not affect the composition or compensation of the
Committee.
(c) The Committee shall have the power to cancel all
Rights theretofore granted pursuant to the Plan in the event
that it shall determine that the accounting effects of the
grant or exercise of Rights under the Plan would not be in the
best interests of the Company.
(d) Any action which may be undertaken by the
Committee pursuant to the terms hereof may be undertaken by the
Board, except as provided in Rule 16b-3 promulgated pursuant to
the Act.
ARTICLE XIII
Miscellaneous
Section 13.1. No Right To Employment. Nothing in the
Plan shall be deemed to confer upon any Participant the right
to remain in the employ of the Company.
Section 13.2. Withholding of Taxes.
(a) The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock
or the payment of any cash hereunder, payment by the
Participant of any taxes required by law with respect thereto.
(b) The Committee may permit any such withholding
obligation to be satisfied by reducing the number of shares of
Common Stock otherwise deliverable. A Reporting Person may
elect to have a sufficient number of shares of Common Stock
withheld to fulfill such tax obligations (hereinafter a
"Withholding Election") only if the election complies with the
following conditions: (x) the Withholding Election shall be
subject to the disapproval of the Committee and (y) the
Withholding Election is made (i) during the period beginning on
the third business day following the date of release for
publication of the quarterly or annual summary statements of
sales and earnings of the Company and ending on the twelfth
business day following such date, (ii) six months before the
Stock Award becomes taxable, or (iii) during any other period
in which a Withholding Election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the Act. Any
fraction of a share of Common Stock required to satisfy such
tax obligations shall be disregarded and the amount due shall
be paid instead in cash by the Participant.
Section 13.3. No Assignment of Benefits. No benefit
payable under the Plan shall, except as otherwise specifically
provided by law, be subject in any manner to anticipation,
alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
attach, sell, transfer, assign, pledge, encumber or charge any
such benefit shall be void, and any such benefit shall not in
any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment
or legal process for or against such person. If any person
entitled to a benefit hereunder shall be adjudicated a bankrupt
or shall attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge such benefit, or if any
attempt is made to subject any such benefit to the debts,
contracts, liabilities, engagements or torts of any person
entitled to such benefit, then such benefit shall, in the
discretion of the Committee, cease and terminate, and in that
event the Committee may cause such benefit, or any part
thereof, to be held or applied for the benefit of such person,
his or her spouse, children or other dependents, or any of
them, in such manner and in such proportion as the Committee
shall determine.
Section 13.4. Death; Disability; Termination. The
Committee shall establish the provisions which shall govern in
the event of the death, disability, or termination (including
layoff) of a Participant, which provisions may be different
than the provisions otherwise described herein with respect to
death, disability, and termination. If, for any reason, the
Committee shall determine that it is not desirable because of
the incapacity of the person who shall be entitled to receive
any payments hereunder, to make such payments directly to such
person, the Committee may apply such payment for the benefit of
such person in any way that the Committee shall deem advisable
or may make any such payment to any third person who, in the
judgment of the Committee, will apply such payment for the
benefit of the person entitled thereto. In the event of such
payment, the Company, the Board of Directors and the Committee
shall be discharged from all further liability therefor. An
Employee's employment shall be deemed terminated for purposes
of the Plan as of the date benefit payments would have
commenced under the Warner-Lambert Long Term Disability
Benefits Plan had the Participant been enrolled in such plan,
except as otherwise provided herein. Absence on leave approved
by the Company shall not be considered an interruption of
employment for any purpose of the Plan.
Section 13.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on the New
York Stock Exchange, the issue of any shares of stock pursuant
to a Stock Award shall be conditioned upon the shares so to be
issued being listed on such Exchange. Warner-Lambert shall
make application for listing on such Exchange unlisted shares
subject to Stock Awards, but shall have no obligation to issue
such shares unless and until such shares are so listed, and the
right to exercise any Option or Right with respect to such
shares shall be suspended until such listing has been effected.
(b) If at any time counsel to Warner-Lambert shall
be of the opinion that any sale or delivery of shares of Common
Stock pursuant to a Stock Award is or may in the circumstances
be unlawful under the statutes, rules or regulations of any
applicable jurisdiction, Warner-Lambert shall have no
obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or
registration under the Securities Act of 1933, as amended, or
otherwise with respect to shares of Common Stock or Stock
Awards, and the right to exercise any Option or Right shall be
suspended until, in the opinion of said counsel, such sale or
delivery shall be lawful.
(c) Upon termination of any period of suspension
under this Section 13.5, any Stock Award affected by such
suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such
suspension shall extend any Option Period.
Section 13.6. Governing Law. This Plan shall be governed
by the law of the State of New Jersey (regardless of the law
that might otherwise govern under applicable New Jersey
principles of conflict of laws).
Section 13.7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as
though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they
would so apply.
Section 13.8. Laws of Foreign Jurisdictions. Without
amending the Plan, but subject to the limitations specified in
Article XII hereof, the Committee may grant, amend, administer,
annul or terminate Stock Awards on such terms and conditions,
which may be different from those specified in the Plan, as it
may deem necessary or desirable to make available tax or other
benefits of the laws of any foreign jurisdiction.
Section 13.9. Other Plans. Nothing contained herein
shall prevent the Company from adopting additional compensation
plans or arrangements.
ARTICLE XIV
Effective Date; Expiration
Section 14.1. Effective Date. The Plan shall be
submitted to the stockholders of Warner-Lambert for their
approval at the Annual Meeting of Stockholders to be held in
1989. The Plan shall become effective upon the affirmative
vote of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote at the meeting.
Section 14.2. Expiration. No Stock Awards may be granted
hereunder after April 25, 1994. The expiration of the Plan as
herein provided shall not affect any Stock Award granted prior
to such expiration.
WARNER-LAMBERT COMPANY
WARNER-LAMBERT COMPANY
1992 STOCK PLAN
As Amended to March 25, 1997
<PAGE>
WARNER-LAMBERT COMPANY
1992 STOCK PLAN
ARTICLE I
Purpose of Plan
Section 1.1. Purpose.
(a) The purpose of the 1992 Stock Plan is to provide
additional incentive to selected officers and other employees
of the Company (as hereinafter defined), to recognize and
reward their efforts and accomplishments in order to strengthen
the desire of employees to remain with the Company and
stimulate their efforts on behalf of the Company and to attract
and retain persons of competence, and, by encouraging ownership
of a stock interest in the Company, to gain for the Company the
advantages inherent in employees having a sense of
proprietorship.
(b) In addition, the Plan (as hereinafter defined)
will assist in the attraction and retention of non-employee
members of the Board of Directors by providing the opportunity
for such Directors to obtain a proprietary interest in the
Company's success and progress and with increased flexibility
in the timing of the receipt of fees for services on, and
attending meetings of, the Board of Directors and committees
thereof.
ARTICLE II
Definitions
Section 2.1. Definitions. Whenever used herein, unless
the context otherwise indicates, the following terms shall have
the respective meaning set forth below:
Account: A Cash Account or a Stock Account.
Act: The Securities Exchange Act of 1934, as amended.
Affiliate: Any corporation, partnership, association,
joint-stock company, business trust, joint venture or
unincorporated organization controlled, directly or indirectly,
by Warner-Lambert. Warner-Lambert shall be deemed to control
any such entity if Warner-Lambert possesses, directly or
indirectly, the power to direct or cause the direction of its
management and policies, whether through the ownership of
voting securities, by contract or otherwise.
Board of Directors (or Board): The Board of Directors of
Warner-Lambert.
Business Day: A day except for a Saturday, Sunday or a
legal holiday.
Cash Account: The Account which reflects the Compensation
deferred by a Director pursuant to Section 11.3.
Cash Credit: A credit to a Director's Cash Account,
expressed in whole dollars and fractions thereof, pursuant to
Section 11.3.
Closing Price: The closing price of the Common Stock on
the Composite Tape for New York Stock Exchange issues.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The committee appointed to administer the Plan
in accordance with Section 12.1 hereof.
Common Stock: Common Stock, par value $1.00 per share, of
Warner-Lambert.
Company: Warner-Lambert and its Affiliates.
Compensation: All cash remuneration payable to a Director
for services to the Company as a Director or as a consultant,
other than reimbursement for expenses, and shall include
retainer fees for service on, and fees for attendance at
meetings of, the Board and any committees thereof.
Deferred Compensation Account: An account established by
the Company for a Director under a Predecessor Plan.
Director: Any member of the Board of Directors who is not
an employee of the Company or any of its Affiliates.
Effective Date: The date specified in Article XV hereof.
Employee: Officers and other employees of the Company or
any of its Affiliates (including such persons who are also
members of the Board of Directors).
Fair Market Value: As used in the Plan, the term "Fair
Market Value" shall be the mean between the high and low sales
prices for Common Stock on the Composite Tape for New York
Stock Exchange issues on the date the calculation thereof shall
be made. In the event the date of calculation shall be a date
on which the Common Stock shall not trade on the New York Stock
Exchange, determination of Fair Market Value shall be made as
of the first date prior thereto on which the Common Stock shall
have traded on the New York Stock Exchange.
Grantee: A Participant to whom Rights have been granted
in accordance with the provisions of Articles IV and VI hereof.
Option: The grant to Participants of options to purchase
shares of Common Stock in accordance with the provisions of
Articles IV and V hereof.
Optionee: A Participant to whom one or more Options have
been granted in accordance with the provisions of Articles IV
and V hereof.
Option Period: The period of time during which an Option
may be exercised in accordance with the provisions hereof.
Option Price: The price per share payable to the Company
for shares of Common Stock upon the exercise of an Option.
Participant: Each Employee to whom a Stock Award is
granted under the Plan.
Performance Awards: Awards made to Employees in
accordance with the provisions of Article VIII hereof.
Plan: The Warner-Lambert Company 1992 Stock Plan.
Plan Year: The calendar year.
Predecessor Plans: The Warner-Lambert Directors' Fees
Deferral Plan, the Warner-Lambert Consulting Fees Deferral Plan
and the Deferred Compensation Plan for Directors of Warner-
Lambert Company.
Reference Option: An Option, other than an incentive
stock option, to which a Right shall relate.
Reporting Person: A person subject to the reporting
requirements of Section 16(a) of the Act, excluding former
officers and directors whose transactions in Common Stock are
no longer subject to Section 16 of the Act.
Restricted Period: The period of time from the date of
grant of Restricted Stock until the lapse of restrictions
attached thereto.
Restricted Stock: Common Stock granted under the Plan
which is subject to restrictions in accordance with the
provisions of Article VII hereof.
Right: The grant to Participants of rights to acquire
shares of Common Stock in accordance with the provisions of
Articles IV and VI hereof.
Secretary: The Secretary of Warner-Lambert.
Spread: The amount by which the Option Price that would
be payable by the Grantee upon the exercise of the Reference
Option is less than the Fair Market Value of a share of Common
Stock on the date the related Right was granted.
Stock Account: The Account which reflects the
Compensation deferred by a Director pursuant to Section 11.4.
Stock Award: A grant of Options, Rights, Restricted Stock
or Performance Awards in accordance with the provisions hereof.
Stock Credit: A credit to a Director's Stock Account,
expressed in whole shares and fractions thereof, pursuant to
Section 11.4.
Subsidiary: Any corporation (other than Warner-Lambert)
in an unbroken chain of corporations beginning with and
including Warner-Lambert if, at the time of the granting of a
Stock Award, each of the corporations other than the last
corporation in said unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
Valuation Date: The date on which a Right is exercised.
Warner-Lambert: Warner-Lambert Company or any successor
to it in ownership of substantially all of its assets, whether
by merger, consolidation or otherwise.
Article III
Eligibility and Grants
Section 3.1. Eligibility and Grants. The Committee shall
determine the Employees who shall be granted Stock Awards and
the number of shares thereof. The Committee may make more than
one grant to an Employee during the life of the Plan. Each
grant shall be evidenced by a written instrument duly executed
by or on behalf of the Company.
Section 3.2. Share Limitation. Stock Awards may not be
granted in any year which provide for the issuance of more than
1.75% of the shares of Common Stock outstanding (including
issued shares reacquired by the Company) on the January 1 of
the year of grant. Shares of Common Stock issued under the
Plan may be either authorized and unissued shares or issued
shares reacquired by the Company. Notwithstanding the above
limitation, in any year in which Stock Awards are granted which
provide for the issuance of less than the maximum permissible
number of shares, the balance of such unused shares shall be
added to the limitation in subsequent years. In addition, if
any Option granted under the Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full,
the corresponding number of unpurchased shares shall be added
to the limitation in subsequent years; provided, however, that
if such expired, terminated or cancelled Option shall have been
a Reference Option, none of such unpurchased shares shall again
become available for purposes of the Plan to the extent that
the related Right granted under the Plan is exercised.
Further, if any shares of Common Stock granted hereunder are
forfeited or such award otherwise terminates without the
delivery of such shares upon the lapse of restrictions, the
shares subject to such grant, to the extent of such forfeiture
or termination, shall be added to the limitation in subsequent
years so long as the Participant received no "benefits of
ownership" (within the meaning of Section 16 of the Act) in
connection with such grant. To the extent permitted by Section
16 of the Act, any shares of Common Stock issued under the Plan
through the assumption or substitution of outstanding grants
from an acquired company shall not reduce the shares available
under the Plan.
ARTICLE IV
General Terms of Options and Rights
Section 4.1. Consideration. The Committee shall
determine the consideration to the Company for the granting of
Options and Rights under the Plan, as well as the conditions,
if any, which it may deem appropriate to ensure that such
consideration will be received by, or will accrue to, the
Company, and, in the discretion of the Committee, such
consideration need not be the same, but may vary for Options
and Rights granted under the Plan at the same time or from time
to time.
Section 4.2. Number of Options and Rights.
(a) The Committee may grant more than one Option or
Right to an individual during the life of the Plan and, subject
to the requirements of Section 422 of the Code with respect to
incentive stock options, such Option or Right may be in
addition to, in tandem with, or in substitution for, options or
rights previously granted under the Plan or under another stock
plan of the Company or of another corporation and assumed by
the Company.
(b) The Committee may permit the voluntary surrender
of all or a portion of any Option granted under the Plan or any
prior plan to be conditioned upon the granting to the Employee
of a new Option for the same or a different number of shares as
the Option surrendered, or may require such voluntary surrender
as a condition precedent to a grant of a new Option to such
Employee. Such new Option shall be exercisable at the price,
during the period, and in accordance with any other terms or
conditions specified by the Committee at the time the new
Option is granted.
Section 4.3. Option and Right Agreements. The Company
shall effect the grant of Options and Rights under the Plan, in
accordance with determinations made by the Committee, by
execution of instruments in writing, in a form approved by the
Committee. Each Option and Right shall contain such terms and
conditions (which need not be the same for all Options and
Rights, whether granted at the same time or at different times)
as the Committee shall deem to be appropriate. The Committee
may, in its sole discretion, and subject to such terms and
conditions as it may adopt, accelerate the date or dates on
which some or all outstanding Options and Rights may be
exercised. Except as otherwise provided by the Committee,
Options and Rights shall be exercised by submitting to the
Company a signed copy of a notice of exercise in a form to be
supplied by the Company and the exercise of an Option or Right
shall be effective on the date on which the Company receives
such notice at its principal corporate offices.
Section 4.4. Non-Transferability of Option or Right. No
Option or Right granted under the Plan to an Employee shall be
transferable by the Employee otherwise than by will or by the
laws of descent and distribution or pursuant to a "qualified
domestic relations order" (as defined in the Code), and such
Option and Right shall be exercisable, during the Employee's
lifetime, only by such Employee.
Section 4.5. Optionees and Grantees not Stockholders. An
Optionee or Grantee or legal representative thereof shall have
none of the rights of a stockholder with respect to shares
subject to Options or Rights until such shares shall be issued
upon exercise of the Option or Right.
Section 4.6. Certain Events. (a) As used in the Plan, a
"Change in Control of Warner-Lambert" shall be deemed to have
occurred if (i) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Act is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of Warner-Lambert representing twenty
percent (20%) or more of the combined voting power of Warner-
Lambert's then outstanding securities, (ii) upon the
consummation of a merger, consolidation, sale or disposition of
all or substantially all of Warner-Lambert's assets or plan of
liquidation which is approved by the stockholders of Warner-
Lambert (a "Transaction"), or (iii) the composition of the
Board at any time during any consecutive twenty-four (24) month
period changes such that the Continuity Directors (as
hereinafter defined) cease for any reason to constitute at
least fifty-one percent (51%) of the Board. For purposes of
the foregoing clause (iii), "Continuity Directors" means those
members of the Board who either (a) were directors at the
beginning of such consecutive twenty-four (24) month period, or
(b)(1) filled a vacancy during such twenty-four (24) month
period created by reason of (x) death, (y) a medically
determinable physical or mental impairment which renders the
director substantially unable to function as a director or (z)
retirement at the last mandatory retirement age in effect for
at least two (2) years, and (2) were elected, nominated or
voted for by at least fifty-one percent (51%) of the current
directors who were also directors at the commencement of such
twenty-four (24) month period. Notwithstanding the provisions
of Article II hereof, upon the exercise of a Right during the
30-day period following Warner-Lambert obtaining actual
knowledge of a Change in Control of Warner-Lambert, "Fair
Market Value" of a share of Common Stock on the Valuation Date
shall be equal to the higher of (i) the highest closing sale
price per share of Common Stock of Warner-Lambert on the
Composite Tape for New York Stock Exchange issues during the
period commencing 30 days prior to such Change in Control and
ending immediately prior to such exercise or (ii) if the Change
in Control of Warner-Lambert occurs as a result of a tender or
exchange offer or consummation of a Transaction, then the
highest price per share of Common Stock pursuant thereto. Any
consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to the
applicable transaction shall be valued at the valuation placed
thereon by the Board. Adjustments, if any, shall be made in
accordance with Section 10.1 hereof.
(b) As used in the Plan, a "Merger of Equals" shall mean
either: (a) a Change in Control of Warner-Lambert Company,
pursuant to the terms of which the stockholders of Warner-
Lambert Company receive consideration, including securities,
with an Aggregate Value (as defined below) not greater than 115
percent of the average closing price of the Common Stock of
Warner-Lambert Company on the Composite Tape for New York Stock
Exchange issues for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction; or (b) any other Change in
Control of Warner-Lambert Company which the Board of Directors,
in its sole discretion, determines to be a "Merger of Equals"
for the purposes of this provision. For purposes of this
section, "Aggregate Value" shall mean the consideration to be
received by the stockholders of Warner-Lambert Company equal to
the sum of (A) cash, (B) the value of any securities and (C)
the value of any other non-cash consideration. The value of
securities received shall equal the average closing price of
the security on the principal security exchange on which such
security is listed for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction. For securities not traded on
a security exchange, and for any other non-cash consideration
that is received, the value of such security or such non-cash
consideration shall be determined by the Board of Directors.
ARTICLE V
Terms and Conditions of Options
Section 5.1. Types of Options. Options granted under the
Plan shall be in the form of (i) incentive stock options as
defined in Section 422 of the Code, or (ii) options not
qualifying under such section, or both, in the discretion of
the Committee. The status of each Option shall be identified
in the Option agreement.
Section 5.2. Option Price. The Option Price shall be
such as shall be fixed by the Committee, subject to adjustment
pursuant to Section 10.1 hereof. The date of the granting of
an Option under the Plan shall be the date fixed by the
Committee.
Section 5.3. Period of Option.
(a) No part of an Option may be exercised unless the
Optionee remains in the continuous employ of the Company for
the period of time specified by the Committee, except that upon
the occurrence of a Change in Control of Warner-Lambert all
Options may be exercised without giving effect to the period of
employment limitation and the limitations, if any, which may
have been imposed by the Committee pursuant to Section 5.3(b)
with respect to the percent of the total number of shares to
which the Option relates which may be purchased from time to
time during the Option Period.
(b) Options will be exercisable thereafter over the
Option Period, which, in the case of each Option, shall be a
period determined by the Committee and will be exercisable at
such times and in such amounts as determined by the Committee
at the time each Option is granted. Notwithstanding any other
provision contained in this Plan, no Option shall be
exercisable after the expiration of the Option Period. Except
as provided in Sections 5.4, 5.5 and 5.6 hereof, no Option may
be exercised unless the Optionee is then in the employ of the
Company and shall have been continuously so employed since the
date of the grant of such Option.
Section 5.4. Termination of Employment Before Age 55. An
Optionee whose employment terminates before age 55, by reason
other than death, shall be entitled to exercise such Option,
only within the three-month period after the date of such
termination of employment and in no event after the expiration
of the Option Period, and then only if and to the extent that
the Optionee was entitled to exercise the Option at the date of
the termination of employment, giving effect to the
limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period and have not been removed pursuant to Section
5.3(a).
Section 5.5. Termination of Employment On or After Age
55. An Optionee whose employment terminates on or after age
55, by reason other than death, shall be entitled to exercise
such Option if the Optionee was entitled to exercise the Option
at the date of the termination, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination, but
in no event after the expiration of the Option Period.
Section 5.6. Death of Optionee. If an Optionee should
die:
(a) while in the employ of the Company, the Option
theretofore granted shall, if the Optionee was entitled to
exercise the Option at the date of death, be exercisable by the
estate of the Optionee, or by a person who acquired the right
to exercise such Option by bequest or inheritance or by reason
of the death of the Optionee, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination, but
in no event after the expiration of the Option Period;
(b) within the three-month period after the date of
the termination of employment before age 55, the Option
theretofore granted shall be exercisable by the estate of the
Optionee, or by a person who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death
of the Optionee, but then only if and to the extent that the
Optionee was entitled to exercise the Option at the date of
death, giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Option relates which may be purchased from time to time
during the Option Period and have not been removed pursuant to
Section 5.3(a); provided, however, that such Option shall be
exercisable only within the twelve-month period next succeeding
the death of the Optionee and in no event after the expiration
of the Option Period; or
(c) after the date of the termination of employment
on or after age 55, the Option theretofore granted shall, if
the Optionee was entitled to exercise the Option at the date of
death, be exercisable by the estate of the Optionee, or by a
person who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the
Optionee, without, however, giving effect to the limitations,
if any, which may have been imposed by the Committee pursuant
to Section 5.3(b) with respect to the percent of the total
number of shares to which the Option relates which may be
purchased from time to time during the Option Period; provided,
however, that such Option shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Optionee provided such
death occurs before the later of (i) or (ii), but in no event
after the expiration of the Option Period.
Section 5.7. Payment for shares. Payment for shares of
Common Stock shall be made in full at the time of exercise of
the Option. Nothing herein shall be construed to prohibit the
Company from making a loan or advance to the Optionee for the
purpose of financing, in whole or in part, the purchase of
optioned shares. Payment of the Option Price shall be made in
cash or, with the consent of the Committee, in whole or in part
in Common Stock, Stock Awards or other consideration. Payment
may also be made by delivering a properly executed exercise
notice together with irrevocable instructions to a third party
to promptly deliver to the Company the amount of sale or loan
proceeds to pay the exercise price.
Section 5.8. Incentive Stock Options. Options granted in
the form of incentive stock options shall be subject, in
addition to the foregoing provisions, to the following
provisions:
(a) Annual Limit. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of the
Common Stock with respect to which incentive stock options are
exercisable for the first time by any Optionee during any
calendar year (under the Plan or under any other stock plan of
the Company) exceeds $100,000, such options shall be treated as
options which are not incentive stock options.
(b) Ten Percent Shareholder. No incentive stock
option shall be granted to any individual who, at the time of
the proposed grant, owns Common Stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of Warner-Lambert or any Subsidiary.
(c) Option Period. No incentive stock option shall
be exercisable after the expiration of ten years from the date
of grant.
(d) Option Price. The Option Price of an incentive
stock option shall not be less than the Fair Market Value per
share on the date of grant.
(e) Subsidiary. Incentive stock options may only be
granted to employees of Warner-Lambert and its Subsidiaries.
(f) Aggregate Limit. The aggregate number of shares
of Common Stock which may be issued pursuant to the exercise of
incentive stock options shall not exceed the lesser of (i)
10,000,000 shares or (ii) the number of shares determined in
accordance with the share limitation specified in Section 3.2
hereof.
The Company intends that Options designated by the Committee as
incentive stock options shall constitute incentive stock
options under Section 422 of the Code. Should any of the
foregoing provisions not be necessary in order to so comply or
should any additional provisions be required, the Committee may
amend the Plan accordingly, without the necessity of obtaining
the approval of stockholders of Warner-Lambert.
Section 5.9. Rollover Options. Notwithstanding anything
herein to the contrary, in the event of a Merger of Equals all
Options granted hereunder shall become immediately exercisable
by the Optionee and the Options shall be converted into options
to purchase the stock of the company which other shareholders
of Warner-Lambert Company receive in the transaction (the
"Rollover Options"). The Rollover Options shall be subject to
the same terms and conditions as those applicable to the
Options held prior to the Merger of Equals, including, but not
limited to, exercisability and Option Period, except as
hereinafter provided. If the Aggregate Value consists only of
shares of a publicly traded security ("New Security"), each
Rollover Option shall entitle the holder to purchase the number
of shares of New Security which is equal to the product of (a)
the Exchange Ratio (as hereinafter defined) and (b) the number
of shares of Common Stock subject to the Option immediately
prior to the effective date of the Merger of Equals (rounded to
the nearest full number of shares). The exercise price for
each Rollover Option shall be the exercise price per share of
each Option divided by the Exchange Ratio (rounded to the
nearest full cent). For purposes hereof, "Exchange Ratio"
shall mean the ratio for exchanging Common Stock held by the
stockholders of Warner-Lambert Company for shares of New
Security which is set forth in the definitive agreement
pertaining to the transaction. If the Aggregate Value consists
of consideration other than New Securities, the Board shall
make appropriate adjustments to the number of Rollover Options
and the exercise price thereof. In addition, with respect to
Options granted after March 25, 1997, if an optionee who is not
55 years old is terminated within three (3) years following the
Merger of Equals (for a reason other than "Termination for Just
Cause," as defined in the Warner-Lambert Company Enhanced
Severance Plan), such optionee's Options shall remain
exercisable notwithstanding such termination of employment by
the Company or any successor or its affiliates and such Options
shall be exercisable until two years following the termination
of employment, but in no event after the expiration of the
Option Period.
ARTICLE VI
Terms of Rights
Section 6.1. Relation to Option. Each Right shall relate
specifically to a Reference Option, then held by, or
concurrently granted to, the Grantee. Upon exercise of a Right
an amount shall be payable from Warner-Lambert, determined in
accordance with Section 6.3 hereof. The Reference Option shall
terminate to the extent that the related Right is exercised.
Section 6.2. Exercise of Right. A Right shall become
exercisable at such time, and in respect of such number of
shares of Common Stock, as the Reference Option is then
exercisable and such Right shall terminate upon termination of
the Reference Option, provided, however, that no Right shall be
exercisable unless the Grantee shall have remained in the
continuous employ of the Company for the period specified by
the Committee, except that upon the occurrence of a Change in
Control of Warner-Lambert, all Rights may be exercised without
giving effect to the period of employment limitation and the
limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period. Except as provided in this Section 6.2, and in
Sections 6.5 and 6.6, no Right shall be exercisable unless at
the time of such exercise the Grantee shall be in the employ of
the Company.
Section 6.3. Amount Payable Upon Exercise of Right. Upon
the exercise of a Right the amount payable shall be equal to:
(i) 100% of the Spread but not exceeding the
difference between the Option Price and the Fair Market
Value of a share of Common Stock on the Valuation Date;
plus
(ii) 125% of the amount, if any, by which the Fair
Market Value of a share of Common Stock on the Valuation
Date exceeds the Fair Market Value on the date the Right
was granted;
multiplied by the number of shares with respect to which the
Right is being exercised; provided, however, that the Committee
may grant Rights which provide that upon exercise the amount
payable shall be equal to 100% of the amount by which the Fair
Market Value of a share of Common Stock on the Valuation Date
exceeds the Fair Market Value on the date the Right was
granted.
Section 6.4. Form of Payment. The amount payable on
exercise of a Right shall be payable in cash, shares of Common
Stock valued at their Fair Market Value as of the Valuation
Date, or in any combination thereof; provided, however, that
the form of payment shall be in the sole discretion of the
Committee. In the event that any payment in the form of both
cash and shares of Common Stock is made to a Reporting Person,
the cash portion of such payment shall be made upon the Grantee
becoming taxable in respect of the Common Stock received upon
exercise of the Right. Notwithstanding the foregoing, a
payment, in whole or in part, of cash may be made to a
Reporting Person upon exercise of a Right only if the Right is
exercised (i) during the period beginning on the third business
day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of
the Company and ending on the twelfth business day following
such date, or (ii) during any other period permitted under the
provisions of Rule 16b-3 promulgated pursuant to the Act. In
addition, a payment of cash shall be made to a Reporting Person
who has held the Right at least six months from the date of its
grant promptly following a Change in Control of Warner-Lambert
which Change in Control is outside the control of any Reporting
Person within the meaning of the aforesaid Rule 16b-3. The
Company intends that this provision shall comply with the
requirements of Rule 16b-3 under the Act. Should this
provision not be necessary to comply with the requirements of
such Rule or should any additional provision be necessary in
order to comply with the requirements of such Rule, the
Committee may amend the Plan accordingly, without the necessity
of obtaining the approval of stockholders of the Company. Any
fraction of a share resulting from the above calculation shall
be disregarded.
Section 6.5. Termination of Employment. If, prior to the
expiration of a Reference Option, the employment of the Grantee
by the Company should terminate, by reason other than death,
the related Right shall terminate, except that if, after a
Grantee shall have remained in the employ of the Company for
the period specified by the Committee, such Grantee's
employment should terminate on or after age 55, the Right
theretofore granted shall be exercisable until the later of (i)
the three-year period after termination of employment, or (ii)
the period after termination of employment which is equal to
the number of full months that the Reference Option has been
outstanding prior to such termination, but in no event after
the expiration of the Option Period, without, however, giving
effect to the limitations, if any, which may have been imposed
by the Committee pursuant to Section 5.3(b) hereof.
Section 6.6. Death of Grantee. If a Grantee should die
prior to the termination of the Reference Option:
(a) while in the employ of the Company, the Right
theretofore granted shall, if the Grantee was entitled to
exercise the Right at the date of death, be exercisable by the
estate of the Grantee, or by a person who acquired the right to
exercise such Right by bequest or inheritance or by reason of
the death of the Grantee, without, however, giving effect to
the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) hereof with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period; provided, however, that such Right shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Reference Option has been outstanding prior to such
termination, but in no event after the expiration of the Option
Period; or
(b) after the date of the termination of employment
on or after age 55, the Right theretofore granted shall, if the
Grantee was entitled to exercise the Right at the date of
death, be exercisable by the estate of the Grantee, or by a
person who acquired the right to exercise such Right by bequest
or inheritance or by reason of the death of the Grantee,
without, however, giving effect to the limitations, if any,
which may have been imposed by the Committee pursuant to
Section 5.3(b) hereof with respect to the percent of the total
number of shares to which the Right relates which may be
purchased from time to time during the Option Period; provided,
however, that such Right shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Reference Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Grantee provided such death
occurs before the later of (i) or (ii), but in no event after
the expiration of the Option Period.
Section 6.7. Limited Rights. Notwithstanding anything
herein to the contrary, Limited Rights may be granted hereunder
by the Committee with respect to the options granted under this
Plan or any other stock option plan of the Company which shall
entitle the holder to receive a payment of cash promptly
following a Change in Control of Warner-Lambert which Change in
Control is outside the control of any Reporting Person within
the meaning of Rule 16b-3 under the Act. Such payment of cash
shall be made to a Reporting Person only if such person has
held such Limited Right at least six months from the date of
its grant. Promptly following any such Change in Control, the
Optionee shall be entitled to receive a cash payment equal to
the excess of the Fair Market Value of a share of Common Stock
on the Valuation Date over the Option Price of the related
Option multiplied by the number of shares with respect to which
the Limited Right relates (in such case the method of
determining the Fair Market Value in the third sentence of
Section 4.6(a) shall apply). Limited Rights shall expire on
the first to occur of their date of payment or expiration of
the Limited Right or the related Option. Further, upon payment
of a Limited Right, the related Option (and any other Right
related thereto) shall be cancelled. Except as otherwise
provided herein, the provisions of the Plan relating to Rights
shall also apply to Limited Rights.
ARTICLE VII
Terms And Conditions Of Restricted Stock
Section 7.1. General. The restrictions set forth in
Section 7.2 shall apply to each grant of Restricted Stock for
the duration of the Restricted Period.
Section 7.2. Restrictions. A stock certificate
representing the number of shares of Restricted Stock granted
shall be registered in the Participant's name but shall be held
in custody by the Company for the Participant's account. The
Participant shall have all rights and privileges of a
stockholder as to such Restricted Stock, including the right to
receive dividends and the right to vote such shares, except
that, subject to the provisions of Section 7.3, the following
restrictions shall apply: (i) the Participant shall not be
entitled to delivery of the certificate until the expiration of
the Restricted Period; (ii) none of the shares of Restricted
Stock may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period; (iii)
the Participant shall, if requested by the Company, execute and
deliver to the Company, a stock power endorsed in blank; and
(iv) all of the shares of Restricted Stock still subject to
restrictions shall be forfeited and all rights of the
Participant to such shares shall terminate without further
obligation on the part of the Company if the Participant ceases
to be an Employee prior to the expiration of the Restricted
Period applicable to such shares. Upon the forfeiture (in
whole or in part) of shares of Restricted Stock, such forfeited
shares shall become treasury shares of the Company without
further action by the Participant. The Participant shall have
the same rights and privileges, and be subject to the same
restrictions, with respect to any shares received pursuant to
Section 10.1 hereof.
Section 7.3. Terms and Conditions. The Committee shall
establish the terms and conditions, which need not be the same
for all grants made under the Plan, applicable to the
Restricted Stock, and which may include restrictions based upon
periods of time, performance (corporate, group, individual or
otherwise), combinations thereof or such other restrictions as
the Committee shall determine to be appropriate. The Committee
may provide for the restrictions to lapse with respect to a
portion or portions of the Restricted Stock at different times
or upon the occurrence of different events and the Committee
may waive, in whole or in part, any or all restrictions
applicable to a grant of Restricted Stock. Restricted Stock
awards may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
Section 7.4. Delivery of Restricted Shares. At the end
of the Restricted Period as herein provided, a stock
certificate for the number of shares of Restricted Stock with
respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the Participant or
the Participant's beneficiary or estate, as the case may be.
The Company shall not be required to deliver any fractional
share of Common Stock but shall pay, in lieu thereof, the fair
market value (measured as of the date the restrictions lapse)
of such fractional share to the Participant or the
Participant's beneficiary or estate, as the case may be.
Notwithstanding the foregoing, the Committee may authorize the
delivery of the Restricted Stock to a Participant during the
Restricted Period, in which event any stock certificates in
respect of shares of Restricted Stock thus delivered to a
Participant during the Restricted Period applicable to such
shares shall bear an appropriate legend referring to the terms
and conditions, including the restrictions, applicable thereto.
Section 7.5. Certain Events.
(a) In the event of a Change in Control of Warner-
Lambert the rights and privileges of Participants hereunder
shall be governed by the following clause (i), clause (ii) or
clause (iii), as appropriate:
(i) Value of Restricted Stock. All shares of
Restricted Stock then outstanding shall be immediately
forfeited and shall revert to the Company as treasury
shares and, in lieu thereof, each Participant shall
receive a cash payment equal to the Value of the
Restricted Stock (as hereinafter defined); provided,
however, that if the Participant is a Reporting Person at
the time of the Change in Control of Warner-Lambert, the
provisions of clause (ii) shall govern the rights and
privileges of such Participant.
(ii) Reporting Persons. All shares of
Restricted Stock previously granted to Participants who
are Reporting Persons at the time of the Change in Control
of Warner-Lambert, which Change in Control is outside the
control of any Reporting Person within the meaning of Rule
16b-3 under the Act, and which are then outstanding and
have been outstanding for a period of at least six (6)
months, shall be immediately forfeited and shall revert to
the Company as treasury shares and, in lieu thereof, such
Participant shall receive a cash payment equal to the
Value of the Restricted Stock.
(iii) Lapse of Restrictions. In the event that
clause (ii) shall not become operational with respect to a
Participant who is a Reporting Person, all restrictions
applicable to shares of Restricted Stock previously
granted to such Participant and then outstanding shall
expire and such shares shall thereupon be delivered to the
Participant free of all restrictions.
(b) As used in the Plan, the "Value of the
Restricted Stock" shall be the higher of (a) the highest
closing price per share of Common Stock on the Composite Tape
for New York Stock Exchange issues during the 30 day period
prior to the Change in Control of Warner-Lambert, or (b) if the
Change in Control of Warner-Lambert occurs as a result of a
tender or exchange offer or consummation of a Transaction, then
the highest price per share of Common Stock pursuant thereto,
multiplied by the total number of shares of Restricted Stock
granted to such Participant and then outstanding, regardless of
whether the restrictions applicable thereto shall have
previously lapsed. Any consideration other than cash forming a
part or all of the consideration for Common Stock to be paid
pursuant to the applicable transaction shall be valued at the
valuation placed thereon by the Board of Directors.
Adjustments, if any, shall be made in accordance with Section
10.1 hereof.
ARTICLE VIII
Terms and Conditions of Performance Awards
Section 8.1. Terms and Conditions. The Committee may
grant Performance Awards, determine the consideration therefor,
which may include prior efforts and accomplishments, and
establish the terms and conditions thereof, which may include
provisions based upon periods of time, performance (corporate,
group, individual or otherwise), combinations thereof or such
other provisions as the Committee may determine to be
appropriate. Performance Awards may consist of shares of
Common Stock or awards that are valued by reference to shares
of Common Stock (e.g., phantom stock or restricted stock
units), cash or such other measure as the Committee shall
determine. Performance Awards may provide for payment in
shares of Common Stock, cash, other property or any combination
thereof as determined by the Committee. Shares of Common Stock
issued pursuant to this Section 8.1 may be issued for no cash
consideration or for such minimum consideration as may be
required by applicable law. The Committee shall determine
whether payment shall be made in a lump sum, installments or
deferred. With respect to Performance Awards which are valued
by reference to shares of Common Stock, the Committee shall
also determine whether the Participant may be entitled to
receive a payment of, or credit equivalent to, any dividends
payable with respect to such shares of Common Stock and the
terms and conditions applicable thereto. Further, if a payment
of cash is to be made on a deferred basis, the Committee shall
establish whether interest shall be credited, the rate thereof
and any other terms and conditions applicable thereto. The
limitations on transfer set forth in Section 4.4 shall be
applicable to all Performance Awards.
ARTICLE IX
Regulatory Compliance and Listing
Section 9.1. Regulatory Compliance and Listing. The
issuance or delivery of any Stock Awards and shares of Common
Stock pursuant thereto may be postponed by the Company for such
periods as may be required to comply with any applicable
requirements under the Federal securities laws, any applicable
listing requirements of any national securities exchange or any
requirements under any other law or regulation applicable
thereto, and the Company shall not be obligated to issue or
deliver any such awards or 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.
ARTICLE X
Adjustment in Event of Changes in Capitalization
Section 10.1. Adjustments. In the event of a
recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, rights offering,
reorganization, liquidation, or the sale, conveyance, lease or
other transfer by Warner-Lambert of all or substantially all of
its property, or any other change in the corporate structure or
shares of Warner-Lambert, the Committee may make such equitable
adjustments to prevent dilution or enlargement of rights as it
may deem appropriate, including adjustments (i) in the number
and class of shares authorized to be granted hereunder,
(including adjustment to the share limitation of Section 3.2
hereof), (ii) in the number and kind of shares available under
any outstanding Stock Awards (including substitution of shares
of another corporation), (iii) in the price of any Option, and
(iv) in the number of Stock Credits in each Director's Stock
Account; provided, however, that in no event may any change be
made to an incentive stock option which would constitute a
"modification" within the meaning of Section 425(h)(3) of the
Code. Stock Awards granted under the Plan shall contain such
provisions as are consistent with the foregoing with respect to
adjustments to be made in the number and kind of shares covered
thereby and in the Option Price in the event of any such
change.
ARTICLE XI
Directors' Deferred Compensation
Section 11.1. Election To Participate.
(a) Each Director may elect to defer payment of all
or any portion of his or her Compensation that is payable
during the immediately succeeding Plan Year. Such election
must be made with respect to all Compensation payable in such
succeeding Plan Year by the date established by the Secretary
of the Company but in no event later than December 31 of such
preceding Plan Year.
(b) An election to defer any Compensation shall be:
(i) in writing, (ii) delivered to the Secretary, and (iii)
irrevocable. A Director may file a new election each Plan Year
applicable to the immediately succeeding Plan Year. If no
election or revocation of a prior election is received by such
date as may be permissible under the preceding paragraph, the
election, if any, in effect for such Plan Year will continue to
be effective for the immediately succeeding Plan Year. If a
Director does not elect to defer Compensation payable during a
Plan Year, all such Compensation shall be paid directly to such
Director in accordance with resolutions adopted by the Board
from time to time.
Section 11.2. Mode of Deferral. A Director who has
elected to defer all or a portion of his or her Compensation as
provided in Section 11.1 hereof may further elect to have such
deferred amounts credited to a Cash Account, a Stock Account,
or a combination of both such Accounts. The Secretary shall
maintain such Accounts in the name of the Director. The
election referred to in this Section 11.2 may be made once per
year and shall become effective on the January 1st which
follows such election; provided, however, that no election to
defer amounts into the Stock Account shall become effective
unless the transaction qualifies as exempt under Rule 16b-3(d)
under the Act. Any such election shall be specified in a
writing delivered by the Director to the Secretary and shall be
irrevocable. If a Director fails to elect the Account to which
deferral shall be made or if any such election would result in
a transaction which would not qualify as exempt under Rule 16b-
3(d) under the Act, he or she shall be deemed to have elected
deferral to the Cash Account. In addition, a Director may
cease deferring amounts into the Stock Account at any time by
written notice delivered to the Secretary and thereafter such
amounts shall be credited to the Cash Account. Compensation
deferred to a Cash Account or Stock Account shall result in
Cash Credits or Stock Credits, respectively.
Section 11.3. Cash Account. The Cash Account of a
Director shall be credited, as of the day the deferred
Compensation otherwise would have been payable to such
Director, with Cash Credits equal to the dollar amount of such
deferred Compensation. The Cash Account shall be adjusted and
increased each year, as if interest was credited thereon, at
the rate utilized for adjusting deferred bonus accounts under
the Warner-Lambert Company Incentive Compensation Plan.
Section 11.4. Stock Account. The Stock Account of a
Director shall be credited, as of the day the deferred
Compensation otherwise would have been payable to such
Director, with Stock Credits equal to the number of shares of
Common Stock (including fractions of a share) that could have
been purchased with the amount of such deferred Compensation at
the Closing Price of shares of Common Stock on the day the
deferred Compensation otherwise would have been payable to such
Director. As of the date of any dividend record date for the
Common Stock, the Director's Stock Account shall be credited
with additional Stock Credits equal to the number of shares of
Common Stock (including fractions of a share) that could have
been purchased, at the Closing Price of shares of Common Stock
on such date, with the amount which would have been paid as
dividends on that number of shares (including fractions of a
share) of Common Stock which is equal to the number of Stock
Credits then attributed to the Director's Stock Account;
provided, however, that in the event that there is not then in
effect an election under Section 11.2 hereof to have any of
such Director's Compensation credited to a Stock Account and,
further, that the Director has elected under Section 11.5(a)
hereof to transfer his or her Stock Account to a Cash Account
then the amount which would have been credited to the Stock
Account in accordance with this sentence but for this proviso
shall instead be credited to such Director's Cash Account. In
the case of dividends paid in property other than cash, the
amount of the dividend shall be deemed to be the fair market
value of the property at the time of the payment of the
dividend, as determined in good faith by the Committee.
Section 11.5. Conversions.
(a) Stock Account to Cash Account. A Director may
elect to convert all or any portion of his or her Stock Account
to his or her Cash Account; provided, however, that no such
election shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(f) under the Act. The
amount to be credited to such Director's Cash Account shall be
obtained by multiplying the number of Stock Credits credited to
his or her Stock Account as of the last day of the month in
which such election is made by the Closing Price of shares of
Common Stock on such date.
(b) Cash Account to Stock Account. A Director may
elect to convert all or any portion of his or her Cash Account
to his or her Stock Account; provided, however, that no such
election shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(f) under the Act. The
number of Stock Credits to be credited to such Director's Stock
Account shall be obtained by dividing the number of Cash
Credits credited to his or her Cash Account as of the last day
of the month in which such election is made by the Closing
Price of shares of Common Stock on such date.
(c) An election under this Section 11.5 shall be in
a writing delivered to the Secretary and may be revoked or
revised at any time prior to the last day of the month in which
the election is made.
Section 11.6. Distribution of Cash Account or Stock
Account.
(a) Distributions in respect of a Director's Cash
Account and Stock Account shall become payable in full to such
Director, annually, over a period of ten (10) years, except as
otherwise agreed to by the Committee and the Director,
beginning with the first day of the calendar year following the
year in which the individual ceases to be a member of the Board
of Directors.
(b) Distributions in respect of a Director's Cash
Account and Stock Account shall be made only in cash.
Section 11.7. Installment Amount.
(a) The amount of each distribution with respect to
a Director's Cash Account shall be the amount obtained by
multiplying the balance in such Account by a fraction, the
numerator of which is one (1) and the denominator of which is
the number of years in which distributions remain to be made
(including the current distribution).
(b) The amount of each distribution with respect to
a Director's Stock Account shall be the amount obtained by
multiplying the number of Stock Credits attributable to such
installment (determined as hereinafter provided) by the average
of the Closing Prices of shares of Common Stock on each
Business Day in the month immediately prior to the month in
which such installment is to be paid. The number of Stock
Credits attributable to an installment shall be equal to the
amount obtained by multiplying the current number of Stock
Credits in such Stock Account by a fraction, the numerator of
which is one (1) and the denominator of which is the number of
years in which distributions remain to be made (including the
current distribution).
Section 11.8. Financial Hardship. Notwithstanding any
other provision hereof, at the written request of a Director or
a Director's legal representative, the Committee, in its sole
discretion, upon a finding that continued deferral will result
in financial hardship to the Director, may authorize (i) the
payment of all or a part of a Director's Accounts in a single
installment prior to his or her ceasing to be a Director or
(ii) the acceleration of payment of any multiple installments
thereof; provided, however, that Directors may not receive
distributions under this Section 11.8 if such distribution
would result in liability of the Director under Section 16 of
the Act.
Section 11.9. Distribution upon Death. Upon the death of
a Director, the Committee shall pay all of such Director's Cash
Account and Stock Account in a single installment to the
beneficiary designated by the Director. All such designations
shall be made in writing and delivered to the Secretary. A
Director may from time to time revoke or change any such
designation by written notice to the Secretary. If there is no
designation on file with the Secretary at the time of the
Director's death, or if the beneficiary designated therein
shall have predeceased the Director, such distributions shall
be made to the executor or administrator of the Director's
estate. Any distribution under this Section 11.9 shall be made
as soon as practicable following notification to the Committee
of the Director's death and the value of the Stock Account for
the purpose of such distribution shall be based upon the
Closing Price of shares of Common Stock on the date of the
Director's death.
Section 11.10. Certain Events. Notwithstanding any other
provision hereof, in the event of a Change in Control of
Warner-Lambert which is outside of the control of any Reporting
Person within the meaning of Rule 16b-3 under the Act, the
balance in the Stock Account of each Director shall be
converted to the Cash Account. For this purpose, the balance
in the Stock Account shall be determined by multiplying the
number of Stock Credits by the higher of (i) the highest
Closing Price during the period commencing 30 days prior to
such Change in Control or (ii) if the Change in Control of
Warner-Lambert occurs as a result of a tender or exchange offer
or consummation of a Transaction, then the highest price per
share of Common Stock pursuant thereto. Any consideration
other than cash forming a part or all of the consideration for
Common Stock to be paid pursuant to the applicable transaction
shall be valued at the valuation placed thereon by the Board of
Directors. Adjustments, if any, shall be made in accordance
with Article X hereof. Within 30 days after a Change in
Control of Warner-Lambert, each Director may designate a
distribution schedule which may provide for a lump sum payment
or installment payments over a period of up to 15 years,
provided, however, that no payment shall be made for a period
of one year after the Change in Control. In the event that a
Director shall not make a designation in accordance with the
preceding sentence, the balance in the Cash Account shall be
distributed in a lump sum one year after the Change in Control.
Section 11.11. Valuations. Notwithstanding any other
provision hereof, in any instance in which a Director's Stock
Account is to be valued by reference to the Closing Price of
shares of Common Stock on a single day, the Committee may
declare such price to be unrepresentative of the market value
of such Common Stock and, in lieu thereof, shall base such
valuation on the average of the Closing Prices of shares of
Common Stock on each Business Day during the calendar quarter
ending coincident with or immediately preceding the day which
would otherwise serve as the basis for the valuation.
Section 11.12. Funding. The Company's sole obligation to
a Director or any person claiming under or through any Director
in respect of the payment of any balance in an Account shall be
solely a contractual obligation in accordance with the terms of
the Plan. No promise hereunder shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the
satisfaction of such promises.
Section 11.13. Status of Stock Credits. Stock Credits
are not, and do not constitute, shares of Common Stock, and no
right as a holder of shares of Common Stock shall devolve upon
a Director by reason of his or her participation in the Plan.
Section 11.14. Non-Trading Date. In the event that the
date of the determination of a Closing Price hereunder shall be
a date which shall not be a date on which the Common Stock is
traded on the New York Stock Exchange, determination of such
Closing Price shall be made as of the first date thereafter on
which the Common Stock is so traded.
Section 11.15. No Right To Reelection. Nothing in the
Plan shall be deemed to create any obligation on the part of
the Board to nominate any Director for reelection by the
Company's stockholders, nor confer upon any Director the right
to remain a member of the Board of Directors.
Section 11.16. Predecessor Plans. Upon the Effective
Date of the Plan, no further benefits shall accrue under any
Predecessor Plans, except as provided in Section 11.18 hereof.
Section 11.17. Deferred Compensation Accounts. Upon the
Effective Date of the Plan, all Deferred Compensation Accounts
shall become subject to the terms and conditions of this Plan
in lieu of the terms and conditions of the Predecessor Plans,
except as provided in Section 11.18 hereof.
Section 11.18. Retired Directors. Benefits accrued under
Predecessor Plans which are in pay status on the Effective Date
shall continue to be paid in accordance with the provisions of
the Predecessor Plans.
Section 11.19. Federal Securities Law. The Company
intends that the provisions of this Article XI, and all
transactions effected in accordance with this Article XI, shall
comply with Rule 16b-3 under the Act. In the event that any
provision of this Article XI is not necessary to so comply or
any additional provision is necessary to obtain or maintain
such compliance, the Committee is authorized to revise the Plan
accordingly without obtaining approval of the stockholders of
Warner-Lambert. By way of illustration, and not limitation,
the Committee may bifurcate the provisions of this Article XI,
and such other provisions as it shall deem necessary, into a
separate plan (which plan shall be recognized as having
received approval of the stockholders of Warner-Lambert), if
the Committee shall deem such action necessary to maintain
qualification of Article XI (and transactions thereunder) under
Rule 16b-3 under the Act and the qualification of the
provisions of the Plan affecting Employees (and transactions
thereunder) under Rule 16b-3 under the Act.
ARTICLE XII
Administration
Section 12.1. Administration.
(a) The Plan shall be administered by a committee
consisting of not less than three members of the Board of
Directors, who shall be appointed by, and shall serve at the
pleasure of, the Board of Directors. No person who is or,
within one year prior thereto, has been eligible to receive an
award under the Plan or any other plan of the Company which
would result in loss of "disinterested person" status within
the meaning of Section 16 of the Act may be a member of the
Committee, and no person may be granted a Stock Award while a
member of the Committee. A majority of the Committee shall
constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present, expressed
from time to time by a vote at a meeting (including a meeting
held by telephone conference call or in which one or more
members of the Committee participate by telephone), or acts
approved in writing by a majority of the Committee, shall be
the acts of the Committee.
(b) In addition to the Committee's discretionary
authority set forth in other Articles hereof, the Committee has
discretionary authority to construe and interpret the Plan and
is authorized to establish such rules and regulations for the
proper administration of the Plan as it may deem advisable and
not inconsistent with the provisions of the Plan. All
questions arising under the Plan or under any rule or
regulation with respect to the Plan adopted by the Committee,
whether such questions involve an interpretation of the Plan or
otherwise, shall be decided by the Committee, and its decisions
shall be conclusive and binding in all cases.
(c) The Committee has discretionary authority to
determine the Employees to whom Stock Awards under the Plan are
to be granted, the terms and conditions applicable thereto and
the number of shares to be covered by each award. In selecting
the individuals to whom Stock Awards shall be granted, as well
as in determining the terms and conditions applicable thereto
and the number of shares subject to each grant, the Committee
shall consider the positions and responsibilities of the
Employees being considered, the nature of the services and
accomplishments of each, the value to the Company of their
services, their present and potential contribution to the
success of the Company, the anticipated number of years of
service remaining and such other factors as the Committee may
deem relevant. The Committee may obtain such advice or
assistance as it deems appropriate from persons not serving on
the Committee.
Section 12.2. Stock Awards Committee. In addition, and not
in limitation of the authority of the Committee, the Stock Awards
Committee (as hereinafter constituted) may grant Stock Awards, in
accordance with the provisions of the Plan, including the
establishment of the terms and conditions thereof and the
consideration to the Company therefor, to Employees who, at the
time of the grant, are not Reporting Persons. The Stock Awards
Committee, whose members need not serve on the Board of
Directors, shall be appointed by, and shall serve at the pleasure
of, the Committee. A majority of the Stock Awards Committee
shall constitute a quorum and the acts of a majority of the
members present at any meeting at which a quorum is present,
expressed from time to time by a vote at a meeting (including a
meeting held by telephone conference call or in which one or more
members of the Stock Awards Committee participate by telephone),
or acts approved in writing by a majority of the Stock Awards
Committee, shall be the acts of the Stock Awards Committee.
Notwithstanding the foregoing, the Stock Awards Committee may not
undertake any action which the provisions of Rule 16b-3,
promulgated pursuant to the Act, require to be undertaken by
"Non-Employee Directors" (as defined in said Rule) as a condition
of the continued qualification of the Plan (and transactions
thereunder) under Rule 16b-3.
ARTICLE XIII
Termination or Amendment of the Plan
Section 13.1. Termination or Amendment.
(a) The Board may at any time terminate the Plan and
may from time to time alter or amend the Plan or any part thereof
(including any amendment deemed necessary to ensure that the
Company may comply with any regulatory requirement referred to in
Article IX); provided, however, that, unless otherwise required
by law, the rights of a Participant with respect to Stock Awards
granted or the rights of a Director with respect to his or her
Accounts prior to such termination, alteration or amendment may
not be impaired without the consent of such Participant or
Director, as the case may be, and, provided further, without the
approval of the Company's stockholders, no alteration or
amendment may be made which would require approval of such
stockholders as a condition of compliance with Rule 16b-3 under
the Act. The Company intends that the Plan (and transactions
thereunder) shall comply with the requirements of Rule 16b-3
promulgated pursuant to the Act. Should any provisions hereof
not be necessary in order to comply with the requirements of such
Rule or should any additional provisions be necessary in order to
so comply, the Committee may amend the Plan accordingly, without
the necessity of obtaining approval of the stockholders of
Warner-Lambert.
(b) The Committee may at any time adopt any amendment
to the Plan which (i)(A) does not increase Plan liabilities by an
amount in excess of five million dollars ($5,000,000) and does
not increase Plan expense by an amount in excess of five hundred
thousand dollars ($500,000) or (B) is required by an applicable
law, regulation or ruling, (ii) can be undertaken by the Board of
Directors under the terms of the Plan, (iii) does not involve a
termination of the Plan, (iv) does not affect the limitations
contained in this sentence, and (v) does not affect the
composition or compensation of the Committee.
(c) The Committee shall have the power to cancel all
Rights theretofore granted pursuant to the Plan in the event that
it shall determine that the accounting effects of the grant or
exercise of Rights under the Plan would not be in the best
interests of the Company.
(d) Any action which may be undertaken by the
Committee pursuant to the terms hereof may be undertaken by the
Board, except as provided in Rule 16b-3 promulgated pursuant to
the Act.
ARTICLE XIV
Miscellaneous
Section 14.1. No Right To Employment. Nothing in the Plan
shall be deemed to confer upon any Participant the right to
remain in the employ of the Company.
Section 14.2. Withholding of Taxes.
(a) The Company shall have the right to require, prior
to the issuance or delivery of any shares of Common Stock or the
payment of any cash hereunder, payment by the Participant or the
Director, as the case may be, of any taxes required by law with
respect thereto.
(b) The Committee may permit any such withholding
obligation to be satisfied by reducing the number of shares of
Common Stock otherwise deliverable. A Reporting Person may elect
to have a sufficient number of shares of Common Stock withheld to
fulfill such tax obligations (hereinafter a "Withholding
Election") only if the election complies with the following
conditions: (x) the Withholding Election shall be subject to the
disapproval of the Committee and (y) the Withholding Election is
made (i) during the period beginning on the third business day
following the date of release for publication of the quarterly or
annual summary statements of sales and earnings of the Company
and ending on the twelfth business day following such date, or
(ii) during any other period in which a Withholding Election may
be made under the provisions of Rule 16b-3 promulgated pursuant
to the Act. Any fraction of a share of Common Stock required to
satisfy such tax obligations shall be disregarded and the amount
due shall be paid instead in cash by the Participant.
Section 14.3. No Assignment of Benefits. No benefit
payable under the Plan shall, except as otherwise specifically
provided by law, be subject in any manner to anticipation,
alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
attach, sell, transfer, assign, pledge, encumber or charge any
such benefit shall be void, and any such benefit shall not in any
manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment
or legal process for or against such person. If any person
entitled to a benefit hereunder shall be adjudicated a bankrupt
or shall attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge such benefit, or if any attempt is
made to subject any such benefit to the debts, contracts,
liabilities, engagements or torts of any person entitled to such
benefit, then such benefit shall, in the discretion of the
Committee, cease and terminate, and in that event the Committee
may cause such benefit, or any part thereof, to be held or
applied for the benefit of such person, his or her spouse,
children or other dependents, or any of them, in such manner and
in such proportion as the Committee shall determine.
Section 14.4. Death; Disability; Termination. The
Committee shall establish the provisions which shall govern in
the event of the death, disability, or termination (including
layoff) of a Participant or a Director, which provisions may be
different than the provisions otherwise described herein with
respect to death, disability, and termination. If, for any
reason, the Committee shall determine that it is not desirable
because of the incapacity of the person who shall be entitled to
receive any payments hereunder, to make such payments directly to
such person, the Committee may apply such payment for the benefit
of such person in any way that the Committee shall deem advisable
or may make any such payment to any third person who, in the
judgment of the Committee, will apply such payment for the
benefit of the person entitled thereto. In the event of such
payment, the Company, the Board of Directors and the Committee
shall be discharged from all further liability therefor. The
employment of an Employee who becomes disabled shall be deemed
terminated for purposes of the Plan as of the date benefit
payments would have commenced under the Warner-Lambert Long Term
Disability Benefits Plan had the Participant been enrolled in
such plan, except as otherwise provided herein. Absence on leave
approved by the Company shall not be considered an interruption
of employment for any purpose of the Plan.
Section 14.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on the New
York Stock Exchange, the issue of any shares of stock pursuant to
a Stock Award shall be conditioned upon the shares so to be
issued being listed on such Exchange. Warner-Lambert shall make
application for listing on such Exchange unlisted shares subject
to Stock Awards, but shall have no obligation to issue such
shares unless and until such shares are so listed, and the right
to exercise any Option or Right with respect to such shares shall
be suspended until such listing has been effected.
(b) If at any time counsel to Warner-Lambert shall be
of the opinion that any sale or delivery of shares of Common
Stock pursuant to a Stock Award is or may in the circumstances be
unlawful under the statutes, rules or regulations of any
applicable jurisdiction, Warner-Lambert shall have no obligation
to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the
Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or Stock Awards, and the right to exercise
any Option or Right shall be suspended until, in the opinion of
said counsel, such sale or delivery shall be lawful.
(c) Upon termination of any period of suspension under
this Section 14.5, any Stock Award affected by such suspension
which shall not then have expired or terminated shall be
reinstated as to all shares available before such suspension and
as to shares which would otherwise have become available during
the period of such suspension, but no such suspension shall
extend any Option Period.
Section 14.6. Governing Law. This Plan shall be governed
by the law of the State of New Jersey (regardless of the law that
might otherwise govern under applicable New Jersey principles of
conflict of laws).
Section 14.7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as though
they were also used in the feminine gender in all cases where
they would so apply, and wherever any words are used herein in
the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so
apply.
Section 14.8. Laws of Foreign Jurisdictions. Without
amending the Plan, but subject to the limitations specified in
Article XIII hereof, the Committee may grant, amend, administer,
annul or terminate Stock Awards on such terms and conditions,
which may be different from those specified in the Plan, as it
may deem necessary or desirable to make available tax or other
benefits of the laws of any foreign jurisdiction.
Section 14.9. Other Plans. Nothing contained herein shall
prevent the Company from adopting additional compensation plans
or arrangements.
Section 14.10. Federal Securities Law. Notwithstanding any
other provision of the Plan, no transaction shall be given effect
on any date which would, in the opinion of counsel to the
Company, result in liability under Section 16(b) of the Act.ARTICLE
XV
Effective Date; Term of Plan
Section 15.1. Effective Date. The Plan shall be submitted
to the stockholders of Warner-Lambert for their approval at the
Annual Meeting of Stockholders to be held in 1992. The Plan
shall become effective upon the affirmative vote of the holders
of a majority of the shares of Common Stock present, or
represented, and entitled to vote at the meeting.
Section 15.2. Term of Plan. No Stock Awards may be granted
hereunder after April 28, 1997. This Section 15.2 shall not
affect any Stock Award granted prior to such date. Further, the
provisions of Article XI hereof (as amended from time to time)
are ongoing and shall continue until terminated by the Board.
WARNER-LAMBERT COMPANY
WARNER-LAMBERT COMPANY
1996 STOCK PLAN
As Amended to March 25, 1997
<PAGE>
WARNER-LAMBERT COMPANY
1996 STOCK PLAN
ARTICLE I
Purpose of Plan
Section 1.1. Purpose.
(a) The purpose of the 1996 Stock Plan is to provide
additional incentive to selected officers and other employees
of the Company (as hereinafter defined), to recognize and
reward their efforts and accomplishments in order to strengthen
the desire of employees to remain with the Company and
stimulate their efforts on behalf of the Company and to attract
and retain persons of competence, and, by encouraging ownership
of a stock interest in the Company, to gain for the Company the
advantages inherent in employees having a sense of
proprietorship.
(b) In addition, the Plan (as hereinafter defined)
will assist in the attraction and retention of non-employee
members of the Board of Directors by providing the opportunity
for such Directors to obtain a proprietary interest in the
Company's success and progress and with increased flexibility
in the timing of the receipt of fees for services on, and
attending meetings of, the Board of Directors and committees
thereof.
ARTICLE II
Definitions
Section 2.1. Definitions. Whenever used herein, unless
the context otherwise indicates, the following terms shall have
the respective meaning set forth below:
Account: A Cash Account or a Stock Account.
Act: The Securities Exchange Act of 1934, as amended.
Affiliate: Any corporation, partnership, association,
joint-stock company, business trust, joint venture or
unincorporated organization controlled, directly or indirectly,
by Warner-Lambert. Warner-Lambert shall be deemed to control
any such entity if Warner-Lambert possesses, directly or
indirectly, the power to direct or cause the direction of its
management and policies, whether through the ownership of
voting securities, by contract or otherwise.
Board of Directors (or Board): The Board of Directors of
Warner-Lambert.
Business Day: A day except for a Saturday, Sunday or a
legal holiday.
Cash Account: The Account which reflects the Compensation
deferred by a Director pursuant to Section 11.3.
Cash Credit: A credit to a Director's Cash Account,
expressed in whole dollars and fractions thereof, pursuant to
Section 11.3.
Closing Price: The closing price of the Common Stock on
the Composite Tape for New York Stock Exchange issues.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The committee appointed to administer the Plan
in accordance with Section 12.1 hereof.
Common Stock: Common Stock, par value $1.00 per share, of
Warner-Lambert.
Company: Warner-Lambert and its Affiliates.
Compensation: All cash remuneration payable to a Director
for services to the Company as a Director or as a consultant,
other than reimbursement for expenses, and shall include
retainer fees for service on, and fees for attendance at
meetings of, the Board and any committees thereof.
Deferred Compensation Account: An account established by
the Company for a Director under a Predecessor Plan.
Director: Any member of the Board of Directors who is not
an employee of the Company or any of its Affiliates.
Effective Date: The date specified in Article XV hereof.
Employee: Officers and other employees of the Company or
any of its Affiliates (including such persons who are also
members of the Board of Directors).
Fair Market Value: As used in the Plan, the term "Fair
Market Value" shall be the mean between the high and low sales
prices for Common Stock on the Composite Tape for New York
Stock Exchange issues on the date the calculation thereof shall
be made. In the event the date of calculation shall be a date
on which the Common Stock shall not trade on the New York Stock
Exchange, determination of Fair Market Value shall be made as
of the first date prior thereto on which the Common Stock shall
have traded on the New York Stock Exchange.
Grantee: A Participant to whom Rights have been granted
in accordance with the provisions of Articles IV and VI hereof.
Option: The grant to Participants of options to purchase
shares of Common Stock in accordance with the provisions of
Articles IV and V hereof.
Optionee: A Participant to whom one or more Options have
been granted in accordance with the provisions of Articles IV
and V hereof.
Option Period: The period of time during which an Option
may be exercised in accordance with the provisions hereof.
Option Price: The price per share payable to the Company
for shares of Common Stock upon the exercise of an Option.
Participant: Each Employee to whom a Stock Award is
granted under the Plan.
Performance Awards: Awards made to Employees in
accordance with the provisions of Article VIII hereof.
Plan: The Warner-Lambert Company 1996 Stock Plan.
Plan Year: The calendar year.
Predecessor Plans: The Warner-Lambert Directors' Fees
Deferral Plan, the Warner-Lambert Consulting Fees Deferral
Plan, the Deferred Compensation Plan for Directors of Warner-
Lambert Company and the Warner-Lambert 1992 Stock Plan.
Reference Option: An Option, other than an incentive
stock option, to which a Right shall relate.
Reporting Person: A person subject to the reporting
requirements of Section 16(a) of the Act, excluding former
officers and directors whose transactions in Common Stock are
no longer subject to Section 16 of the Act.
Restricted Period: The period of time from the date of
grant of Restricted Stock until the lapse of restrictions
attached thereto.
Restricted Stock: Common Stock granted under the Plan
which is subject to restrictions in accordance with the
provisions of Article VII hereof.
Right: The grant to Participants of rights to acquire
shares of Common Stock in accordance with the provisions of
Articles IV and VI hereof.
Secretary: The Secretary of Warner-Lambert.
Spread: The amount by which the Option Price that would
be payable by the Grantee upon the exercise of the Reference
Option is less than the Fair Market Value of a share of Common
Stock on the date the related Right was granted.
Stock Account: The Account which reflects the
Compensation deferred by a Director pursuant to Section 11.4.
Stock Award: A grant of Options, Rights, Restricted Stock
or Performance Awards in accordance with the provisions hereof.
Stock Credit: A credit to a Director's Stock Account,
expressed in whole shares and fractions thereof, pursuant to
Section 11.4.
Subsidiary: Any corporation (other than Warner-Lambert)
in an unbroken chain of corporations beginning with and
including Warner-Lambert if, at the time of the granting of a
Stock Award, each of the corporations other than the last
corporation in said unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
Valuation Date: The date on which a Right is exercised.
Warner-Lambert: Warner-Lambert Company or any successor
to it in ownership of substantially all of its assets, whether
by merger, consolidation or otherwise.
Article III
Eligibility and Grants
Section 3.1. Eligibility and Grants. The Committee shall
determine the Employees who shall be granted Stock Awards and
the number of shares thereof. The Committee may make more than
one grant to an Employee during the life of the Plan. Each
grant shall be evidenced by a written instrument duly executed
by or on behalf of the Company.
Section 3.2. Share Limitation.
(a) Stock Awards may not be granted in any year
which provide for the issuance of more than 1.65% of the shares
of Common Stock outstanding (including issued shares reacquired
by the Company) on the January 1 of the year of grant.
Restricted Stock may not be granted in any year for more than
20% of the shares authorized under the preceding sentence.
Shares of Common Stock issued under the Plan may be either
authorized and unissued shares or issued shares reacquired by
the Company. Notwithstanding the above limitation, in any year
in which Stock Awards (including Restricted Stock) are granted
which provide for the issuance of less than the maximum
permissible number of shares, the balance of such unused shares
shall be added to the limitation in subsequent years. In
addition, if any Option granted under the Plan shall expire,
terminate or be cancelled for any reason without having been
exercised in full, the corresponding number of unpurchased
shares shall be added to the limitation in subsequent years;
provided, however, that if such expired, terminated or
cancelled Option shall have been a Reference Option, none of
such unpurchased shares shall again become available for
purposes of the Plan to the extent that the related Right
granted under the Plan is exercised. Further, if any shares of
Common Stock granted hereunder are forfeited or such award
otherwise terminates without the delivery of such shares upon
the lapse of restrictions, the shares subject to such grant, to
the extent of such forfeiture or termination, shall be added to
the limitation in subsequent years so long as the Participant
received no "benefits of ownership" (within the meaning of
Section 16 of the Act) in connection with such grant. To the
extent permitted by Section 16 of the Act, any shares of Common
Stock issued under the Plan through the assumption or
substitution of outstanding grants from an acquired company
shall not reduce the shares available under the Plan.
(b) Stock Awards may not be granted in any year to
any individual which provide for the issuance of more than
600,000 shares of Common Stock (as such number shall be
adjusted in accordance with Article X). Notwithstanding the
above limitation, in any year in which Stock Awards are granted
which provide for the issuance of less than the maximum
permissible number of shares, the balance of such unused shares
shall be added to the limitation in subsequent years.
ARTICLE IV
General Terms of Options and Rights
Section 4.1. Consideration. The Committee shall
determine the consideration to the Company for the granting of
Options and Rights under the Plan, as well as the conditions,
if any, which it may deem appropriate to ensure that such
consideration will be received by, or will accrue to, the
Company, and, in the discretion of the Committee, such
consideration need not be the same, but may vary for Options
and Rights granted under the Plan at the same time or from time
to time.<PAGE>
Section 4.2. Number of Options and Rights.
(a) The Committee may grant more than one Option or
Right to an individual during the life of the Plan and, subject
to the requirements of Section 422 of the Code with respect to
incentive stock options, such Option or Right may be in
addition to, in tandem with, or in substitution for, options or
rights previously granted under the Plan or under another stock
plan of the Company or of another corporation and assumed by
the Company.
(b) The Committee may permit the voluntary surrender
of all or a portion of any Option granted under the Plan or any
prior plan to be conditioned upon the granting to the Employee
of a new Option for the same or a different number of shares as
the Option surrendered, or may require such voluntary surrender
as a condition precedent to a grant of a new Option to such
Employee. Such new Option shall be exercisable at the price,
during the period, and in accordance with any other terms or
conditions specified by the Committee at the time the new
Option is granted.
Section 4.3. Option and Right Agreements. The Company
shall effect the grant of Options and Rights under the Plan, in
accordance with determinations made by the Committee, by
execution of instruments in writing, in a form approved by the
Committee. Each Option and Right shall contain such terms and
conditions (which need not be the same for all Options and
Rights, whether granted at the same time or at different times)
as the Committee shall deem to be appropriate. The Committee
may, in its sole discretion, and subject to such terms and
conditions as it may adopt, accelerate the date or dates on
which some or all outstanding Options and Rights may be
exercised. Except as otherwise provided by the Committee,
Options and Rights shall be exercised by submitting to the
Company a signed copy of a notice of exercise in a form to be
supplied by the Company and the exercise of an Option or Right
shall be effective on the date on which the Company receives
such notice at its principal corporate offices.
Section 4.4. Non-Transferability of Option or Right. No
Option or Right granted under the Plan to an Employee shall be
transferable by the Employee otherwise than by will or by the
laws of descent and distribution or pursuant to a "qualified
domestic relations order" (as defined in the Code), and such
Option and Right shall be exercisable, during the Employee's
lifetime, only by such Employee.
Section 4.5. Optionees and Grantees not Stockholders. An
Optionee or Grantee or legal representative thereof shall have
none of the rights of a stockholder with respect to shares
subject to Options or Rights until such shares shall be issued
upon exercise of the Option or Right.
Section 4.6. Certain Events. (a) As used in the Plan, a
"Change in Control of Warner-Lambert" shall be deemed to have
occurred if (i) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Act) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of Warner-Lambert representing twenty
percent (20%) or more of the combined voting power of Warner-
Lambert's then outstanding securities, (ii) upon the
consummation of a merger, consolidation, sale or disposition of
all or substantially all of Warner-Lambert's assets or plan of
liquidation which is approved by the stockholders of Warner-
Lambert (a "Transaction"), or (iii) the composition of the
Board at any time during any consecutive twenty-four (24) month
period changes such that the Continuity Directors (as
hereinafter defined) cease for any reason to constitute at
least fifty-one percent (51%) of the Board. For purposes of
the foregoing clause (iii), "Continuity Directors" means those
members of the Board who either (a) were directors at the
beginning of such consecutive twenty-four (24) month period, or
(b)(1) filled a vacancy during such twenty-four (24) month
period created by reason of (x) death, (y) a medically
determinable physical or mental impairment which renders the
director substantially unable to function as a director or (z)
retirement at the last mandatory retirement age in effect for
at least two (2) years, and (2) were elected, nominated or
voted for by at least fifty-one percent (51%) of the current
directors who were also directors at the commencement of such
twenty-four (24) month period. Notwithstanding the provisions
of Article II hereof, upon the exercise of a Right during the
30-day period following Warner-Lambert obtaining actual
knowledge of a Change in Control of Warner-Lambert, "Fair
Market Value" of a share of Common Stock on the Valuation Date
shall be equal to the higher of (i) the highest closing sale
price per share of Common Stock of Warner-Lambert on the
Composite Tape for New York Stock Exchange issues during the
period commencing 30 days prior to such Change in Control and
ending immediately prior to such exercise or (ii) if the Change
in Control of Warner-Lambert occurs as a result of a tender or
exchange offer or consummation of a Transaction, then the
highest price per share of Common Stock pursuant thereto. Any
consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to the
applicable transaction shall be valued at the valuation placed
thereon by the Board. Adjustments, if any, shall be made in
accordance with Section 10.1 hereof.
(b) As used in the Plan, a "Merger of Equals" shall mean
either: (a) a Change in Control of Warner-Lambert Company,
pursuant to the terms of which the stockholders of Warner-
Lambert Company receive consideration, including securities,
with an Aggregate Value (as defined below) not greater than 115
percent of the average closing price of the Common Stock of
Warner-Lambert Company on the Composite Tape for New York Stock
Exchange issues for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction; or (b) any other Change in
Control of Warner-Lambert Company which the Board of Directors,
in its sole discretion, determines to be a "Merger of Equals"
for the purposes of this provision. For purposes of this
section, "Aggregate Value" shall mean the consideration to be
received by the stockholders of Warner-Lambert Company equal to
the sum of (A) cash, (B) the value of any securities and (C)
the value of any other non-cash consideration. The value of
securities received shall equal the average closing price of
the security on the principal security exchange on which such
security is listed for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction. For securities not traded on
a security exchange, and for any other non-cash consideration
that is received, the value of such security or such non-cash
consideration shall be determined by the Board of Directors.
ARTICLE V
Terms and Conditions of Options
Section 5.1. Types of Options. Options granted under the
Plan shall be in the form of (i) incentive stock options as
defined in Section 422 of the Code, or (ii) options not
qualifying under such section, or both, in the discretion of
the Committee. The status of each Option shall be identified
in the Option agreement.
Section 5.2. Option Price. The Option Price shall be
such as shall be fixed by the Committee, subject to adjustment
pursuant to Section 10.1 hereof; provided, however, that the
Option Price shall not be less than the Fair Market Value of
Warner-Lambert Common Stock on the date of grant. The date of
the granting of an Option under the Plan shall be the date
fixed by the Committee.
Section 5.3. Period of Option.
(a) No part of an Option may be exercised unless the
Optionee remains in the continuous employ of the Company for
the period of time specified by the Committee, except that upon
the occurrence of a Change in Control of Warner-Lambert all
Options may be exercised without giving effect to the period of
employment limitation and the limitations, if any, which may
have been imposed by the Committee pursuant to Section 5.3(b)
with respect to the percent of the total number of shares to
which the Option relates which may be purchased from time to
time during the Option Period.
(b) Options will be exercisable thereafter over the
Option Period, which, in the case of each Option, shall be a
period determined by the Committee and will be exercisable at
such times and in such amounts as determined by the Committee
at the time each Option is granted. Notwithstanding any other
provision contained in this Plan, no Option shall be
exercisable after the expiration of the Option Period. Except
as provided in Sections 5.4, 5.5 and 5.6 hereof or as
otherwise determined by the Committee, no Option may be
exercised unless the Optionee is then in the employ of the
Company and shall have been continuously so employed since the
date of the grant of such Option.
Section 5.4. Termination of Employment Before Age 55. An
Optionee whose employment terminates before age 55, by reason
other than death, shall be entitled to exercise such Option,
only within the three-month period after the date of such
termination of employment and in no event after the expiration
of the Option Period, and then only if and to the extent that
the Optionee was entitled to exercise the Option at the date of
the termination of employment, giving effect to the
limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period and have not been removed pursuant to Section
5.3(a).
Section 5.5. Termination of Employment On or After Age
55. An Optionee whose employment terminates on or after age
55, by reason other than death, shall be entitled to exercise
such Option if the Optionee was entitled to exercise the Option
at the date of the termination, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination, but
in no event after the expiration of the Option Period.
Section 5.6. Death of Optionee. If an Optionee should
die:
(a) while in the employ of the Company, the Option
theretofore granted shall, if the Optionee was entitled to
exercise the Option at the date of death, be exercisable by the
estate of the Optionee, or by a person who acquired the right
to exercise such Option by bequest or inheritance or by reason
of the death of the Optionee, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination, but
in no event after the expiration of the Option Period;
(b) within the three-month period after the date of
the termination of employment before age 55, the Option
theretofore granted shall be exercisable by the estate of the
Optionee, or by a person who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death
of the Optionee, but then only if and to the extent that the
Optionee was entitled to exercise the Option at the date of
death, giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Option relates which may be purchased from time to time
during the Option Period and have not been removed pursuant to
Section 5.3(a); provided, however, that such Option shall be
exercisable only within the twelve-month period next succeeding
the death of the Optionee and in no event after the expiration
of the Option Period; or
(c) after the date of the termination of employment
on or after age 55, the Option theretofore granted shall, if
the Optionee was entitled to exercise the Option at the date of
death, be exercisable by the estate of the Optionee, or by a
person who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the
Optionee, without, however, giving effect to the limitations,
if any, which may have been imposed by the Committee pursuant
to Section 5.3(b) with respect to the percent of the total
number of shares to which the Option relates which may be
purchased from time to time during the Option Period; provided,
however, that such Option shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Optionee provided such
death occurs before the later of (i) or (ii), but in no event
after the expiration of the Option Period.
Section 5.7. Payment for shares. Payment for shares of
Common Stock shall be made in full at the time of exercise of
the Option. Nothing herein shall be construed to prohibit the
Company from making a loan or advance to the Optionee for the
purpose of financing, in whole or in part, the purchase of
optioned shares. Payment of the Option Price shall be made in
cash or, with the consent of the Committee, in whole or in part
in Common Stock, Stock Awards or other consideration. Payment
may also be made by delivering a properly executed exercise
notice together with irrevocable instructions to a third party
to promptly deliver to the Company the amount of sale or loan
proceeds to pay the exercise price.
Section 5.8. Incentive Stock Options. Options granted in
the form of incentive stock options shall be subject, in
addition to the foregoing provisions, to the following
provisions:
(a) Annual Limit. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of the
Common Stock with respect to which incentive stock options are
exercisable for the first time by any Optionee during any
calendar year (under the Plan or under any other stock plan of
the Company) exceeds $100,000, such options shall be treated as
options which are not incentive stock options.
(b) Ten Percent Shareholder. No incentive stock
option shall be granted to any individual who, at the time of
the proposed grant, owns Common Stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of Warner-Lambert or any Subsidiary.
(c) Option Period. No incentive stock option shall
be exercisable after the expiration of ten years from the date
of grant.
(d) Option Price. The Option Price of an incentive
stock option shall not be less than the Fair Market Value per
share on the date of grant.
(e) Subsidiary. Incentive stock options may only be
granted to employees of Warner-Lambert and its Subsidiaries.
(f) Aggregate Limit. The aggregate number of shares
of Common Stock which may be issued pursuant to the exercise of
incentive stock options shall not exceed the lesser of (i)
20,000,000 shares or (ii) the number of shares determined in
accordance with the share limitation specified in Section 3.2
hereof.
The Company intends that Options designated by the Committee as
incentive stock options shall constitute incentive stock
options under Section 422 of the Code. Should any of the
foregoing provisions not be necessary in order to so comply or
should any additional provisions be required, the Committee may
amend the Plan accordingly, without the necessity of obtaining
the approval of stockholders of Warner-Lambert.
Section 5.9. Rollover Options. Notwithstanding anything
herein to the contrary, in the event of a Merger of Equals all
Options granted hereunder shall become immediately exercisable
by the Optionee and the Options shall be converted into options
to purchase the stock of the company which other shareholders
of Warner-Lambert Company receive in the transaction (the
"Rollover Options"). The Rollover Options shall be subject to
the same terms and conditions as those applicable to the
Options held prior to the Merger of Equals, including, but not
limited to, exercisability and Option Period, except as
hereinafter provided. If the Aggregate Value consists only of
shares of a publicly traded security ("New Security"), each
Rollover Option shall entitle the holder to purchase the number
of shares of New Security which is equal to the product of (a)
the Exchange Ratio (as hereinafter defined) and (b) the number
of shares of Common Stock subject to the Option immediately
prior to the effective date of the Merger of Equals (rounded to
the nearest full number of shares). The exercise price for
each Rollover Option shall be the exercise price per share of
each Option divided by the Exchange Ratio (rounded to the
nearest full cent). For purposes hereof, "Exchange Ratio"
shall mean the ratio for exchanging Common Stock held by the
stockholders of Warner-Lambert Company for shares of New
Security which is set forth in the definitive agreement
pertaining to the transaction. If the Aggregate Value consists
of consideration other than New Securities, the Board shall
make appropriate adjustments to the number of Rollover Options
and the exercise price thereof. In addition, with respect to
Options granted after March 25, 1997, if an optionee who is not
55 years old is terminated within three (3) years following the
Merger of Equals (for a reason other than "Termination for Just
Cause," as defined in the Warner-Lambert Company Enhanced
Severance Plan), such optionee's Options shall remain
exercisable notwithstanding such termination of employment by
the Company or any successor or its affiliates and such Options
shall be exercisable until two years following the termination
of employment, but in no event after the expiration of the
Option Period.
ARTICLE VI
Terms of Rights
Section 6.1. Relation to Option. Each Right shall relate
specifically to a Reference Option, then held by, or
concurrently granted to, the Grantee. Upon exercise of a Right
an amount shall be payable from Warner-Lambert, determined in
accordance with Section 6.3 hereof. The Reference Option shall
terminate to the extent that the related Right is exercised.
Section 6.2. Exercise of Right. A Right shall become
exercisable at such time, and in respect of such number of
shares of Common Stock, as the Reference Option is then
exercisable and such Right shall terminate upon termination of
the Reference Option, provided, however, that no Right shall be
exercisable unless the Grantee shall have remained in the
continuous employ of the Company for the period specified by
the Committee, except that upon the occurrence of a Change in
Control of Warner-Lambert, all Rights may be exercised without
giving effect to the period of employment limitation and the
limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period. Except as provided in this Section 6.2, Section
6.5 and Section 6.6, or as otherwise determined by the
Committee, no Right shall be exercisable unless at the time of
such exercise the Grantee shall be in the employ of the
Company.
Section 6.3. Amount Payable Upon Exercise of Right. Upon
the exercise of a Right the amount payable shall be equal to:
(i) 100% of the Spread but not exceeding the
difference between the Option Price and the Fair Market
Value of a share of Common Stock on the Valuation Date;
plus
(ii) 125% of the amount, if any, by which the Fair
Market Value of a share of Common Stock on the Valuation
Date exceeds the Fair Market Value on the date the Right
was granted;
multiplied by the number of shares with respect to which the
Right is being exercised; provided, however, that the Committee
may grant Rights which provide that upon exercise the amount
payable shall be equal to 100% of the amount by which the Fair
Market Value of a share of Common Stock on the Valuation Date
exceeds the Fair Market Value on the date the Right was
granted.
Section 6.4. Form of Payment. The amount payable on
exercise of a Right shall be payable in cash, shares of Common
Stock valued at their Fair Market Value as of the Valuation
Date, or in any combination thereof; provided, however, that
the form of payment shall be in the sole discretion of the
Committee. In the event that any payment in the form of both
cash and shares of Common Stock is made to a Reporting Person,
the cash portion of such payment shall be made upon the Grantee
becoming taxable in respect of the Common Stock received upon
exercise of the Right. Notwithstanding the foregoing, a
payment, in whole or in part, of cash may be made to a
Reporting Person upon exercise of a Right only if the Right is
exercised (i) during the period beginning on the third business
day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of
the Company and ending on the twelfth business day following
such date, or (ii) during any other period permitted under the
provisions of Rule 16b-3 promulgated pursuant to the Act. In
addition, a payment of cash shall be made to a Reporting Person
who has held the Right at least six months from the date of its
grant promptly following a Change in Control of Warner-Lambert
which Change in Control is outside the control of any Reporting
Person within the meaning of the aforesaid Rule 16b-3. The
Company intends that this provision shall comply with the
requirements of Rule 16b-3 under the Act. Should this
provision not be necessary to comply with the requirements of
such Rule or should any additional provision be necessary in
order to comply with the requirements of such Rule, the
Committee may amend the Plan accordingly, without the necessity
of obtaining the approval of stockholders of the Company. Any
fraction of a share resulting from the above calculation shall
be disregarded.
Section 6.5. Termination of Employment. If, prior to the
expiration of a Reference Option, the employment of the Grantee
by the Company should terminate, by reason other than death,
the related Right shall terminate, except that if, after a
Grantee shall have remained in the employ of the Company for
the period specified by the Committee, such Grantee's
employment should terminate on or after age 55, the Right
theretofore granted shall be exercisable until the later of (i)
the three-year period after termination of employment, or (ii)
the period after termination of employment which is equal to
the number of full months that the Reference Option has been
outstanding prior to such termination, but in no event after
the expiration of the Option Period, without, however, giving
effect to the limitations, if any, which may have been imposed
by the Committee pursuant to Section 5.3(b) hereof.
Section 6.6. Death of Grantee. If a Grantee should die
prior to the termination of the Reference Option:
(a) while in the employ of the Company, the Right
theretofore granted shall, if the Grantee was entitled to
exercise the Right at the date of death, be exercisable by the
estate of the Grantee, or by a person who acquired the right to
exercise such Right by bequest or inheritance or by reason of
the death of the Grantee, without, however, giving effect to
the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) hereof with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period; provided, however, that such Right shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Reference Option has been outstanding prior to such
termination, but in no event after the expiration of the Option
Period; or
(b) after the date of the termination of employment
on or after age 55, the Right theretofore granted shall, if the
Grantee was entitled to exercise the Right at the date of
death, be exercisable by the estate of the Grantee, or by a
person who acquired the right to exercise such Right by bequest
or inheritance or by reason of the death of the Grantee,
without, however, giving effect to the limitations, if any,
which may have been imposed by the Committee pursuant to
Section 5.3(b) hereof with respect to the percent of the total
number of shares to which the Right relates which may be
purchased from time to time during the Option Period; provided,
however, that such Right shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Reference Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Grantee provided such death
occurs before the later of (i) or (ii), but in no event after
the expiration of the Option Period.
Section 6.7. Limited Rights. Notwithstanding anything
herein to the contrary, Limited Rights may be granted hereunder
by the Committee with respect to the options granted under this
Plan or any other stock option plan of the Company which shall
entitle the holder to receive a payment of cash promptly
following a Change in Control of Warner-Lambert which Change in
Control is outside the control of any Reporting Person within
the meaning of Rule 16b-3 under the Act. Such payment of cash
shall be made to a Reporting Person only if such person has
held such Limited Right at least six months from the date of
its grant. Promptly following any such Change in Control, the
Optionee shall be entitled to receive a cash payment equal to
the excess of the Fair Market Value of a share of Common Stock
on the Valuation Date over the Option Price of the related
Option multiplied by the number of shares with respect to which
the Limited Right relates (in such case the method of
determining the Fair Market Value in the third sentence of
Section 4.6(a) shall apply). Limited Rights shall expire on
the first to occur of their date of payment or expiration of
the Limited Right or the related Option. Further, upon payment
of a Limited Right, the related Option (and any other Right
related thereto) shall be cancelled. Except as otherwise
provided herein, the provisions of the Plan relating to Rights
shall also apply to Limited Rights.
ARTICLE VII
Terms And Conditions Of Restricted Stock
Section 7.1. General. The restrictions set forth in
Section 7.2 shall apply to each grant of Restricted Stock for
the duration of the Restricted Period.
Section 7.2. Restrictions. A stock certificate
representing the number of shares of Restricted Stock granted
shall be registered in the Participant's name but shall be held
in custody by the Company for the Participant's account.
Subject to the provisions of Section 7.3, the Participant shall
have all rights and privileges of a stockholder as to such
Restricted Stock, including the right to receive dividends and
the right to vote such shares, and the following restrictions
shall apply: (i) the Participant shall not be entitled to
delivery of the certificate until the expiration of the
Restricted Period; (ii) none of the shares of Restricted Stock
may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period; (iii)
the Participant shall, if requested by the Company, execute and
deliver to the Company, a stock power endorsed in blank; and
(iv) all of the shares of Restricted Stock still subject to
restrictions shall be forfeited and all rights of the
Participant to such shares shall terminate without further
obligation on the part of the Company if the Participant ceases
to be an Employee prior to the expiration of the Restricted
Period applicable to such shares. Upon the forfeiture (in
whole or in part) of shares of Restricted Stock, such forfeited
shares shall become treasury shares of the Company without
further action by the Participant. The Participant shall have
the same rights and privileges, and be subject to the same
restrictions, with respect to any shares received pursuant to
Section 10.1 hereof.
Section 7.3. Terms and Conditions. The Committee shall
establish the terms and conditions, which need not be the same
for all grants made under the Plan, applicable to the
Restricted Stock, and which may include restrictions based upon
periods of time, performance (corporate, group, individual or
otherwise), combinations thereof or such other restrictions as
the Committee shall determine to be appropriate. The Committee
may provide for the restrictions to lapse with respect to a
portion or portions of the Restricted Stock at different times
or upon the occurrence of different events and the Committee
may waive, in whole or in part, any or all restrictions
applicable to a grant of Restricted Stock. Restricted Stock
awards may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
Section 7.4. Delivery of Restricted Shares. At the end
of the Restricted Period as herein provided, a stock
certificate for the number of shares of Restricted Stock with
respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the Participant or
the Participant's beneficiary or estate, as the case may be.
The Company shall not be required to deliver any fractional
share of Common Stock but shall pay, in lieu thereof, the fair
market value (measured as of the date the restrictions lapse)
of such fractional share to the Participant or the
Participant's beneficiary or estate, as the case may be.
Notwithstanding the foregoing, the Committee may authorize the
delivery of the Restricted Stock to a Participant during the
Restricted Period, in which event any stock certificates in
respect of shares of Restricted Stock thus delivered to a
Participant during the Restricted Period applicable to such
shares shall bear an appropriate legend referring to the terms
and conditions, including the restrictions, applicable thereto.
Section 7.5. Certain Events.
(a) In the event of a Change in Control of Warner-
Lambert the rights and privileges of Participants hereunder
shall be governed by the following clause (i), clause (ii) or
clause (iii), as appropriate:
(i) Value of Restricted Stock. All shares of
Restricted Stock then outstanding shall be immediately
forfeited and shall revert to the Company as treasury
shares and, in lieu thereof, each Participant shall
receive a cash payment equal to the Value of the
Restricted Stock (as hereinafter defined); provided,
however, that if the Participant is a Reporting Person at
the time of the Change in Control of Warner-Lambert, the
provisions of clause (ii) shall govern the rights and
privileges of such Participant.
(ii) Reporting Persons. All shares of
Restricted Stock previously granted to Participants who
are Reporting Persons at the time of the Change in Control
of Warner-Lambert, which Change in Control is outside the
control of any Reporting Person within the meaning of Rule
16b-3 under the Act, and which are then outstanding and
have been outstanding for a period of at least six (6)
months, shall be immediately forfeited and shall revert to
the Company as treasury shares and, in lieu thereof, such
Participant shall receive a cash payment equal to the
Value of the Restricted Stock.
(iii) Lapse of Restrictions. In the event that
clause (ii) shall not become operational with respect to a
Participant who is a Reporting Person, all restrictions
applicable to shares of Restricted Stock previously
granted to such Participant and then outstanding shall
expire and such shares shall thereupon be delivered to the
Participant free of all restrictions.
(b) As used in the Plan, the "Value of the
Restricted Stock" shall be the higher of (a) the highest
closing price per share of Common Stock on the Composite Tape
for New York Stock Exchange issues during the 30 day period
prior to the Change in Control of Warner-Lambert, or (b) if the
Change in Control of Warner-Lambert occurs as a result of a
tender or exchange offer or consummation of a Transaction, then
the highest price per share of Common Stock pursuant thereto,
multiplied by the total number of shares of Restricted Stock
granted to such Participant and then outstanding, regardless of
whether the restrictions applicable thereto shall have
previously lapsed. Any consideration other than cash forming a
part or all of the consideration for Common Stock to be paid
pursuant to the applicable transaction shall be valued at the
valuation placed thereon by the Board of Directors.
Adjustments, if any, shall be made in accordance with Section
10.1 hereof.
ARTICLE VIII
Terms and Conditions of Performance Awards
Section 8.1. Terms and Conditions. The Committee may
grant Performance Awards, determine the consideration therefor,
which may include prior efforts and accomplishments, and
establish the terms and conditions thereof, which may include
provisions based upon periods of time, performance (corporate,
group, individual or otherwise), combinations thereof or such
other provisions as the Committee may determine to be
appropriate. Performance Awards may consist of shares of
Common Stock or awards that are valued by reference to shares
of Common Stock (e.g., phantom stock or restricted stock
units), cash or such other measure as the Committee shall
determine. Performance Awards may provide for payment in
shares of Common Stock, cash, other property or any combination
thereof as determined by the Committee. Shares of Common Stock
issued pursuant to this Section 8.1 may be issued for no cash
consideration or for such minimum consideration as may be
required by applicable law. The Committee shall determine
whether payment shall be made in a lump sum, installments or
deferred. With respect to Performance Awards which are valued
by reference to shares of Common Stock, the Committee shall
also determine whether the Participant may be entitled to
receive a payment of, or credit equivalent to, any dividends
payable with respect to such shares of Common Stock and the
terms and conditions applicable thereto. Further, if a payment
of cash is to be made on a deferred basis, the Committee shall
establish whether interest shall be credited, the rate thereof
and any other terms and conditions applicable thereto. The
limitations on transfer set forth in Section 4.4 shall be
applicable to all Performance Awards.
ARTICLE IX
Regulatory Compliance and Listing
Section 9.1. Regulatory Compliance and Listing. The
issuance or delivery of any Stock Awards and shares of Common
Stock pursuant thereto may be postponed by the Company for such
periods as may be required to comply with any applicable
requirements under the Federal securities laws, any applicable
listing requirements of any national securities exchange or any
requirements under any other law or regulation applicable
thereto, and the Company shall not be obligated to issue or
deliver any such awards or 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.
ARTICLE X
Adjustment in Event of Changes in Capitalization
Section 10.1. Adjustments. In the event of a
recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, rights offering,
reorganization, liquidation, or the sale, conveyance, lease or
other transfer by Warner-Lambert of all or substantially all of
its property, or any other change in the corporate structure or
shares of Warner-Lambert, equitable adjustments shall be made
to prevent dilution or enlargement of rights (i) in the number
and class of shares authorized to be granted hereunder,
(including adjustment to the share limitation of Section 3.2
hereof), (ii) in the number and kind of shares available under
any outstanding Stock Awards (including substitution of shares
of another corporation), (iii) in the price of any Option, (iv)
in the number of Stock Credits in each Director's Stock Account
and (v) in any other aspect of the Plan as the Committee shall
deem appropriate; provided, however, that in no event may any
change be made to an incentive stock option which would
constitute a "modification" within the meaning of Section
424(h)(3) of the Code. Stock Awards granted under the Plan
shall contain such provisions as are consistent with the
foregoing with respect to adjustments to be made in the number
and kind of shares covered thereby and in the Option Price in
the event of any such change.
ARTICLE XI
Directors' Deferred Compensation
Section 11.1. Election To Participate.
(a) Each Director may elect to defer payment of all
or any portion of his or her Compensation that is payable
during the immediately succeeding Plan Year. Such election
must be made with respect to all Compensation payable in such
succeeding Plan Year by the date established by the Secretary
of the Company but in no event later than December 31 of such
preceding Plan Year.
(b) An election to defer any Compensation shall be:
(i) in writing, (ii) delivered to the Secretary, and (iii)
irrevocable. A Director may file a new election each Plan Year
applicable to the immediately succeeding Plan Year. If no
election or revocation of a prior election is received by such
date as may be permissible under the preceding paragraph, the
election, if any, in effect for such Plan Year will continue to
be effective for the immediately succeeding Plan Year. If a
Director does not elect to defer Compensation payable during a
Plan Year, all such Compensation shall be paid directly to such
Director in accordance with resolutions adopted by the Board
from time to time.
Section 11.2. Mode of Deferral. A Director who has
elected to defer all or a portion of his or her Compensation as
provided in Section 11.1 hereof may further elect to have such
deferred amounts credited to a Cash Account, a Stock Account,
or a combination of both such Accounts. The Secretary shall
maintain such Accounts in the name of the Director. The
election referred to in this Section 11.2 may be made once per
year and shall become effective on the January 1st which
follows such election; provided, however, that no election to
defer amounts into the Stock Account shall become effective
unless the transaction qualifies as exempt under Rule 16b-3(d)
under the Act. Any such election shall be specified in a
writing delivered by the Director to the Secretary and shall be
irrevocable. If a Director fails to elect the Account to which
deferral shall be made or if any such election would result in
a transaction which would not qualify as exempt under Rule 16b-
3(d) under the Act, he or she shall be deemed to have elected
deferral to the Cash Account. In addition, a Director may
cease deferring amounts into the Stock Account at any time by
written notice delivered to the Secretary and thereafter such
amounts shall be credited to the Cash Account. Compensation
deferred to a Cash Account or Stock Account shall result in
Cash Credits or Stock Credits, respectively.
Section 11.3. Cash Account. The Cash Account of a
Director shall be credited, as of the day the deferred
Compensation otherwise would have been payable to such
Director, with Cash Credits equal to the dollar amount of such
deferred Compensation. The Cash Account shall be adjusted and
increased each year, as if interest was credited thereon, at
the rate utilized for adjusting deferred bonus accounts under
the Warner-Lambert Company Incentive Compensation Plan.
Section 11.4. Stock Account. The Stock Account of a
Director shall be credited, as of the day the deferred
Compensation otherwise would have been payable to such
Director, with Stock Credits equal to the number of shares of
Common Stock (including fractions of a share) that could have
been purchased with the amount of such deferred Compensation at
the Closing Price of shares of Common Stock on the day the
deferred Compensation otherwise would have been payable to such
Director. As of the date of any dividend record date for the
Common Stock, the Director's Stock Account shall be credited
with additional Stock Credits equal to the number of shares of
Common Stock (including fractions of a share) that could have
been purchased, at the Closing Price of shares of Common Stock
on such date, with the amount which would have been paid as
dividends on that number of shares (including fractions of a
share) of Common Stock which is equal to the number of Stock
Credits then attributed to the Director's Stock Account;
provided, however, that in the event that there is not then in
effect an election under Section 11.2 hereof to have any of
such Director's Compensation credited to a Stock Account and,
further, that the Director has elected under Section 11.5(a)
hereof to transfer his or her Stock Account to a Cash Account
then the amount which would have been credited to the Stock
Account in accordance with this sentence but for this proviso
shall instead be credited to such Director's Cash Account. In
the case of dividends paid in property other than cash, the
amount of the dividend shall be deemed to be the fair market
value of the property at the time of the payment of the
dividend, as determined in good faith by the Committee.
Section 11.5. Conversions.
(a) Stock Account to Cash Account. A Director may
elect to convert all or any portion of his or her Stock Account
to his or her Cash Account; provided, however, that no such
election shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(f) under the Act. The
amount to be credited to such Director's Cash Account shall be
obtained by multiplying the number of Stock Credits credited to
his or her Stock Account as of the last day of the month in
which such election is made by the Closing Price of shares of
Common Stock on such date.
(b) Cash Account to Stock Account. A Director may
elect to convert all or any portion of his or her Cash Account
to his or her Stock Account; provided, however, that no such
election shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(f) under the Act. The
number of Stock Credits to be credited to such Director's Stock
Account shall be obtained by dividing the number of Cash
Credits credited to his or her Cash Account as of the last day
of the month in which such election is made by the Closing
Price of shares of Common Stock on such date.
(c) An election under this Section 11.5 shall be in
a writing delivered to the Secretary and may be revoked or
revised at any time prior to the last day of the month in which
the election is made.
Section 11.6. Distribution of Cash Account or Stock
Account.
(a) Distributions in respect of a Director's Cash
Account and Stock Account shall become payable in full to such
Director, annually, over a period of ten (10) years, except as
otherwise agreed to by the Committee and the Director,
beginning with the first day of the calendar year following the
year in which the individual ceases to be a member of the Board
of Directors.
(b) Distributions in respect of a Director's Cash
Account and Stock Account shall be made only in cash.
Section 11.7. Installment Amount.
(a) The amount of each distribution with respect to
a Director's Cash Account shall be the amount obtained by
multiplying the balance in such Account by a fraction, the
numerator of which is one (1) and the denominator of which is
the number of years in which distributions remain to be made
(including the current distribution).
(b) The amount of each distribution with respect to
a Director's Stock Account shall be the amount obtained by
multiplying the number of Stock Credits attributable to such
installment (determined as hereinafter provided) by the average
of the Closing Prices of shares of Common Stock on each
Business Day in the month immediately prior to the month in
which such installment is to be paid. The number of Stock
Credits attributable to an installment shall be equal to the
amount obtained by multiplying the current number of Stock
Credits in such Stock Account by a fraction, the numerator of
which is one (1) and the denominator of which is the number of
years in which distributions remain to be made (including the
current distribution).
Section 11.8. Financial Hardship. Notwithstanding any
other provision hereof, at the written request of a Director or
a Director's legal representative, the Committee, in its sole
discretion, upon a finding that continued deferral will result
in financial hardship to the Director, may authorize (i) the
payment of all or a part of a Director's Accounts in a single
installment prior to his or her ceasing to be a Director or
(ii) the acceleration of payment of any multiple installments
thereof; provided, however, that Directors may not receive
distributions under this Section 11.8 if such distribution
would result in liability of the Director under Section 16 of
the Act.
Section 11.9. Distribution upon Death. Upon the death of
a Director, the Committee shall pay all of such Director's Cash
Account and Stock Account in a single installment to the
beneficiary designated by the Director. All such designations
shall be made in writing and delivered to the Secretary. A
Director may from time to time revoke or change any such
designation by written notice to the Secretary. If there is no
designation on file with the Secretary at the time of the
Director's death, or if the beneficiary designated therein
shall have predeceased the Director, such distributions shall
be made to the executor or administrator of the Director's
estate. Any distribution under this Section 11.9 shall be made
as soon as practicable following notification to the Committee
of the Director's death and the value of the Stock Account for
the purpose of such distribution shall be based upon the
Closing Price of shares of Common Stock on the date of the
Director's death.
Section 11.10. Certain Events. Notwithstanding any other
provision hereof, in the event of a Change in Control of
Warner-Lambert which is outside of the control of any Reporting
Person within the meaning of Rule 16b-3 under the Act, the
balance in the Stock Account of each Director shall be
converted to the Cash Account. For this purpose, the balance
in the Stock Account shall be determined by multiplying the
number of Stock Credits by the higher of (i) the highest
Closing Price during the period commencing 30 days prior to
such Change in Control or (ii) if the Change in Control of
Warner-Lambert occurs as a result of a tender or exchange offer
or consummation of a Transaction, then the highest price per
share of Common Stock pursuant thereto. Any consideration
other than cash forming a part or all of the consideration for
Common Stock to be paid pursuant to the applicable transaction
shall be valued at the valuation placed thereon by the Board of
Directors. Adjustments, if any, shall be made in accordance
with Article X hereof. Within 30 days after a Change in
Control of Warner-Lambert, each Director may designate a
distribution schedule which may provide for a lump sum payment
or installment payments over a period of up to 15 years,
provided, however, that no payment shall be made for a period
of one year after the Change in Control. In the event that a
Director shall not make a designation in accordance with the
preceding sentence, the balance in the Cash Account shall be
distributed in a lump sum one year after the Change in Control.
Section 11.11. Valuations. Notwithstanding any other
provision hereof, in any instance in which a Director's Stock
Account is to be valued by reference to the Closing Price of
shares of Common Stock on a single day, the Committee may
declare such price to be unrepresentative of the market value
of such Common Stock and, in lieu thereof, shall base such
valuation on the average of the Closing Prices of shares of
Common Stock on each Business Day during the calendar quarter
ending coincident with or immediately preceding the day which
would otherwise serve as the basis for the valuation.
Section 11.12. Funding. The Company's sole obligation to
a Director or any person claiming under or through any Director
in respect of the payment of any balance in an Account shall be
solely a contractual obligation in accordance with the terms of
the Plan. No promise hereunder shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the
satisfaction of such promises.
Section 11.13. Status of Stock Credits. Stock Credits
are not, and do not constitute, shares of Common Stock, and no
right as a holder of shares of Common Stock shall devolve upon
a Director by reason of his or her participation in the Plan.
Section 11.14. Non-Trading Date. In the event that the
date of the determination of a Closing Price hereunder shall be
a date which shall not be a date on which the Common Stock is
traded on the New York Stock Exchange, determination of such
Closing Price shall be made as of the first date thereafter on
which the Common Stock is so traded.
Section 11.15. No Right To Reelection. Nothing in the
Plan shall be deemed to create any obligation on the part of
the Board to nominate any Director for reelection by the
Company's stockholders, nor confer upon any Director the right
to remain a member of the Board of Directors.
Section 11.16. Predecessor Plans. Upon the Effective
Date of the Plan, no further benefits shall accrue under any
Predecessor Plans and account balances accrued under any
Predecessor Plans shall be governed by the provisions of this
Plan, except as provided in Section 11.18 hereof.
Section 11.17. Deferred Compensation Accounts. Upon the
Effective Date of the Plan, all Deferred Compensation Accounts
shall become subject to the terms and conditions of this Plan
in lieu of the terms and conditions of the Predecessor Plans,
except as provided in Section 11.18 hereof.
Section 11.18. Retired Directors. Benefits accrued under
Predecessor Plans which are in pay status on the Effective Date
shall continue to be paid in accordance with the provisions of
the Predecessor Plans.
Section 11.19. Federal Securities Law. The Company
intends that the provisions of this Article XI, and all
transactions effected in accordance with this Article XI, shall
comply with Rule 16b-3 under the Act. In the event that any
provision of this Article XI is not necessary to so comply or
any additional provision is necessary to obtain or maintain
such compliance, the Committee is authorized to revise the Plan
accordingly without obtaining approval of the stockholders of
Warner-Lambert. By way of illustration, and not limitation,
the Committee may bifurcate the provisions of this Article XI,
and such other provisions as it shall deem necessary, into a
separate plan (which plan shall be recognized as having
received approval of the stockholders of Warner-Lambert), if
the Committee shall deem such action necessary to maintain
qualification of Article XI (and transactions thereunder) under
Rule 16b-3(d) under the Act and the qualification of the
provisions of the Plan affecting Employees (and transactions
thereunder) under Rule 16b-3 under the Act.
ARTICLE XII
Administration
Section 12.1. Administration.
(a) The Plan shall be administered by a committee
consisting of not less than three members of the Board of
Directors, who shall be appointed by, and shall serve at the
pleasure of, the Board of Directors. No person who is or,
within one year prior thereto, has been eligible to receive an
award under the Plan or any other plan of the Company which
would result in loss of "disinterested person" status within
the meaning of Section 16 of the Act may be a member of the
Committee, and no person may be granted a Stock Award while a
member of the Committee. A majority of the Committee shall
constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present, expressed
from time to time by a vote at a meeting (including a meeting
held by telephone conference call or in which one or more
members of the Committee participate by telephone), or acts
approved in writing by a majority of the Committee, shall be
the acts of the Committee.
(b) In addition to the Committee's discretionary
authority set forth in other Articles hereof, the Committee has
discretionary authority to construe and interpret the Plan and
is authorized to establish such rules and regulations for the
proper administration of the Plan as it may deem advisable and
not inconsistent with the provisions of the Plan. All
questions arising under the Plan or under any rule or
regulation with respect to the Plan adopted by the Committee,
whether such questions involve an interpretation of the Plan or
otherwise, shall be decided by the Committee, and its decisions
shall be conclusive and binding in all cases.
(c) The Committee has discretionary authority to
determine the Employees to whom Stock Awards under the Plan are
to be granted, the terms and conditions applicable thereto and
the number of shares to be covered by each award. In selecting
the individuals to whom Stock Awards shall be granted, as well
as in determining the terms and conditions applicable thereto
and the number of shares subject to each grant, the Committee
shall consider the positions and responsibilities of the
Employees being considered, the nature of the services and
accomplishments of each, the value to the Company of their
services, their present and potential contribution to the
success of the Company, the anticipated number of years of
service remaining and such other factors as the Committee may
deem relevant. The Committee may obtain such advice or
assistance as it deems appropriate from persons not serving on
the Committee.
Section 12.2. Stock Awards Committee. In addition, and
not in limitation of the authority of the Committee, the Stock
Awards Committee (as hereinafter constituted) may grant Stock
Awards, in accordance with the provisions of the Plan,
including the establishment of the terms and conditions thereof
and the consideration to the Company therefor, to Employees
who, at the time of the grant, are not Reporting Persons. The
Stock Awards Committee, whose members need not serve on the
Board of Directors, shall be appointed by, and shall serve at
the pleasure of, the Committee. A majority of the Stock Awards
Committee shall constitute a quorum and the acts of a majority
of the members present at any meeting at which a quorum is
present, expressed from time to time by a vote at a meeting
(including a meeting held by telephone conference call or in
which one or more members of the Stock Awards Committee
participate by telephone), or acts approved in writing by a
majority of the Stock Awards Committee, shall be the acts of
the Stock Awards Committee. Notwithstanding the foregoing, the
Stock Awards Committee may not undertake any action which the
provisions of Rule 16b-3, promulgated pursuant to the Act,
require to be undertaken by "Non-Employee Directors" (as
defined in said Rule) as a condition of the continued
qualification of the Plan (and transactions thereunder) under
Rule 16b-3.
ARTICLE XIII
Termination or Amendment of the Plan
Section 13.1. Termination or Amendment.
(a) The Board may at any time terminate the Plan and
may from time to time alter or amend the Plan or any part
thereof (including any amendment deemed necessary to ensure
that the Company may comply with any regulatory requirement
referred to in Article IX); provided, however, that, unless
otherwise required by law, the rights of a Participant with
respect to Stock Awards granted or the rights of a Director
with respect to his or her Accounts prior to such termination,
alteration or amendment may not be impaired without the consent
of such Participant or Director, as the case may be, and,
provided further, without the approval of the Company's
stockholders, no alteration or amendment may be made which
would require approval of such stockholders as a condition of
compliance with Rule 16b-3 under the Act. The Company intends
that the Plan (and transactions thereunder) shall comply with
the requirements of Rule 16b-3 promulgated pursuant to the Act.
Should any provisions hereof not be necessary in order to
comply with the requirements of such Rule or should any
additional provisions be necessary in order to so comply, the
Committee may amend the Plan accordingly, without the necessity
of obtaining approval of the stockholders of Warner-Lambert.
(b) The Committee may at any time adopt any
amendment to the Plan which (i)(A) does not increase Plan
liabilities by an amount in excess of five million dollars
($5,000,000) and does not increase Plan expense by an amount in
excess of five hundred thousand dollars ($500,000) or (B) is
required by an applicable law, regulation or ruling, (ii) can
be undertaken by the Board of Directors under the terms of the
Plan, (iii) does not involve a termination of the Plan, (iv)
does not affect the limitations contained in this sentence, and
(v) does not affect the composition or compensation of the
Committee.
(c) The Committee shall have the power to cancel all
Rights theretofore granted pursuant to the Plan in the event
that it shall determine that the accounting effects of the
grant or exercise of Rights under the Plan would not be in the
best interests of the Company.
(d) Any action which may be undertaken by the
Committee pursuant to the terms hereof may be undertaken by the
Board, except as provided in Rule 16b-3 promulgated pursuant to
the Act.
ARTICLE XIV
Miscellaneous
Section 14.1. No Right To Employment. Nothing in the
Plan shall be deemed to confer upon any Participant the right
to remain in the employ of the Company.
Section 14.2. Withholding of Taxes.
(a) The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock
or the payment of any cash hereunder, payment by the
Participant or the Director, as the case may be, of any taxes
required by law with respect thereto.
(b) The Committee may permit any such withholding
obligation to be satisfied by reducing the number of shares of
Common Stock otherwise deliverable. A Reporting Person may
elect to have a sufficient number of shares of Common Stock
withheld to fulfill such tax obligations (hereinafter a
"Withholding Election") only if the election complies with the
following conditions: (x) the Withholding Election shall be
subject to the disapproval of the Committee and (y) the
Withholding Election is made (i) during the period beginning on
the third business day following the date of release for
publication of the quarterly or annual summary statements of
sales and earnings of the Company and ending on the twelfth
business day following such date, or (ii) during any other
period in which a Withholding Election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the Act. Any
fraction of a share of Common Stock required to satisfy such
tax obligations shall be disregarded and the amount due shall
be paid instead in cash by the Participant.
Section 14.3. No Assignment of Benefits. No benefit
payable under the Plan shall, except as otherwise specifically
provided by law, be subject in any manner to anticipation,
alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
attach, sell, transfer, assign, pledge, encumber or charge any
such benefit shall be void, and any such benefit shall not in
any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment
or legal process for or against such person. If any person
entitled to a benefit hereunder shall be adjudicated a bankrupt
or shall attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge such benefit, or if any
attempt is made to subject any such benefit to the debts,
contracts, liabilities, engagements or torts of any person
entitled to such benefit, then such benefit shall, in the
discretion of the Committee, cease and terminate, and in that
event the Committee may cause such benefit, or any part
thereof, to be held or applied for the benefit of such person,
his or her spouse, children or other dependents, or any of
them, in such manner and in such proportion as the Committee
shall determine.
Section 14.4. Death; Disability; Termination. The
Committee shall establish the provisions which shall govern in
the event of the death, disability, or termination (including
layoff) of a Participant or a Director, which provisions may be
different than the provisions otherwise described herein with
respect to death, disability, and termination. If, for any
reason, the Committee shall determine that it is not desirable
because of the incapacity of the person who shall be entitled
to receive any payments hereunder, to make such payments
directly to such person, the Committee may apply such payment
for the benefit of such person in any way that the Committee
shall deem advisable or may make any such payment to any third
person who, in the judgment of the Committee, will apply such
payment for the benefit of the person entitled thereto. In the
event of such payment, the Company, the Board of Directors and
the Committee shall be discharged from all further liability
therefor. The employment of an Employee who becomes disabled
shall be deemed terminated for purposes of the Plan as of the
date benefit payments would have commenced under the Warner-
Lambert Long Term Disability Benefits Plan had the Participant
been enrolled in such plan, except as otherwise provided herein
or under Company policy. Absence on leave approved by the
Company shall not be considered an interruption of employment
for any purpose of the Plan.
Section 14.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on the New
York Stock Exchange, the issue of any shares of stock pursuant
to a Stock Award shall be conditioned upon the shares so to be
issued being listed on such Exchange. Warner-Lambert shall
make application for listing on such Exchange unlisted shares
subject to Stock Awards, but shall have no obligation to issue
such shares unless and until such shares are so listed, and the
right to exercise any Option or Right with respect to such
shares shall be suspended until such listing has been effected.
(b) If at any time counsel to Warner-Lambert shall
be of the opinion that any sale or delivery of shares of Common
Stock pursuant to a Stock Award is or may in the circumstances
be unlawful under the statutes, rules or regulations of any
applicable jurisdiction, Warner-Lambert shall have no
obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or
registration under the Securities Act of 1933, as amended, or
otherwise with respect to shares of Common Stock or Stock
Awards, and the right to exercise any Option or Right shall be
suspended until, in the opinion of said counsel, such sale or
delivery shall be lawful.
(c) Upon termination of any period of suspension
under this Section 14.5, any Stock Award affected by such
suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become
available during the period of such suspension.
Section 14.6. Governing Law. This Plan shall be governed
by the law of the State of New Jersey (regardless of the law
that might otherwise govern under applicable New Jersey
principles of conflict of laws).
Section 14.7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as
though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they
would so apply.
Section 14.8. Laws of Foreign Jurisdictions. Without
amending the Plan, but subject to the limitations specified in
Article XIII hereof, the Committee may grant, amend,
administer, annul or terminate Stock Awards on such terms and
conditions, which may be different from those specified in the
Plan, as it may deem necessary or desirable to make available
tax or other benefits of the laws of any foreign jurisdiction.
Section 14.9. Other Plans. Nothing contained herein
shall prevent the Company from adopting additional compensation
plans or arrangements.
Section 14.10. Federal Securities Law. Notwithstanding
any other provision of the Plan, no transaction shall be given
effect on any date which would, in the opinion of counsel to
the Company, result in liability under Section 16(b) of the
Act.
ARTICLE XV
Effective Date; Term of Plan
Section 15.1. Effective Date. The Plan shall be
submitted to the stockholders of Warner-Lambert for their
approval at the Annual Meeting of Stockholders to be held in
1996. Approval will require the affirmative vote of the
holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote at the meeting. If approved,
the Plan shall become effective January 1, 1997.
Section 15.2. Term of Plan. No Stock Awards may be
granted hereunder after April 23, 2007. This Section 15.2
shall not affect any Stock Award granted prior to such date.
Further, the provisions of Article XI hereof (as amended from
time to time) are ongoing and shall continue until terminated
by the Board.
WARNER-LAMBERT COMPANY
WARNER-LAMBERT COMPANY
EXECUTIVE SEVERANCE PLAN
As Amended To March 25, 1997
<PAGE>
WARNER-LAMBERT COMPANY
EXECUTIVE SEVERANCE PLAN
Section 1. Establishment of Plan. Warner-Lambert
Company (the "Company") hereby establishes this Executive
Severance Plan (the "Plan"). The Plan shall become
effective as of February 17, 1988 (the "Effective Date").
Section 2. Purposes of Plan. In recognition of the
establishment of the Enhanced Severance Plan which is not
applicable to Participants (as hereinafter defined) in this
Plan, and in further recognition of the several different
concerns of Executives encompassed hereby, the purposes of
the Plan are to: (a) fulfill the Company's commitment under
the Warner-Lambert Creed of attracting and retaining capable
people as a means of both addressing the health and well-
being of people throughout the world and providing a fair
and attractive economic return to the Company's
shareholders; (b) address the concerns of the Company's
Executives regarding job security; and (c) help ensure that
the Executives receive the benefits which they legitimately
expect in the normal course of their employment.
Section 3. Definition of Executives; Eligibility.
3.1. Definition of Executives. For purposes of this
Plan, the term "Executives" shall mean (a) all employees of
the Company who are subject to the reporting requirements of
Section 16(a) of the Act (as hereinafter defined)
("Corporate Officers") on the Effective Date; (b) all
persons who become Corporate Officers after the Effective
Date and (c) all employees of the Company who are designated
by the Board of Directors of the Company (the "Board") or by
the Executive Committee of the Company (as such bodies are
constituted prior to the occurrence of a Change in Control
(as hereinafter defined)) as eligible for participation in
this Plan ("Designated Employees"). For purposes of this
Plan, the term "Act" shall mean the Securities Exchange Act
of 1934, as amended.
3.2. Eligibility. All Executives shall participate in
the Plan (the "Participants"); provided, however, that (i)
except as provided in clauses (iii) and (iv) of this
subsection, an Executive shall cease to be a Participant at
the time such Executive ceases to be a Corporate Officer;
(ii) no person who is not an Executive at the time of the
occurrence of a Change in Control shall become a Participant
thereafter; (iii) except as provided in clause (iv) of this
subsection, the participation of a Designated Employee shall
cease at the time that such employee ceases to be a
corporate officer appointed to such position by the Board of
Directors, unless such employee continues to be a Corporate
Officer; and (iv) no Executives who are Participants at the
time of the occurrence of a Change in Control shall cease
participation without their written consent.
Section 4. Definition of Change in Control; Activation
Event.
4.1. Change In Control. For purposes of this Plan, a
"Change in Control" of the Company shall be deemed to have
occurred if (i) any person (as such term is used in Sections
13(d) and 14(d)(2) 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 20% or
more of the combined voting power of the Company's then
outstanding securities, (ii) the stockholders of the Company
approve a merger, consolidation, sale or disposition of all
or substantially all of the Company's assets or plan of
liquidation or (iii) the composition of the Board at any
time during any consecutive twenty-four (24) month period
changes such that the Continuity Directors (as hereinafter
defined) cease for any reason to constitute at least fifty-
one percent (51%) of the Board. For purposes of the
foregoing clause (iii), "Continuity Directors" means those
members of the Board who either (a) were directors at the
beginning of such consecutive twenty-four (24) month period,
or (b)(1) filled a vacancy during such twenty-four (24)
month period created by reason of (x) death, (y) a medically
determinable physical or mental impairment which renders the
director substantially unable to function as a director or
(z) retirement at the last mandatory retirement age in
effect for at least two (2) years, and (2) were elected,
nominated or voted for by at least fifty-one percent (51%)
of the current directors who were also directors at the
commencement of such twenty-four (24) month period.
4.2. Activation Event. For purposes of this Plan, the
term "Activation Event" shall mean a termination of
employment with the Company (whether voluntary or
involuntary) within three (3) years after a Change in
Control for any reason other than death or Termination for
Just Cause (as hereinafter defined).
Section 5. Severance Benefits. Upon the occurrence of
an Activation Event with respect to a Participant, the
following shall apply to such Participant: (a) the benefits
specified in Severance Policy #163, as such policy is in
effect immediately prior to the occurrence of the Change in
Control (including amounts due by reason of such event) (the
"Severance Policy"), shall be paid to the Participant, in
accordance with the coverage provisions thereof, even though
the termination would not otherwise give rise to severance
payments, provided, however, that the Severance Pay Duration
Period (as defined in the Severance Policy) of Participants
shall be thirty-six (36) months; (b) severance benefits
shall be determined on the basis of base pay plus Bonus
Amount (as hereinafter defined), extrapolated for the entire
Severance Pay Duration Period, as determined in accordance
with paragraph (a) hereof (for example severance benefits
shall include payment of, and benefits continuance shall in
part be based upon, three (3) times the Participant's Bonus
Amount); (c) severance payments and continued eligibility
for other benefits shall not terminate upon other
employment, retirement or death; (d) severance payments
(including amounts paid in respect of the Participant's
Bonus Amount) shall, at the election of the Participant, be
made monthly or in a lump sum (regardless of eligibility
therefor under the Severance Policy) and the receipt of a
lump sum payment shall not terminate coverage under other
benefit arrangements which are otherwise continued during
the Severance Pay Duration Period under the Severance
Policy; and (e) the Company shall provide third party
outplacement assistance consistent with the Company's prior
practices. For purposes hereof, the term "Bonus Amount"
shall mean the target award for such Participant's job grade
as set forth in Exhibit 5 hereto, as such schedule may be
revised from time to time; provided, however, that upon the
occurrence of a Change in Control, the target awards may not
be reduced.
Section 6. Retirement Plans. Upon the occurrence of a
Change in Control, the vesting requirement applicable to
Participants shall become five (5) Years of Service (as
defined in the Warner-Lambert Retirement Plan (the
"Retirement Plan")) and upon the occurrence of an Activation
Event with respect to a Participant, such Participant shall
receive credit for all purposes of the Retirement Plan for
the Severance Pay Duration Period (including the extension
thereto provided under Section 5) and the payments received
in respect of such Period to the extent permissible under
the Internal Revenue Code of 1986, as amended (the "Code"),
with the balance of such credit, if any, being given under
the Warner-Lambert Supplemental Pension Income Plan (the
"Supplemental Pension Plan"). In addition, upon the
occurrence of an Activation Event with respect to a
Participant, eligibility for Supplemental Pension Income
under the Supplemental Pension Plan shall become attainment
of salary grade 17 prior to the Change in Control. To
implement the aforementioned, the Retirement Plan is hereby
amended by (i) deleting the second parenthetical in the
first sentence of Section 7 of Article XIII thereof, and
(ii) revising the third sentence of Section 7 of Section
XIII thereof, to read in its entirety as provided in Exhibit
6(a) hereto. Further, the Supplemental Pension Plan is
hereby amended by (i) adding the phrase "and the Warner-
Lambert Executive Severance Plan" after the fifteenth word
of Section 13.3 of Article XIII thereof and revising Section
13.1(a) to read in its entirety as provided in Exhibit 6(b)
hereto.
Section 7. Savings Plan. Upon the occurrence of an
Activation Event with respect to a Participant, such
Participant shall receive credit for all purposes of the
Warner-Lambert Savings and Stock Plan (the "Savings Plan")
for the Severance Pay Duration Period (including the
extension thereto provided under Section 5) and the payments
received in respect of such Period (exclusive of Bonus
Amounts) to the extent permissible under the Code, with the
balance of such credit, if any, being given under the
Warner-Lambert Supplemental Savings Plan (the "Supplemental
Savings Plan"). To implement the aforementioned, the
Savings Plan is hereby amended by (i) deleting the second
parenthetical in the first sentence of Section 7.6 thereof,
(ii) revising the third sentence of Section 7.6 thereof, to
read in its entirety as provided in Exhibit 7 hereto and
(iii) the Supplemental Savings Plan is hereby amended by
adding the phrase "and the Warner-Lambert Executive
Severance Plan" after the fifteenth word of the last
paragraph of Section 11.1 of Article 11 thereof.
Section 8. Incentive Compensation Plan. Upon the
occurrence of a Change in Control, (i) the formula for
determining the rate for adjustments to Deferred Bonus
Accounts (as defined in the Warner-Lambert Company Incentive
Compensation Plan (the "Incentive Compensation Plan")) may
not be lower for succeeding periods than the formula in
effect at the occurrence of the Change in Control (for
example, if the formula in effect at the Change in Control
is the average prime rate plus two (2) percent, the formula
for all future years may not be lower than the average prime
rate plus two (2) percent); (ii) the consulting and
forfeiture provisions of the Incentive Compensation Plan
shall no longer apply; (iii) the Company shall promptly
transfer an amount equal to the aggregate of all Deferred
Bonus Accounts to a trustee under an irrevocable trust
commonly known as a "Rabbi Trust"; (iv) if the Participant
had a Deferred Bonus Account on September 27, 1994, and he
or she did not consent in writing to the provisions
described in the following clause (v) prior to November 1,
1994, then upon the Participant's termination of
employment with the Company, he or she shall promptly
receive the balance in the Deferred Bonus Account in a lump
sum distribution; and (v) upon a Participant's termination
of employment with the Company within 3 years after a
change in Control, he or she may, within 30 days thereafter,
designate a distribution schedule for their Deferred Bonus
Account which schedule may provide for a lump sum payment
or installment payments over a period of up to 15 years,
provided, however, that no payment shall be made until
the end of the severance period (for example, if the
Participant is entitled to 3 years' severance pay,
deferred bonus payments may not begin until 3 years after
termination even if such Participant receives the severance
pay in a lump sum at termination). To implement the afore-
mentioned, the Incentive Compensation Plan is hereby amended
by (i) deleting the second parenthetical in the third
sentence of Section 5.2 thereof and (ii) deleting the
parenthetical in the first sentence of Sections 6.3 and
7.1(d) thereof.
Section 9. Stock Option Plans. Upon the occurrence of
a Change in Control, all Options (as such term is defined in
the Stock Option Plans (as hereinafter defined)) then
outstanding under the Warner-Lambert Company 1974 Stock
Option and Alternate Stock Plan, the Warner-Lambert Company
1983 Stock Option Plan and the Warner-Lambert Company 1987
Stock Option Plan (collectively, the "Stock Option Plans")
and held by Participants shall become immediately
exercisable by the optionee. Effective as of the Effective
Date of the Plan, limited stock appreciation rights
("LSAR's") are hereby granted to all Participants, at such
Effective Date, in connection with all outstanding options
held by such Participants which are not Reference Options
(as defined in the Stock Option Plans). Such LSAR's shall
only be exercisable for a thirty (30) day period beginning
on the date of the occurrence of a Change in Control unless
(i) the optionee is subject to the reporting requirements of
Section 16(a) of the Act at the time of the occurrence of
the Change in Control and (ii) such event occurs within six
(6) months of the date of grant of the LSAR's, in which case
the LSAR's shall only be exercisable during the thirty (30)
day period beginning six (6) months after the grant of the
LSAR's. Such LSAR's shall remain exercisable (during the
thirty (30) day period beginning on the date of the
occurrence of the Change in Control or during the thirty
(30) day period beginning six (6) months after the grant of
the LSAR's, as the case may be), notwithstanding the
termination of the optionee's employment with the Company.
Upon the occurrence of the Change in Control within six (6)
months of the date of grant of the LSAR's, the Company shall
promptly transfer to a trustee under an irrevocable trust
commonly known as a "Rabbi Trust" for the benefit of the
Participants the maximum amount of cash estimated to be
necessary to satisfy the Company's obligations upon exercise
of all such LSAR's. Upon exercise of an LSAR, a Participant
shall be entitled to receive a cash payment equal to the
excess of the Fair Market Value (as hereinafter defined) on
the date of exercise of a share of Warner-Lambert Common
Stock over the grant price of the Option to which the LSAR
relates multiplied by the number of shares with respect to
which the LSAR is being exercised. For purposes hereof, the
term "Fair Market Value" shall have the same definition
currently applicable to the exercise of a Right (as defined
in the Stock Option Plans) during the thirty (30) day period
following a Change in Control. In addition, upon the
occurrence of a Change in Control, all Rights then
outstanding under the Stock Option Plans and held by
Participants shall become immediately exercisable by the
grantee; provided, however, that such Rights which have been
held by the grantee for less than six (6) months shall
become fully exercisable only during the thirty (30) day
period beginning six (6) months after the date of grant,
notwithstanding the termination of the grantee's employment
with the Company. Upon the occurrence of a Change in
Control, the Company shall promptly transfer to a trustee
under a Rabbi Trust for the benefit of Participants the
maximum amount of cash estimated to be necessary to satisfy
the Company's obligations upon exercise of all outstanding
Rights then held by Participants for less than six (6)
months. To implement the aforementioned, (i) Article 7 of
the Stock Option Plans is hereby amended by deleting
paragraph (i) of Section 7(b) thereof in its entirety and
substituting a new Paragraph (i) therefor, to read in its
entirety as provided in Exhibit 9(a) hereto; (ii) Article 8
of the Stock Option Plans is hereby amended by deleting
Paragraph (b) thereof in its entirety and substituting a new
Paragraph (b) therefor, to read in its entirety as provided
in Exhibit 9(b) hereto; and (iii) Article 8 of the Stock
Option Plans is hereby amended by adding a new Paragraph (f)
thereto, to read in its entirety as provided in Exhibit 9(c)
hereto. In addition, all Options and Rights presently
outstanding are hereby amended by deleting the last
paragraph of Paragraph 1 thereof in its entirety and
substituting therefor the language as provided in Exhibit
9(d) hereto. In addition, the Stock Option Plans and the
Warner-Lambert Company 1989 Stock Plan, the Warner-Lambert
Company 1992 Stock Plan and the Warner-Lambert Company 1996
Stock Plan (collectively, the "Stock Plans") are hereby
amended as set forth in Exhibit 9(e) hereof with respect to
a "Merger of Equals" (as therein defined).
Section 10. Medical Benefits. Upon the occurrence of
an Activation Event with respect to a Participant, such
Participant's coverage under the Warner-Lambert Medical Plan
and the Warner-Lambert Dental Plan (or HMO, as the case may
be) shall continue for the duration of the Severance Pay
Duration Period (including the extensions thereto provided
under Section 5), whether or not the Participant receives
the severance payments in a lump sum or in monthly payments.
In addition, for purposes of determining eligibility for
medical and dental coverage after retirement, a
Participant's Severance Pay Duration Period (including the
extensions thereto provided under Section 5) shall count as
a period of employment with the Company, whether or not the
Participant elects to receive severance payments in a lump
sum or in monthly payments. Further, upon the occurrence of
a Change in Control, the Company's retiree medical plan may
not be terminated or amended in a manner that is not also
applicable to active employees.
Section 11. Termination of Plan. This Plan may not be
terminated with respect to any Participant without the
written consent of such Participant.
Section 12. Amendment of Plan. This Plan may not be
amended in any manner which has a significant adverse effect
on any Participant and his rights hereunder without the
written consent of such Participant. Notwithstanding the
foregoing, upon the occurrence of a Change in Control, this
Plan may not be amended in any respect without the written
consent of each Participant affected by such proposed
amendment. Notwithstanding any other provision hereof, the
Plan may be amended in order to obtain or maintain the
status of (i) the Retirement Plan and Savings Plan as
qualified plans under Section 401(a) of the Code and (ii)
the Stock Option Plans as qualified under Rule 16b-3
promulgated pursuant to the Act.
Section 13. Administration. The Chief Executive
Officer of the Company shall appoint a committee (the
"Committee") consisting of three (3) Participants, one of
whom shall be the Corporate Vice President, Human Resources,
who shall act as chairman, to administer the Plan. The
Committee shall have the authority to interpret the Plan and
to adopt rules for the implementation thereof.
Section 14. Termination for Just Cause. For purposes
of this Plan, the term "Termination for Just Cause" shall
mean termination for the commission of a wrongful action
such as theft of Company property or alcohol or drug abuse.
The Company intends that Termination for Just Cause shall be
limited to actions which are comparable to theft or
substance abuse. The determination of whether alleged
grounds for termination qualify as a Termination for Just
Cause shall be made by an Arbitration Panel (as hereinafter
defined).
Section 15. Contract Right of Participants. The Board
of Directors of the Company intends this Plan to constitute
an enforceable contract between the Company and each
Participant and intends this Plan to vest rights in such
Participants as third party beneficiaries.
Section 16. Compensation. For all purposes hereof,
except Section 3 and except to the extent provided in
Section 5 with respect to the determination of a
Participant's Bonus Amount, a Participant's compensation,
rate of base earnings, job grade, target award or similar
amounts or status shall be the higher of such amount, grade
or status (as the case may be) at the time of (i) the
occurrence of a Change in Control, or (ii) the termination
of the Participant's employment.
Section 17. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as
though they were also used in the feminine gender in all
cases where they would so apply, and wherever any words are
used herein in the singular form they shall be construed as
though they were also used in the plural form in all cases
where they would so apply.
Section 18. Governing Law. This Plan shall be
governed by the law of the State of New Jersey (regardless
of the law that might otherwise govern under applicable New
Jersey principles of conflict of laws).
Section 19. Successors and Assigns. The Plan shall be
binding upon the Company and upon any assignee or successor
in interest to the Company.
Section 20. Excise Tax Reimbursement Agreements. As
soon as practicable after the Effective Date, all
Participants shall enter into excise tax reimbursement
agreements substantially in the form provided in Exhibit 20
hereto. The objective of these agreements is to reimburse
the Participants, on an after-tax basis, for any federal
excise tax or similar state or local taxes (whether or not
such taxes are in existence on the date hereof) that would
be imposed as a result of a change in control of the
Company.
Section 21. Arbitration Panel. For purposes of this
Plan, the term "Arbitration Panel" shall mean three (3)
independent arbitrators, one of whom shall be selected by
the Company, one by the Participant and the third shall be
selected by the two other arbitrators. In the event that
agreement cannot be reached on the selection of the third
arbitrator, such arbitrator shall be selected by the
American Arbitration Association. All arbitrators shall be
selected from a list provided by the American Arbitration
Association. All matters presented to the Arbitration Panel
shall be decided by majority vote. All costs of the
arbitration, including the Participant's attorneys' fees, if
any, shall be paid by the Company.
Section 22. Uniform Definition of Change in Control.
The definitions of change in control in the Retirement Plan,
Savings Plan, Warner-Lambert Company Supplemental Pension
Income Plan, Severance Policy, Warner-Lambert Supplemental
Savings Plan, Stock Option Plans, Warner-Lambert Company
1989 Stock Plan, Restricted Stock Plan for Directors of
Warner-Lambert Company, Deferred Compensation Plan for
Directors of Warner-Lambert Company and Warner-Lambert
Company Directors' Retirement Plan shall be amended to
incorporate the definition of "Change in Control" contained
in Section 4 of this Plan. To implement the foregoing, such
plans are hereby amended as provided in Exhibit 22 hereto.
Section 23. Notice of Termination. During the three
(3) year period after the occurrence of a Change in Control,
the employment of a Participant may not be terminated,
except in the event of Termination for Just Cause, unless
the Participant has received six (6) months' advance notice
of the termination in a letter written to such Participant,
which letter shall specify (i) the date of termination,
which date shall not be sooner than six (6) months after
receipt of such letter by the Participant, (ii) the reason
for termination, and (iii) a commitment to honor this Plan,
including, without limitation, the Severance Policy, and to
pay to the Participant all amounts to which the Participant
is entitled thereunder. In addition, the expiration of such
three (3) year period shall not extinguish the rights of any
Participant who has received notice of termination during
such three (3) year period (i) to a full six (6) month
notice period (even if such notice period thereby extends
beyond the three (3) year period), and (ii) to a payment of
such Participant's severance and other benefits in
accordance with the provisions of this Plan.
Section 24. Maintenance of Status Quo. Upon the
occurrence of a Change in Control, no Participant's salary,
bonus or benefits may be reduced for a period of three (3)
years provided that such Participant's performance is
acceptable. For purposes of this Section, a Participant's
performance shall be considered "acceptable" unless the
Participant receives a written performance appraisal
indicating (a) that such Participant's overall performance
(i) is not acceptable and (ii) has not been acceptable
during a performance review period extending at least six
(6) months and (b) the specific reasons the Participant's
performance is not acceptable. Further, such performance
appraisal must have been (a) reviewed and concurred in by
the Participant's supervisor, the supervisor's supervisor
(unless the Participant's supervisor is the Chief Executive
Officer of the Company) and the Participant's Human
Resources representative and (b) preceded by a written
warning given to such Participant which shall have provided
a reasonable opportunity for the Participant to improve his
or her performance.
WARNER-LAMBERT COMPANY<PAGE>
EXHIBIT 5
Target Annual Incentive Award
Target Percentage
Grade of Grade Midpoint
23 70%
22 65
21 58
20 55
19 52
18 49
17 39
16 37
15 34
14 31
13 28
12 24
11 20
10 16
9 8
8 5<PAGE>
EXHIBIT 6(a)
Retirement Plan
"The term "Activation Event" shall also include a
termination of employment with the Company (whether
voluntary or involuntary) within two (2) years after a
Change in Control for any reason other than death or
Termination for Just Cause (i) with respect to Participants
who are covered by the Executive Severance Plan at the time
of occurrence of the Change in Control, and (ii) with
respect to all other Participants (x) if the Change in
Control occurs otherwise than through a transaction approved
and authorized or consented to by the Board of Directors of
the Company, as constituted prior to such transaction, or
(y) in such other circumstance as the Board of Directors
shall deem appropriate."<PAGE>
EXHIBIT 6(b)
Supplemental Pension Plan
(a) an Employee shall be eligible to receive a
Supplemental Pension Income in an amount determined in
accordance with Article VI hereof if he was at salary grade
17 or higher prior to such Change in Control of the Company
and an "Activation Event" (as defined in the Executive
Severance Plan) shall have occurred with respect to such
Employee;<PAGE>
EXHIBIT 7
Savings Plan
"The term "Activation Event" shall also include a
termination of employment with the Company (whether
voluntary or involuntary) within two (2) years after a
Change in Control (as hereinafter defined) for any reason
other than death or Termination for Just Cause (i) with
respect to Participants who are covered by the Executive
Severance Plan at the time of occurrence of the Change in
Control, and (ii) with respect to all other Participants (x)
if the Change in Control occurs otherwise than through a
transaction approved and authorized or consented to by the
Board of Directors of the Company, as constituted prior to
such transaction, or (y) in such other circumstance as the
Board of Directors shall deem appropriate."
<PAGE>
EXHIBIT 9(a)
Stock Option Plans
"(i) Notwithstanding any other provision contained in
this Plan, no part of an Option may be exercised unless the
Optionee remains in the continuous employ of the Company for
one year from the date the Option is granted except that
upon the occurrence of a Change in Control of Warner-Lambert
Company (as hereinafter defined) all Options may be
exercised without giving effect to the one year limitation
and the limitations, if any, which may have been imposed by
the Committee pursuant to paragraph (b)(ii) of this Article
7 with respect to the percent of the total number of shares
to which the Option relates which may be purchased from time
to time during the Option Period."
<PAGE>
EXHIBIT 9(b)
Stock Option Plans
"(b) Exercise of Right. A Right shall become
exercisable at such time, and in respect of such number of
shares of Common Stock, as the Reference Option is then
exercisable and such Right shall terminate upon termination
of the Reference Option, provided, however, that no Right
shall be exercisable unless the Grantee shall have remained
in the continuous employ of the Company for one year from
the date the Right was granted except that upon the
occurrence of a Change in Control of Warner-Lambert Company,
all Rights may be exercised without giving effect to the one
year limitation and the limitations, if any, which may have
been imposed by the Committee pursuant to paragraph (b)(ii)
of Article 7 with respect to the percent of the total number
of shares to which the Right relates which may be purchased
from time to time during the Option Period; provided,
however, that Rights which have been held for less than six
months on the date of the occurrence of a Change in Control
by Grantees who at the time of the occurrence of the Change
in Control are subject to the reporting requirements of
Section 16(a) of the Act may be exercised only during the
thirty (30) day period beginning six months after the date
of grant of the Right, notwithstanding the termination of
the Grantee's employment with the Company, and without
giving effect to the one year limitation and the
limitations, if any, which may have been imposed by the
Committee pursuant to paragraph (b)(ii) of Article 7 with
respect to the percent of the total number of shares to
which the Right relates which may be purchased from time to
time during the Option Period. Except as provided in this
paragraph (b) and in paragraphs (d) and (e) of this Article
8, no Right shall be exercisable unless at the time of such
exercise the Grantee shall be in the employ of the Company.
The date on which the exercise of a Right is effective shall
hereinafter be referred to as the Valuation Date."
<PAGE>
EXHIBIT 9(c)
Stock Option Plans
"(f) Notwithstanding anything herein to the contrary,
Limited Rights may be granted hereunder by the Compensation
Committee with respect to the Options granted under the Plan
(which are not Reference Options), which shall be
exercisable only upon the occurrence of a Change in Control.
Such Limited Rights may only be exercised by Optionees
during the thirty (30) day period beginning on the date of
the occurrence of a Change in Control unless (i) at the time
of the occurrence of the Change in Control such Optionee is
subject to the reporting requirements of Section 16(a) of
the Act and (ii) such event occurs within six (6) months of
the date of grant, in which case such Limited Rights may
only be exercised during the thirty (30) day period
beginning six (6) months after the grant of the Limited
Rights. During the period specified in the preceding
sentence, such Limited Rights may be exercised notwith-
standing the termination of the Optionee's employment with
the Company. Upon the exercise of a Limited Right, the
Optionee shall be entitled to receive a cash payment equal
to the excess of the Fair Market Value of a share of Common
Stock on the Valuation Date over the Option Price of the
related Option multiplied by the number of shares with
respect to which the Limited Right is being exercised (in
such case the method of determining the Fair Market Value in
the third sentence of Section 6(i) shall apply). Limited
Rights shall expire on the first to occur of the date of
exercise or expiration of the right of exercise of the
Limited Right or of the related Option. Further, upon
exercise of a Limited Right, the related Option shall be
cancelled. The Board of Directors reserves the right to
cancel all outstanding Limited Rights in accordance with
Sections 11 and 12 of the Executive Severance Plan. Except
as otherwise provided herein, the provisions of the Plan
relating to Rights shall also apply to Limited Rights."
<PAGE>
EXHIBIT 9(d)
Stock Option Plans
"Notwithstanding anything herein to the contrary, this
Option may be exercised in full as of the date on which
there occurs a "Change in Control of Warner-Lambert Company"
(as defined in the Plan).
Further, you are hereby granted Limited Rights (as
defined in the Plan) with respect to those Options presently
held by you which were not granted in tandem with Rights.
These Limited Rights may only be exercised by you during the
thirty (30) day period beginning on the date of the
occurrence of a "Change in Control" (as hereinafter defined)
unless (i) you are subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Act"), at the time of the occurrence of the
Change in Control (a "Reporting Person") and (ii) such
Change in Control occurs within six (6) months of the date
of grant of the Limited Rights, in which case these Limited
Rights may only be exercised during the thirty (30) day
period beginning six (6) months after the date of grant of
the Limited Rights. Lastly, upon exercise of a Limited
Right, you shall be entitled to receive a cash payment equal
to the excess of the "Fair Market Value" (as defined in the
Plan) of a share of Common Stock on the date of exercise
over the Option Price multiplied by the number of shares
with respect to the Limited Right is being exercised.
Notwithstanding the foregoing, the Company reserves the
right to cancel all outstanding Limited Rights in the event
that the Board of Directors of the Company cancels the
Executive Severance Plan. Except as otherwise provided
herein, the provisions of the Plan relating to Rights shall
also apply to Limited Rights.
In addition, notwithstanding anything herein to the
contrary, Rights which are outstanding on the date of the
occurrence of a Change in Control may be exercised in full;
provided, however, that if you are a Reporting Person and
the Change in Control occurs within six (6) months after the
date of grant of the Right, the Right may only be exercised
during the thirty (30) day period beginning six (6) months
after the date of grant of the Right.
For purposes hereof, a Change in Control shall be
deemed to have occurred if (i) any person (as such term is
used in Sections 13(d) and 14(d)(2) 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 20% or more of the combined voting
power of the Company's then outstanding securities, (ii) the
stockholders of the Company approve a merger, consolidation,
sale or disposition of all or substantially all of the
Company's assets or plan of liquidation or (iii) the
composition of the Board of Directors of the Company at any
time during any consecutive twenty-four (24) month period
changes such that the Continuity Directors (as hereinafter
defined) cease for any reason to constitute at least fifty-
one percent (51%) of the Board. For purposes of the
foregoing clause (iii), "Continuity Directors" means those
members of the Board who either (a) were directors at the
beginning of such consecutive twenty-four (24) month period,
or (b)(1) filled a vacancy during such twenty-four (24)
month period created by reason of (x) death, (y) a medically
determinable physical or mental impairment which renders the
director substantially unable to function as a director or
(z) retirement at the last mandatory retirement age in
effect for at least two (2) years, and (2) were elected,
nominated or voted for by at least fifty-one percent (51%)
of the current directors who were also directors at the
commencement of such twenty-four (24) month period."
<PAGE>
EXHIBIT 9(e)
Stock Plans
1. Section 4.6 of the Warner-Lambert Company 1989
Stock Plan, the Warner-Lambert Company 1992 Stock Plan and
the Warner-Lambert Company 1996 Stock Plan shall be amended
by adding "(a)" before the first sentence thereof and by
adding the following as (b) at the end thereof and Section
6(h) of the Warner-Lambert Company 1983 Stock Option Plan
and the Warner-Lambert Company 1987 Stock Option Plan shall
be amended by adding "(I)" before the first sentence thereof
and by adding the following as (II) at the end thereof:
"As used in the Plan, a "Merger of Equals" shall mean
either: (a) a Change in Control of Warner-Lambert Company,
pursuant to the terms of which the stockholders of Warner-
Lambert Company receive consideration, including securities,
with an Aggregate Value (as defined below) not greater than
115 percent of the average closing price of the Common Stock
of Warner-Lambert Company on the Composite Tape for New York
Stock Exchange issues for the twenty business days
immediately preceding the earlier of the execution of the
definitive agreement pertaining to the transaction or the
public announcement of the transaction; or (b) any other
Change in Control of Warner-Lambert Company which the Board
of Directors, in its sole discretion, determines to be a
"Merger of Equals" for the purposes of this provision. For
purposes of this section, "Aggregate Value" shall mean the
consideration to be received by the stockholders of Warner-
Lambert Company equal to the sum of (A) cash, (B) the value
of any securities and (C) the value of any other non-cash
consideration. The value of securities received shall equal
the average closing price of the security on the principal
security exchange on which such security is listed for the
twenty business days immediately preceding the earlier of
the execution of the definitive agreement pertaining to the
transaction or the public announcement of the transaction.
For securities not traded on a security exchange, and for
any other non-cash consideration that is received, the value
of such security or such non-cash consideration shall be
determined by the Board of Directors."
2. The Warner-Lambert Company 1989 Stock Plan, the Warner-
Lambert Company 1992 Stock Plan and the Warner-Lambert
Company 1996 Stock Plan shall be amended by adding the
following as new Section 5.9 and the Warner-Lambert Company
1983 Stock Option Plan and the Warner-Lambert Company 1987
Stock Option Plan shall be amended by adding the following
as new Section 7(h):
"Rollover Option. Notwithstanding anything herein to
the contrary, in the event of a Merger of Equals all Options
granted hereunder shall become immediately exercisable by
the Optionee and the Options shall be converted into options
to purchase the stock of the company which other
shareholders of Warner-Lambert Company receive in the
transaction (the "Rollover Options"). The Rollover Options
shall be subject to the same terms and conditions as those
applicable to the Options held prior to the Merger of
Equals, including, but not limited to, exercisability and
Option Period, except as hereinafter provided. If the
Aggregate Value consists only of shares of a publicly traded
security ("New Security"), each Rollover Option shall
entitle the holder to purchase the number of shares of New
Security which is equal to the product of (a) the Exchange
Ratio (as hereinafter defined) and (b) the number of shares
of Common Stock subject to the Option immediately prior to
the effective date of the Merger of Equals (rounded to the
nearest full number of shares). The exercise price for each
Rollover Option shall be the exercise price per share of
each Option divided by the Exchange Ratio (rounded to the
nearest full cent). For purposes hereof, "Exchange Ratio"
shall mean the ratio for exchanging Common Stock held by the
stockholders of Warner-Lambert Company for shares of New
Security which is set forth in the definitive agreement
pertaining to the transaction. If the Aggregate Value
consists of consideration other than New Securities, the
Board shall make appropriate adjustments to the number of
Rollover Options and the exercise price thereof. In
addition, with respect to Options granted after March 25,
1997, if an optionee who is not 55 years old is terminated
within three (3) years following the Merger of Equals (for a
reason other than "Termination for Just Cause," as defined
in the Warner-Lambert Company Enhanced Severance Plan), such
optionee's Options shall remain exercisable notwithstanding
such termination of employment by the Company or any
successor or its affiliates and such Options shall be
exercisable until two years following the termination of
employment, but in no event after the expiration of the
Option Period."<PAGE>
EXHIBIT 20
This AGREEMENT, made and entered into as of June __,
1990 (this "Agreement"), between Warner-Lambert Company, a
Delaware corporation (the "Company"), and ________________
_________________________ (the "Executive").
WHEREAS, the Executive is a highly valued employee of
the Company; and
WHEREAS, the Company has awarded the Executive, in the
ordinary course of business and during the Executive's
employment with the Company, certain employee benefits,
including, but not limited to, employee stock options, that
are designed to compensate the Executive for his services to
the Company and to give him incentive to expend every effort
to produce the best results for the benefit of the Company's
shareholders; and
WHEREAS, in light of the economic climate and in an
effort to foster a sense of job security for the Executive,
the Company and the Executive have entered into certain
arrangements (the "Executive Compensation Arrangements")
regarding the Executive's employee benefits, including, but
not limited to, arrangements regarding the accelerated
vesting of employee stock options and the payment of
severance, that are designed to preserve the Executive's
benefits in the event of a change in control of the Company;
and
WHEREAS, there exists uncertainty in the tax law
whether, and/or to what extent, the Executive Compensation
Arrangements will subject the Executive to the tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any similar state or local taxes,
(all such taxes, whether or not in existence on the date
hereof, being collectively referred to herein as the "Excise
Tax") thereby diminishing the value of the employee benefits
to which the Executive is entitled;
NOW, THEREFORE, in consideration of the mutual premises
and covenants contained herein, the Company and the
Executive do hereby covenant and agree as follows:
1. Special Payments. In the event that the Executive
becomes entitled to any payments and such payments, or any
part thereof, will be subject to the Excise Tax, the Company
shall pay to the Executive, in accordance with the
provisions set forth below, an additional amount (a "Special
Payment") that may be necessary to reimburse the Executive,
on an after-tax basis, for any Excise Tax that may be
imposed by reason of such payments, or any portion thereof,
and for any federal, state and local income tax and Excise
Tax that may be imposed by reason of the Special Payment.
2. Calculation of Excise Tax and Special Payment. The
Special Payment shall be paid to the Executive as promptly
as practicable following a change in control of the Company
once Price Waterhouse has calculated the estimated Excise
Tax to be imposed on the Executive, except as otherwise
provided in paragraph 3. For purposes of determining
whether any payments will be subject to Excise Tax and the
amount of such Excise Tax, all amounts in any manner
connected with a change in control, whether received by the
Executive at such time or not and including amounts which
the Executive has the right to receive in the future as a
result of the change in control (i) shall be treated as
"parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, and (ii) the value
of any non-cash benefits or any deferred payment or benefit
shall be determined by Price Waterhouse in accordance with
the principles of Section 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of any Special
Payment, the Executive shall be deemed to pay state and
local income taxes at the highest marginal rate of taxation
imposed by the state and locality in which the Executive
resides or is employed (or both) in the calendar year in
which the Special Payment is to be made, and federal income
taxes at the highest marginal rate of taxation in the
calendar year in which the Special Payment is to be made,
net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes. At no additional cost to the Executive, Price
Waterhouse shall be responsible for completing and filing
appropriate tax returns for the Executive in connection with
the Special Payment hereunder, consistent with Price
Waterhouse's calculation of such Special Payment.
3. Subsequent Special Payment. In the event that
Price Waterhouse shall determine that payments may be
subject to the Excise Tax if made but that it is uncertain
whether such payments will in fact be made, for example,
payments of severance that will only be made if the
Executive terminates his employment, or in the event that
Price Waterhouse shall determine that payments are not
subject to the Excise Tax but that there is a possibility of
such payments being so treated, Price Waterhouse shall
provide the Company and the Executive with an estimate of
the maximum amount of the Special Payment that might be
required to be paid pursuant to this Agreement. Thereupon
the Company shall promptly transfer to a trustee of an
irrevocable trust commonly known as a "Rabbi Trust" the
maximum additional amount of cash estimated to be necessary
to satisfy the Company's obligations under this Agreement
after taking into consideration any Special Payments
previously made to the Executive. The existence of such
trust shall not discharge the Company's obligations
hereunder and the Company shall continue to have the
obligation to make such payments except to the extent that
payments are actually made to the Executive from such fund.
Additional Special Payments shall be made to the Executive
upon a determination by Price Waterhouse that subsequent
payments received by the Executive, for example, payments of
severance following termination of employment, will result
in additional Excise Tax.
4. Adjustment of Special Payments. (a) In the event
that subsequently enacted or decided statutes, regulations,
administrative rulings or case law indicate, in the view of
Price Waterhouse, that the calculation of the Excise Tax
previously made by Price Waterhouse overstates the
Executive's liability for such Excise Tax, the Company may
direct the Executive, at the Company's sole expense, to file
for a refund of such Excise Tax or take such other actions
as Price Waterhouse reasonably may request in order to
reduce the Executive's liability for Excise Tax and to
ensure that the payments and any Special Payments made to
the Executive pursuant to this Agreement are not determined
to be "parachute payments" within the meaning of Section
280G(b)(2) of the Code, provided that the Company shall have
taken consistent positions on its tax returns and the
Company has issued similar directives to all similarly
situated executives or former executives of the Company who
have received Excise Tax reimbursement payments. The
Executive shall cooperate in good faith in assisting the
Company and Price Waterhouse in their actions pursuant to
this paragraph 4(a).
(b) If it shall be determined, following the
payment to the Executive of the Special Payment, in a final
judicial determination or a final administrative settlement
to which the Executive is a party that the calculation of
the Excise Tax and/or the Special Payment is in error, then
Price Waterhouse will determine the amount (the "Adjustment
Amount"), if any, which the Executive must pay to the
Company or the Company must pay to the Executive, as the
case may be, in order to put the Executive in the same
position, after taking account of any and all taxes
(including penalties and interest) paid by or for the
Executive or refunded to or for the benefit of the Executive
and of the value to the Executive of any and all tax
deductions allowed or disallowed with respect to any
adjustment made in such determination or settlement or
pursuant to this clause, as he would have been in had he
received the Special Payment using the calculations set
forth in such determination or settlement; provided,
however, that as soon as practicable after the Adjustment
Amount has been so determined, the Company shall pay the
Adjustment Amount to the Executive, or the Executive shall
pay the Adjustment Amount to the Company, as the case may
be. In the event that the amount of the estimated Special
Payment exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company
to the Executive payable on the fifth day after demand by
the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
(c) The Executive will promptly notify the Company
in writing whenever he receives notice of the institution of
a judicial or administrative proceeding, formal or informal,
in which the federal tax treatment of any amount paid or
payable under this Agreement is being reviewed or is in
dispute. The Company agrees that, in the event it desires
the claim to be contested, it shall request promptly (but in
no event later than 30 days after notice from the Executive
or such earlier period as the Internal Revenue Service may
specify for responding to such claim) that the Executive
contest the claim. Unless required by law, the Executive
agrees not to make any payment of any tax which is the
subject of the claim before he has given the notice or
during the 30-day period thereafter unless he receives
written instruction from the Company to make such payment,
in which case the Executive will act promptly in accordance
with such instructions. If the Company requests that the
Executive contest the claim and provides the Executive with
an opinion of its counsel, at the Company's sole expense,
setting forth the facts and legal analysis on which it is
based, to the effect that there exists a substantial
likelihood of success in contesting the claim, the Executive
will contest the claim by pursuing administrative remedies,
suing for a refund in the appropriate court or contesting
the claim in the United States Tax Court, all at the
Company's sole expense. If requested by the Company in
writing, the Executive will, at the sole expense of the
Company, take all reasonably necessary actions not adverse
to the Executive to compromise or settle the claim, but in
no event will the Executive compromise or settle the claim
or cease to contest the claim without the written consent of
the Company, which consent shall not be unreasonably
withheld. The Executive agrees, at the sole expense of the
Company, to take appropriate appeals of any judgment or
decision that would require the Company to make a Special
Payment under paragraph 1 if requested by the Company and if
the Executive is provided with an opinion of the Company's
counsel, at the Company's sole expense, setting forth the
facts and legal analysis on which it is based, to the effect
that there exists a substantial likelihood of success on
appeal.
(d) The Company shall pay or reimburse the
Executive from time to time, within five business days after
presentation of reasonable documentation therefor, for all
costs and expenses, including reasonable attorney's fees
incurred as a result of contesting a claim or seeking a
refund with respect to Excise Taxes.
(e) Should the Company fail to provide direction
to the Executive in accordance with the provisions of this
Paragraph 4, the Executive, promptly following the
Executive's written request for such direction, shall take
whatever action he deems appropriate (the Company having no
right to later challenge that decision) and it shall be
deemed that the Company requested him to take that action.
5. State or Local Taxes. All issues surrounding the
application of any Excise Tax which is a state or local tax
shall be resolved by Price Waterhouse based upon the
principles underlying the purpose of this Agreement and by
reference to the methodology, to the extent relevant,
established in Paragraphs 2, 3, and 4 hereof.
6. Amendment; Waiver. This Agreement may not be
modified, amended, waived or terminated in any manner except
by an instrument in writing signed by both parties hereto.
At any time prior to a change in control, the Board of
Directors of the Company may substitute another firm of
certified public accountants. The waiver by either party of
compliance with any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any
other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
7. Governing Law. All matters affecting this
Agreement, including the validity thereof, are to be
governed by, interpreted and construed in accordance with
the laws of the State of New Jersey, except provisions
relating to conflict of laws.
8. Notices. Any notice hereunder by either party to
the other shall be given in writing by personal delivery or
certified mail, return receipt requested. If addressed to
the Executive, the notice shall be delivered or mailed to
the Executive at the address specified under the Executive's
signature hereto, or if addressed to the Company, the notice
shall be delivered or mailed to the Company at its executive
offices to the attention of Vice President and General
Counsel. A notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by certified
mail, on the date shown on the applicable return receipt.
9. Counterparts. This Agreement may be executed by
either of the parties hereto in counterpart, each of which
shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
10. Headings. The headings of paragraphs herein are
included solely for convenience of reference and shall not
control the meaning or interpretation of any of the
provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused the
Agreement to be signed by its officer pursuant to the
authority of its Board of Directors, and the Executive has
executed this Agreement, as of the day and year first
written above.
WARNER-LAMBERT COMPANY
By __________________________
Name:
Title:
[NAME]
______________________________
Address:
<PAGE>
EXHIBIT 22
1. The third sentence of the second paragraph of
Section 1 of Article XXI of the Retirement Plan, the second
sentence of the second paragraph of Section 14.1 of Article
14 of the Savings Plan, Section 13.2 of Article XIII of the
Supplemental Pension Income Plan, the second sentence of the
second paragraph of Section 11.1 of Article 11 of the
Supplemental Savings Plan, Article 6(h) of the Stock Option
Plans and the first sentence of Section 4.6 of the Warner-
Lambert Company 1989 Stock Plan, are hereby amended by
deleting the phrase "(with respect to persons who are not
participants in the Warner-Lambert Executive Severance
Plan)".
2. Section 11.2 of Article XI of the Warner-Lambert
Company Directors' Retirement Plan, the last sentence of
Section 4.6 of Article IV of the Deferred Compensation Plan
for Directors of Warner-Lambert Company and Section 4.5(b)
of the Restricted Stock Plan for Directors of Warner-Lambert
Company are hereby amended by adding the following provision
at the end thereof:
"or (iii) the composition of the Board at any time
during any consecutive twenty-four (24) month period
changes such that the Continuity Directors (as
hereinafter defined) cease for any reason to constitute
at least fifty-one percent (51%) of the Board. For
purposes of the foregoing clause (iii), "Continuity
Directors" means those members of the Board who either
(a) were directors at the beginning of such consecutive
twenty-four (24) month period, or (b)(1) filled a
vacancy during such twenty-four (24) month period
created by reason of (x) death, (y) a medically
determinable physical or mental impairment which
renders the director substantially unable to function
as a director or (z) retirement at the last mandatory
retirement age in effect for at least two (2) years,
and (2) were elected, nominated or voted for by at
least fifty-one percent (51%) of the current directors
who were also directors at the commencement of such
twenty-four (24) month period."
<TABLE>
EXHIBIT 12
WARNER-LAMBERT COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Years Ended December 31,
Three Months Ended ----------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
Earnings before income taxes and
accounting changes (less
<S> <C> <C> <C> <C> <C> <C>
minority interests) $291.6 $1,107.7 $1,018.6 $ 913.1 $318.5 $858.2
Add:
Interest on indebtedness-
excluding amount capitalized 39.2 145.9 122.7 93.7 64.2 80.8
Amortization of debt expense .2 .5 .4 .4 .5 .6
Interest factor in rent
expense (a) 6.9 27.5 26.9 26.2 25.4 23.4
------ -------- -------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Adjusted earnings $337.9 $1,281.6 $1,168.6 $1,033.4 $408.6 $963.0
====== ======== ======== ======== ====== ======
Fixed Charges:
Interest on indebtedness $ 39.2 $ 145.9 $ 122.7 $ 93.7 $ 64.2 $ 80.8
Capitalized interest 1.7 9.6 10.1 9.4 8.6 8.1
Amortization of debt expense .2 .5 .4 .4 .5 .6
Interest factor in rent
expense (a) 6.9 27.5 26.9 26.2 25.4 23.4
------ -------- -------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Total fixed charges $ 48.0 $ 183.5 $ 160.1 $ 129.7 $ 98.7 $112.9
====== ======== ======== ======== ====== ======
Ratio of earnings to fixed charges 7.0 7.0 7.3 8.0 4.1(b) 8.5
====== ======== ======== ======== ====== ======
(a) Represents one third of rental expense, which the company believes is a reasonable
approximation.
(b) The Company's ratio of earnings to fixed charges for 1993 would have been 9.5 excluding the
restructuring charges of $525.2 million.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND FROM THE RELATED
CONSOLIDATED STATEMENT OF INCOME FOR THE 3 MONTH PERIOD ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000104669
<NAME> WARNER-LAMBERT COMPANY AND SUBSIDIARIES
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 416
<SECURITIES> 32
<RECEIVABLES> 1,345
<ALLOWANCES> 0
<INVENTORY> 654
<CURRENT-ASSETS> 2,826
<PP&E> 3,619
<DEPRECIATION> 1,471
<TOTAL-ASSETS> 7,156
<CURRENT-LIABILITIES> 2,137
<BONDS> 1,717
0
0
<COMMON> 321
<OTHER-SE> 2,239
<TOTAL-LIABILITY-AND-EQUITY> 7,156
<SALES> 1,777
<TOTAL-REVENUES> 1,777
<CGS> 549
<TOTAL-COSTS> 549
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> 292
<INCOME-TAX> 88
<INCOME-CONTINUING> 204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 204
<EPS-PRIMARY> .75
<EPS-DILUTED> 0
</TABLE>
