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.
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