WARNER-LAMBERT COMPANY
1987 STOCK OPTION PLAN
AS AMENDED TO MARCH 25, 1997
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
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.