WARNER-LAMBERT COMPANY
1989 STOCK PLAN
AS AMENDED TO MARCH 25, 1997
WARNER-LAMBERT COMPANY
1989 STOCK PLAN
ARTICLE I
Purpose of Plan
Section 1.1. Purpose. The purpose of the 1989 Stock Plan
is to provide additional incentive to the officers and other
employees of the Company (as hereinafter defined) and to
recognize and reward efforts and accomplishments in order to
strengthen the desire of employees to remain with the Company,
stimulate their efforts on behalf of the Company and attract
and retain persons of competence, and, by encouraging ownership
of a stock interest in the Company, to gain for the
organization the advantages inherent in employees having a
sense of proprietorship.
ARTICLE II
Definitions
Section 2.1. Definitions. Whenever used herein, unless
the context otherwise indicates, the following terms shall have
the respective meaning set forth below:
Act: The Securities Exchange Act of 1934, as amended.
Board of Directors (or Board): The Board of Directors of
Warner-Lambert.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The committee appointed to administer the Plan
in accordance with Section 11.1 hereof.
Common Stock: Common Stock, par value $1.00 per share, of
Warner-Lambert.
Company: Warner-Lambert and its Subsidiaries.
Employee: Officers and other employees of the Company
(including such persons who are also members of the Board of
Directors).
Fair Market Value: As used in the Plan, the term "Fair
Market Value" shall be the mean between the high and low sales
prices for Common Stock of Warner-Lambert Company on the
Composite Tape for New York Stock Exchange issues on the date
the calculation thereof shall be made. In the event the date
of calculation shall be on a date which shall not be a trading
date on the New York Stock Exchange, determination of Fair
Market Value shall be made as of the first date prior
theretowhich shall have been a trading date on the New York
Stock Exchange.
Grantee: A Participant to whom Rights have been granted
in accordance with the provisions of Articles IV and VI hereof.
Option: The grant to Participants of options to purchase
shares of Common Stock in accordance with the provisions of
Articles IV and V hereof.
Optionee: A Participant to whom Options have been granted
in accordance with the provisions of Articles IV and V hereof.
Option Period: The period of time during which an Option
may be exercised in accordance with the provisions hereof.
Option Price: The price per share payable to the Company
for shares of Common Stock upon the exercise of an Option.
Participant: Each Employee to whom a Stock Award is
granted under the Plan.
Performance Awards: Awards made to Employees in
accordance with the provisions of Article VIII hereof.
Plan: The Warner-Lambert Company 1989 Stock Plan.
Reference Option: An Option, other than an incentive
stock option, to which a Right shall relate.
Reporting Person: A person subject to the reporting
requirements of Section 16(a) of the Act.
Restricted Period: The period of time from the date of
grant of Restricted Stock until the lapse of restrictions
attached thereto.
Restricted Stock: Common Stock granted under the Plan
which is subject to restrictions in accordance with the
provisions of Article VII hereof.
Right: The grant to Participants of rights to acquire
shares of Common Stock in accordance with the provisions of
Articles IV and VI hereof.
Spread: The amount by which the Option Price that would
be payable by the Grantee upon the exercise of the Reference
Option is less than the Fair Market Value of a share of Common
Stock on the date the related Right was granted.
Stock Award: A grant of Options, Rights, Restricted Stock
or Performance Awards in accordance with the provisions hereof.
Subsidiary: Any corporation (other than Warner-Lambert)
in an unbroken chain of corporations beginning with and
including Warner-Lambert if, at the time of the granting of a
Stock Award, each of the corporations other than the last
corporation in said unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
Valuation Date: The date on which the exercise of a Right
is effective.
Warner-Lambert: Warner-Lambert Company or any successor
to it in ownership of substantially all of its assets, whether
by merger, consolidation or otherwise.
Article III
Eligibility and Grants
Section 3.1. Eligibility and Grants. The Committee shall
determine the Employees who shall be granted Stock Awards and
the number of shares thereof. The Committee may make more than
one grant to an Employee during the life of the Plan. Each
grant shall be evidenced by a written instrument duly executed
by or on behalf of the Company.
Section 3.2. Share Limitation. The aggregate number of
shares of Common Stock which may be issued under the Plan shall
not exceed 8,000,000 shares of Common Stock which may be either
authorized and unissued shares or issued shares reacquired by
the Company. Notwithstanding the above limitation, if any
Option granted under the Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full,
the corresponding number of unpurchased shares shall again be
available for the purposes of the Plan; provided, however, that
if such expired, terminated or cancelled Option shall have been
a Reference Option, none of such unpurchased shares shall again
become available for purposes of the Plan to the extent that
the related Right granted under the Plan is exercised.
Further, if any shares of Common Stock granted hereunder are
forfeited or such award otherwise terminates without the
delivery of such shares upon the lapse of restrictions, the
shares subject to such grant, to the extent of such forfeiture
or termination, shall again be available under the Plan. In
addition, any shares of Common Stock issued under the Plan
through the assumption or substitution of outstanding grants
from an acquired company shall not reduce the shares available
under the Plan.
ARTICLE IV
General Terms of Options and Rights
Section 4.1. Consideration. The Committee shall
determine the consideration to the Company for the granting of
Options and Rights under the Plan, as well as the conditions,
if any, which it may deem appropriate to ensure that such
consideration will be received by, or will accrue to, the
Company, and, in the discretion of the Committee, such
consideration need not be the same, but may vary for Options
and Rights granted under the Plan at the same time or from time
to time.
Section 4.2. Number of Options and Rights.
(a) The Committee may grant more than one Option or
Right to an individual during the life of the Plan and, subject
to the requirements of Section 422A of the Code with respect to
incentive stock options, such Option or Right may be in
addition to, in tandem with, or in substitution for, options or
rights previously granted under the Plan or under another stock
plan of the Company or of another corporation and assumed by
Warner-Lambert.
(b) The Committee may permit the voluntary surrender
of all or a portion of any Option granted under the Plan or any
prior plan to be conditioned upon the granting to the Employee
of a new Option for the same or a different number of shares as
the Option surrendered, or may require such voluntary surrender
as a condition precedent to a grant of a new Option to such
Employee. Such new Option shall be exercisable at the price,
during the period, and in accordance with any other terms or
conditions specified by the Committee at the time the new
Option is granted.
Section 4.3. Option and Right Agreements. The Company
shall effect the grant of Options and Rights under the Plan, in
accordance with determinations made by the Committee, by
execution of instruments in writing, in a form approved by the
Committee. Each Option and Right shall contain such terms and
conditions (which need not be the same for all Options and
Rights, whether granted at the same time or at different times)
as the Committee shall deem to be appropriate. The Committee
may, in its sole discretion, and subject to such terms and
conditions as it may adopt, accelerate the date or dates on
which some or all outstanding Options and Rights may be
exercised. Except as otherwise provided by the Committee,
Options and Rights shall be exercised by submitting to Warner-
Lambert a signed copy of a notice of exercise in a form to be
supplied by Warner-Lambert and the exercise of an Option or
Right shall be effective on the date on which Warner-Lambert
receives such notice at its principal corporate offices.
Section 4.4. Non-Transferability of Option or Right. No
Option or Right granted under the Plan to an Employee shall be
transferable by the Employee otherwise than by will or by the
laws of descent and distribution, and such Option and Right
shall be exercisable, during the Employee's lifetime, only by
such Employee.
Section 4.5. Optionees and Grantees not Stockholders. An
Optionee or Grantee or legal representative thereof shall have
none of the rights of a stockholder with respect to shares
subject to Options or Rights until such shares shall be issued
upon exercise of the Option or Right.
Section 4.6. Certain Events. (a) As used in the Plan, a
"Change in Control of Warner-Lambert Company" shall be deemed
to have occurred if (i) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Act is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of Warner-Lambert Company
representing 20% or more of the combined voting power of
Warner-Lambert Company's then outstanding securities, (ii) upon
the consummation of a merger, consolidation, sale or
disposition of all or substantially all of Warner-Lambert
Company's assets or plan of liquidation which is approved by
shareholders of Warner-Lambert Company (a "Transaction"), or
(iii) the composition of the Board of Directors of Warner-
Lambert Company (the "Board") at any time during any
consecutive twenty-four (24) month period changes such that the
Continuity Directors (as hereinafter defined) cease for any
reason to constitute at least fifty-one percent (51%) of the
Board. For purposes of the foregoing clause (iii), "Continuity
Directors" means those members of the Board who either (a) were
directors at the beginning of such consecutive twenty-four (24)
month period, or (b)(1) filled a vacancy during such twenty-
four (24) month period created by reason of (x) death, (y) a
medically determinable physical or mental impairment which
renders the director substantially unable to function as a
director or (z) retirement at the last mandatory retirement age
in effect for at least two (2) years, and (2) were elected,
nominated or voted for by at least fifty-one percent (51%) of
the current directors who were also directors at the
commencement of such twenty-four (24) month period.
Notwithstanding the provisions of Article II hereof, upon the
exercise of a Right during the 30-day period following Warner-
Lambert Company obtaining actual knowledge of a Change in
Control of Warner-Lambert Company, "Fair Market Value" of a
share of Common Stock on the Valuation Date shall be equal to
the higher of (i) the highest closing sale price per share of
Common Stock of Warner-Lambert Company on the Composite Tape
for New York Stock Exchange issues during the period commencing
30 days prior to such Change in Control and ending immediately
prior to such exercise or (ii) if the Change in Control of
Warner-Lambert Company occurs as a result of a tender or
exchange offer or approval by stockholders of Warner-Lambert
Company of a Transaction, then the highest price per share of
Common Stock of Warner-Lambert Company pursuant thereto. Any
consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to the
exchange offer shall be valued at the valuation placed thereon
by the Board of Directors. Adjustments, if any, shall be made
in accordance with Section 10.1 hereof.
(b) As used in the Plan, a "Merger of Equals" shall mean
either: (a) a Change in Control of Warner-Lambert Company,
pursuant to the terms of which the stockholders of Warner-
Lambert Company receive consideration, including securities,
with an Aggregate Value (as defined below) not greater than 115
percent of the average closing price of the Common Stock of
Warner-Lambert Company on the Composite Tape for New York Stock
Exchange issues for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction; or (b) any other Change in
Control of Warner-Lambert Company which the Board of Directors,
in its sole discretion, determines to be a "Merger of Equals"
for the purposes of this provision. For purposes of this
section, "Aggregate Value" shall mean the consideration to be
received by the stockholders of Warner-Lambert Company equal to
the sum of (A) cash, (B) the value of any securities and (C)
the value of any other non-cash consideration. The value of
securities received shall equal the average closing price of
the security on the principal security exchange on which such
security is listed for the twenty business days immediately
preceding the earlier of the execution of the definitive
agreement pertaining to the transaction or the public
announcement of the transaction. For securities not traded on
a security exchange, and for any other non-cash consideration
that is received, the value of such security or such non-cash
consideration shall be determined by the Board of Directors.
ARTICLE V
Terms and Conditions of Options
Section 5.1. Types of Options. Options granted under the
Plan shall be in the form of (i) incentive stock options as
defined in Section 422A of the Code, or (ii) options not
qualifying under such section, or both, in the discretion of
the Committee. The status of each Option shall be identified
in the Option agreement.
Section 5.2. Option Price. The Option Price shall be
such as shall be fixed by the Committee but not less in any
case than the Fair Market Value per share for such stock on the
date of the granting of the Option, subject to adjustment
pursuant to Section 10.1 hereof. The date of the granting of
an Option under the Plan shall be the date fixed by the
Committee as the date for such Option for the Employee who is
to be the recipient thereof.
Section 5.3. Period of Option.
(a) No part of an Option may be exercised unless the
Optionee remains in the continuous employ of the Company for
one year from the date the Option is granted except that upon
the occurrence of a Change in Control of Warner-Lambert Company
all Options may be exercised without giving effect to the one-
year limitation and the limitations, if any, which may have
been imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Option relates which may be purchased from time to time
during the Option Period.
(b) Options will be exercisable thereafter over the
Option Period, which, in the case of each Option, shall be a
period determined by the Committee (provided, however, that the
term of an incentive stock option shall be a period of not more
than ten years from the date of the grant of such Option), and
will be exercisable at such times and in such amounts as
determined by the Committee at the time each Option is granted.
Notwithstanding any other provision contained in this Plan, no
Option shall be exercisable after the expiration of the Option
Period. Except as provided in Sections 5.4, 5.5 and 5.6
hereof, no Option may be exercised unless the Optionee is then
in the employ of the Company and shall have been continuously
so employed since the date of the grant of such Option.
Section 5.4. Termination of Employment Before Age 55. An
Optionee whose employment terminates before age 55, by reason
other than death, shall be entitled to exercise such Option,
only within the three-month period after the date of such
termination of employment and in no event after the expiration
of the Option Period, and then only if and to the extent that
the Optionee was entitled to exercise the Option at the date of
the termination of employment, giving effect to the
limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period.
Section 5.5. Termination of Employment On or After Age
55. An Optionee whose employment terminates on or after age
55, by reason other than death, shall be entitled to exercise
such Option if the Optionee was entitled to exercise the Option
at the date of the termination, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination, but
in no event after the expiration of the Option Period.
Section 5.6. Death of Optionee. If an Optionee should
die:
(a) while in the employ of the Company, the Option
theretofore granted shall, if the Optionee was entitled to
exercise the Option at the date of death, be exercisable by the
estate of the Optionee, or by a person who acquired the right
to exercise such Option by bequest or inheritance or by reason
of the death of the Optionee, without, however, giving effect
to the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Option
relates which may be purchased from time to time during the
Option Period; provided, however, that such Option shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Option has been outstanding prior to such termination and
in no event after the expiration of the Option Period;
(b) within the three-month period after the date of
the termination of employment before age 55, the Option
theretofore granted shall be exercisable by the estate of the
Optionee, or by a person who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death
of the Optionee, but then only if and to the extent that the
Optionee was entitled to exercise the Option at the date of
death, giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Option relates which may be purchased from time to time
during the Option Period; provided, however, that such Option
shall be exercisable only within the twelve-month period next
succeeding the death of the Optionee and in no event after the
expiration of the Option Period; or
(c) after the date of the termination of employment
on or after age 55, the Option theretofore granted shall, if
the Optionee was entitled to exercise the Option at the date of
death, be exercisable by the estate of the Optionee, or by a
person who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the
Optionee, without, however, giving effect to the limitations,
if any, which may have been imposed by the Committee pursuant
to Section 5.3(b) with respect to the percent of the total
number of shares to which the Option relates which may be
purchased from time to time during the Option Period; provided,
however, that such Option shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Optionee provided such
death occurs before the later of (i) or (ii), but in no event
after the expiration of the Option Period.
Section 5.7. Payment for shares. Payment for shares of
Common Stock purchased shall be made in full at the time of
exercise of the Option. Nothing herein shall be construed to
prohibit the Company from making a loan or advance to the
Optionee for the purpose of financing, in whole or in part, the
purchase of optioned shares. Payment of the Option Price shall
be made in cash or, with the consent of the Committee, in whole
or in part in Common Stock, Stock Awards or other
consideration. Payment may also be made by delivering a
properly executed exercise notice together with irrevocable
instructions to a third party to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise
price.
Section 5.8. Incentive Stock Options. Options granted in
the form of incentive stock options shall be subject, in
addition to the foregoing provisions, to the following
provisions:
(a) Annual Limit. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of the
Common Stock with respect to which incentive stock options are
exercisable for the first time by any Optionee during any
calendar year (under the Plan or under any other stock plan of
the Company) exceeds $100,000, such options shall be treated as
options which are not incentive stock options.
(b) Ten Percent Shareholder. No incentive stock
option shall be granted to any individual who, at the time of
the proposed grant, owns Common Stock possessing more than ten
percent of the total combined voting power of all classes of
stock of Warner-Lambert or any Subsidiary.
(c) Option Period. No incentive stock option shall
be exercisable after the expiration of ten years from the date
of grant.
The Company intends that Options designated by the Committee as
incentive stock options shall constitute incentive stock
options under Section 422A of the Code. Should any of the
foregoing provisions not be necessary in order to so comply or
should any additional provisions be required, the Committee may
amend the Plan accordingly, without the necessity of obtaining
the approval of stockholders of Warner-Lambert.
Section 5.9. Rollover Options. Notwithstanding anything
herein to the contrary, in the event of a Merger of Equals all
Options granted hereunder shall become immediately exercisable
by the Optionee and the Options shall be converted into options
to purchase the stock of the company which other shareholders
of Warner-Lambert Company receive in the transaction (the
"Rollover Options"). The Rollover Options shall be subject to
the same terms and conditions as those applicable to the
Options held prior to the Merger of Equals, including, but not
limited to, exercisability and Option Period, except as
hereinafter provided. If the Aggregate Value consists only of
shares of a publicly traded security ("New Security"), each
Rollover Option shall entitle the holder to purchase the number
of shares of New Security which is equal to the product of (a)
the Exchange Ratio (as hereinafter defined) and (b) the number
of shares of Common Stock subject to the Option immediately
prior to the effective date of the Merger of Equals (rounded to
the nearest full number of shares). The exercise price for
each Rollover Option shall be the exercise price per share of
each Option divided by the Exchange Ratio (rounded to the
nearest full cent). For purposes hereof, "Exchange Ratio"
shall mean the ratio for exchanging Common Stock held by the
stockholders of Warner-Lambert Company for shares of New
Security which is set forth in the definitive agreement
pertaining to the transaction. If the Aggregate Value consists
of consideration other than New Securities, the Board shall
make appropriate adjustments to the number of Rollover Options
and the exercise price thereof. In addition, with respect to
Options granted after March 25, 1997, if an optionee who is not
55 years old is terminated within three (3) years following the
Merger of Equals (for a reason other than "Termination for Just
Cause," as defined in the Warner-Lambert Company Enhanced
Severance Plan), such optionee's Options shall remain
exercisable notwithstanding such termination of employment by
the Company or any successor or its affiliates and such Options
shall be exercisable until two years following the termination
of employment, but in no event after the expiration of the
Option Period.
ARTICLE VI
Terms of Rights
Section 6.1. Relation to Option. Each Right shall relate
specifically to a Reference Option, then held by, or
concurrently granted to, the Grantee. Upon exercise of a Right
an amount shall be payable from Warner-Lambert, determined in
accordance with Section 6.3 hereof. The Reference Option shall
terminate to the extent that the related Right is exercised.
Section 6.2. Exercise of Right. A Right shall become
exercisable at such time, and in respect of such number of
shares of Common Stock, as the Reference Option is then
exercisable and such Right shall terminate upon termination of
the Reference Option, provided, however, that no Right shall be
exercisable unless the Grantee shall have remained in the
continuous employ of the Company for one year from the date the
Right was granted, except that upon the occurrence of a Change
in Control of Warner-Lambert Company, all Rights may be
exercised without giving effect to the one-year limitation and
the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period; provided, however, that Rights which have been
held for less than six months on the date of the occurrence of
a Change in Control by Grantees who at the time of the
occurrence of the Change in Control are Reporting Persons may
be exercised only during the thirty (30) day period beginning
six months after the date of grant of the Right,
notwithstanding the termination of the Grantee's employment
with the Company, and without giving effect to the one-year
limitation and the limitations, if any, which may have been
imposed by the Committee pursuant to Section 5.3(b) with
respect to the percent of the total number of shares to which
the Right relates which may be purchased from time to time
during the Option Period. Except as provided in this Section
6.2, and in Sections 6.5 and 6.6, no Right shall be exercisable
unless at the time of such exercise the Grantee shall be in the
employ of the Company.
Section 6.3. Amount Payable Upon Exercise of Right. Upon
the exercise of a Right the amount payable shall be equal to:
(i) 100% of the Spread but not exceeding the
difference between the Option Price and the Fair Market
Value of a share of Common Stock on the Valuation Date;
plus
(ii) 125% of the amount by which the Fair Market
Value of a share of Common Stock on the Valuation Date
exceeds the Fair Market Value on the date the Right was
granted;
multiplied by the number of shares with respect to which the
Right is being exercised; provided, however, that (x) the
Committee may grant Rights which provide that upon exercise the
amount payable shall be equal to 100% of the amount by which
the Fair Market Value of a share of Common Stock on the
Valuation Date exceeds the Fair Market Value on the date the
Right was granted, and (y) the amount payable shall not exceed
an amount equal to the number of shares with respect to which
the Right is being exercised multiplied by the Fair Market
Value of a share of Common Stock on the Valuation Date.
Section 6.4. Form of Payment. The amount payable on
exercise of a Right shall be payable in cash, shares of Common
Stock valued at their Fair Market Value as of the Valuation
Date, or in any combination thereof; provided, however, that
the form of payment shall be in the sole discretion of the
Committee. In the event that any payment in the form of both
cash and shares of Common Stock is made to a Reporting Person,
the cash portion of such payment shall be made upon the Grantee
becoming taxable in respect of the Common Stock received upon
exercise of the Right. Notwithstanding the foregoing, a
payment, in whole or in part, of cash may be made to a
Reporting Person upon exercise of a Right only if the Right is
exercised (i) during the period beginning on the third business
day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of
the Company and ending on the twelfth business day following
such date, or (ii) during any other period in which cash may be
paid under the provisions of Rule 16b-3 promulgated pursuant to
the Act. In addition, a payment of cash shall be made to a
person subject to the reporting requirements of Section 16(a)
of the Act who has held the Right at least six months from the
date of its grant promptly following a Change in Control of
Warner-Lambert Company which Change in Control is outside the
control of any person subject to such reporting requirements
within the meaning of the aforesaid Rule 16b-3. The Company
intends that this provision shall comply with the requirements
of Rule 16b-3 under the Act. Should this provision not be
necessary to comply with the requirements of such Rule or
should any additional provision be necessary in order to comply
with the requirements of such Rule, the Committee may amend the
Plan accordingly, without the necessity of obtaining the
approval of stockholders of the Company. Any fraction of a
share resulting from the above calculation shall be
disregarded.
Section 6.5. Termination of Employment. If, prior to the
expiration of a Reference Option, the employment of the Grantee
by the Company should terminate, by reason other than death,
the related Right shall terminate, except that if, after a
Grantee shall have remained in the employ of the Company for
one year after the date of the grant of the Right, such
Grantee's employment should terminate on or after age 55, the
Right theretofore granted shall be exercisable until the later
of (i) the three-year period after termination of employment,
or (ii) the period after termination of employment which is
equal to the number of full months that the Reference Option
has been outstanding prior to such termination, but in no event
after the expiration of the Option Period, without, however,
giving effect to the limitations, if any, which may have been
imposed by the Committee pursuant to Section 5.3(b) hereof.
Section 6.6. Death of Grantee. If a Grantee should die
prior to the termination of the Reference Option:
(a) while in the employ of the Company, the Right
theretofore granted shall, if the Grantee was entitled to
exercise the Right at the date of death, be exercisable by the
estate of the Grantee, or by a person who acquired the right to
exercise such Right by bequest or inheritance or by reason of
the death of the Grantee, without, however, giving effect to
the limitations, if any, which may have been imposed by the
Committee pursuant to Section 5.3(b) hereof with respect to the
percent of the total number of shares to which the Right
relates which may be purchased from time to time during the
Option Period; provided, however, that such Right shall be
exercisable until the later of (i) the three-year period after
termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that
the Reference Option has been outstanding prior to such
termination, but in no event after the expiration of the Option
Period; or
(b) after the date of the termination of employment
on or after age 55, the Right theretofore granted shall, if the
Grantee was entitled to exercise the Right at the date of
death, be exercisable by the estate of the Grantee, or by a
person who acquired the right to exercise such Right by bequest
or inheritance or by reason of the death of the Grantee,
without, however, giving effect to the limitations, if any,
which may have been imposed by the Committee pursuant to
Section 5.3(b) hereof with respect to the percent of the total
number of shares to which the Right relates which may be
purchased from time to time during the Option Period; provided,
however, that such Right shall be exercisable until the latest
of (i) the three-year period after termination of employment,
(ii) the period after termination of employment which is equal
to the number of full months that the Reference Option has been
outstanding prior to such termination, or (iii) the twelve-
month period after the death of the Grantee provided such death
occurs before the later of (i) or (ii), but in no event after
the expiration of the Option Period.
Section 6.7. Limited Rights. Notwithstanding anything
herein to the contrary, Limited Rights may be granted hereunder
by the Committee with respect to the options granted under this
Plan or any other stock option plan of the Company (which are
not Reference Options under any such plan) which shall entitle
the holder to receive a payment of cash promptly following a
Change in Control of Warner-Lambert Company which Change in
Control is outside the control of any person subject to the
reporting requirements of Section 16(a) of the Act within the
meaning of Rule 16b-3 under the Act. Such payment of cash
shall be made to a person subject to the reporting requirements
of Section 16(a) of the Act only if such person has held such
Limited Right at least six months from the date of its grant.
Promptly following any such Change in Control, the Optionee
shall be entitled to receive a cash payment equal to the excess
of the Fair Market Value of a share of Common Stock on the
Valuation Date over the Option Price of the related Option
multiplied by the number of shares with respect to which the
Limited Right is being exercised (in such case the method of
determining the Fair Market Value in the second sentence of
Section 4.6(a) shall apply). Limited Rights shall expire on
the first to occur of the date of exercise or expiration of the
right of exercise of the Limited Right or of the related
Option. Further, upon exercise of a Limited Right, the related
Option shall be cancelled. The Board of Directors reserves the
right to cancel all outstanding Limited Rights in accordance
with Sections 11 and 12 of the Executive Severance Plan.
Except as otherwise provided herein, the provisions of the Plan
relating to Rights shall also apply to Limited Rights.
ARTICLE VII
Terms And Conditions Of Restricted Stock
Section 7.1. General. The restrictions set forth in
Section 7.2 shall apply to each grant of Restricted Stock for
the duration of the Restricted Period.
Section 7.2. Restrictions. A stock certificate
representing the number of shares of Restricted Stock granted
shall be registered in the Participant's name but shall be held
in custody by the Company for the Participant's account. The
Participant shall have all rights and privileges of a
stockholder as to such Restricted Stock, including the right to
receive dividends and the right to vote such shares, except
that, subject to the provisions of Section 7.3, the following
restrictions shall apply: (i) the Participant shall not be
entitled to delivery of the certificate until the expiration of
the Restricted Period; (ii) none of the shares of Restricted
Stock may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period; (iii)
the Participant shall, if requested by the Company, execute and
deliver to the Company, a stock power endorsed in blank; and
(iv) all of the shares of Restricted Stock still subject to
restrictions shall be forfeited and all rights of the
Participant to such shares shall terminate without further
obligation on the part of the Company if the Participant ceases
to be an Employee prior to the expiration of the Restricted
Period applicable to such shares. Upon the forfeiture (in
whole or in part) of shares of Restricted Stock, such forfeited
shares shall become treasury shares of the Company without
further action by the Participant. The Participant shall have
the same rights and privileges, and be subject to the same
restrictions, with respect to any shares received pursuant to
Section 10.1 hereof.
Section 7.3. Terms and Conditions. The Committee shall
establish the terms and conditions, which need not be the same
for all grants made under the Plan, applicable to the
Restricted Stock, and which may include restrictions based upon
periods of time, performance (corporate, group, individual or
otherwise), combinations thereof or such other restrictions as
the Committee shall determine to be appropriate. The Committee
may provide for the restrictions to lapse with respect to a
portion or portions of the Restricted Stock at different times
or upon the occurrence of different events and the Committee
may waive, in whole or in part, any or all restrictions
applicable to a grant of Restricted Stock. Restricted Stock
awards may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
Section 7.4. Delivery of Restricted Shares. At the end
of the Restricted Period as herein provided, a stock
certificate for the number of shares of Restricted Stock with
respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the Participant or
the Participant's beneficiary or estate, as the case may be.
The Company shall not be required to deliver any fractional
share of Common Stock but shall pay, in lieu thereof, the fair
market value (measured as of the date the restrictions lapse)
of such fractional share to the Participant or the
Participant's beneficiary or estate, as the case may be.
Notwithstanding the foregoing, the Committee may authorize the
delivery of the Restricted Stock to a Participant during the
Restricted Period, in which event any stock certificates in
respect of shares of Restricted Stock thus delivered to a
Participant during the Restricted Period applicable to such
shares shall bear an appropriate legend referring to the terms
and conditions, including the restrictions, applicable thereto.
Section 7.5. Certain Events.
(a) In the event of a Change in Control of Warner-
Lambert Company the rights and privileges of Participants
hereunder shall be governed by the following clause (i), clause
(ii) or clause (iii), as appropriate:
(i) Value of Restricted Stock. All shares of
Restricted Stock then outstanding shall be immediately
forfeited and shall revert to the Company as treasury
shares and, in lieu thereof, each Participant shall
receive a cash payment equal to the Value of the
Restricted Stock (as hereinafter defined); provided,
however, that if the Participant is a Reporting Person at
the time of the Change in Control of Warner-Lambert
Company, the provisions of clause (ii) shall govern the
rights and privileges of such Participant.
(ii) Reporting Persons. All shares of
Restricted Stock previously granted to Participants who
are Reporting Persons at the time of the Change in Control
of Warner-Lambert Company which Change in Control is
outside the control of any Reporting Person within the
meaning of Rule 16b-3 under the Act, and which are then
outstanding and have been outstanding for a period of at
least six (6) months, shall be immediately forfeited and
shall revert to the Company as treasury shares and, in
lieu thereof, such Participant shall receive a cash
payment equal to the Value of the Restricted Stock.
(iii) Lapse of Restrictions. In the event that
clause (ii) shall not become operational with respect to a
Participant who is a Reporting Person, all restrictions
applicable to shares of Restricted Stock previously
granted to such Participant and then outstanding shall
expire and such shares shall thereupon be delivered to the
Participant free of all restrictions.
(b) As used in the Plan, the "Value of the
Restricted Stock" shall be the higher of (a) the highest
closing price per share of Common Stock on the Composite Tape
for New York Stock Exchange issues during the 30 day period
prior to the Change in Control of Warner-Lambert Company, or
(b) if the Change in Control of Warner-Lambert Company occurs
as a result of a tender or exchange offer or approval by the
stockholders of the Company of a Transaction, then the highest
price per share of Common Stock pursuant thereto, multiplied by
the total number of shares of Restricted Stock granted to such
Participant and then outstanding, regardless of whether the
restrictions applicable thereto shall have previously lapsed.
Any consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to an
exchange offer shall be valued at the valuation placed thereon
by the Board of Directors. Adjustments, if any, shall be made
in accordance with Section 10.1 hereof.
ARTICLE VIII
Terms and Conditions of Performance Awards
Section 8.1. Terms and Conditions. The Committee may
grant Performance Awards, determine the consideration therefor,
which may include prior efforts and accomplishments, and
establish the terms and conditions thereof, which may include
provisions based upon periods of time, performance (corporate,
group, individual or otherwise), combinations thereof or such
other provisions as the Committee may determine to be
appropriate. Performance Awards may consist of shares of
Common Stock or awards that are valued by reference to shares
of Common Stock, cash or such other measure as the Committee
shall determine. Performance Awards may provide for payment in
shares of Common Stock, cash, other property or any combination
thereof as determined by the Committee. Shares of Common Stock
issued pursuant to this Section 8.1 may be issued for no cash
consideration or for such minimum consideration as may be
required by applicable law. The Committee shall determine
whether payment shall be made in a lump sum, installments or
deferred. With respect to Performance Awards which are valued
by reference to shares of Common Stock, the Committee shall
also determine whether the Participant may be entitled to
receive a payment of, or credit equivalent to, any dividends
payable with respect to such shares of Common Stock and the
terms and conditions applicable thereto. Further, if a payment
of cash is to be made on a deferred basis, the Committee shall
establish whether interest shall be credited, the rate thereof
and any other terms and conditions applicable thereto.
ARTICLE IX
Regulatory Compliance and Listing
Section 9.1. Regulatory Compliance and Listing. The
issuance or delivery of any Stock Awards and shares of Common
Stock pursuant thereto may be postponed by the Company for such
periods as may be required to comply with any applicable
requirements under the Federal securities laws, any applicable
listing requirements of any national securities exchange or any
requirements under any other law or regulation applicable
thereto, and the Company shall not be obligated to issue or
deliver any such awards or shares if the issuance or delivery
thereof shall constitute a violation of any provision of any
law or of any regulation of any governmental authority or any
national securities exchange.
ARTICLE X
Adjustment in Event of Changes in Capitalization
Section 10.1. Adjustments. In the event of a
recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, rights offering,
separation, reorganization, liquidation, or the sale,
conveyance, lease or other transfer by Warner-Lambert of all or
substantially all of its property, or any other change in the
corporate structure or shares of the Company, the Committee may
make such equitable adjustments to prevent dilution or
enlargement of rights as it may deem appropriate in the number
and class of shares authorized to be granted hereunder,
including adjustment to the share limitation of Section 3.2
hereof, and change the number and kind of shares available
under any outstanding Option and Right (including substitution
of shares of another corporation), and the price of any Option
and the Fair Market Value in such manner as it shall deem
equitable; provided, however, that in no event may any change
be made to an incentive stock option which would constitute a
"modification" within the meaning of section 425(h)(3) of the
Code. Options granted under the Plan shall contain such
provisions as are consistent with the foregoing with respect to
adjustments to be made in the number and kind of shares covered
thereby and in the Option Price in the event of any such
change.
ARTICLE XI
Administration
Section 11.1. Administration.
(a) The Plan shall be administered by a committee
consisting of not less than three members of the Board of
Directors, who shall be appointed by, and shall serve at the
pleasure of, the Board of Directors. No person who is or,
within one year prior thereto, has been eligible to receive a
Stock Award under the Plan may be a member of the Committee,
and no person may be granted a Stock Award while a member of
the Committee. A majority of the Committee shall constitute a
quorum and the acts of a majority of the members present at any
meeting at which a quorum is present, expressed from time to
time by a vote at a meeting (including a meeting held by
telephone conference call or in which one or more members of
the Committee participate by telephone), or acts approved in
writing by a majority of the Committee, shall be the acts of
the Committee.
(b) In addition to the Committee's discretionary
authority set forth in other Articles hereof, the Committee is
authorized to establish such rules and regulations for the
proper administration of the Plan as it may deem advisable and
not inconsistent with the provisions of the Plan. All
questions arising under the Plan or under any rule or
regulation with respect to the Plan adopted by the Committee,
whether such questions involve an interpretation of the Plan or
otherwise, shall be decided by the Committee, and its decisions
shall be conclusive and binding in all cases.
(c) The Committee shall determine the Employees to
whom Stock Awards under the Plan are to be granted, the terms
and conditions applicable thereto and the number of shares to
be covered by each award. In selecting the individuals to whom
Stock Awards shall be granted, as well as in determining the
terms and conditions applicable thereto and the number of
shares subject to each grant, the Committee shall consider the
positions and responsibilities of the Employees being
considered, the nature of the services and accomplishments of
each, the value to the Company of their services, their present
and potential contribution to the success of the Company, the
anticipated number of years of service remaining and such other
factors as the Committee may deem relevant. The Committee may
obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee.
Section 11.2. Stock Awards Committee. In addition, and
not in limitation of the authority of the Committee, the Stock
Awards Committee (as hereinafter constituted) may grant Stock
Awards, in accordance with the provisions of the Plan,
including the establishment of the terms and conditions thereof
and the consideration to the Company therefor, to Employees
who, at the time of the grant, are not Reporting Persons. The
Stock Awards Committee, whose members need not serve on the
Board of Directors, shall be appointed by, and shall serve at
the pleasure of, the Committee. A majority of the Stock Awards
Committee shall constitute a quorum and the acts of a majority
of the members present at any meeting at which a quorum is
present, expressed from time to time by a vote at a meeting
(including a meeting held by telephone conference call or in
which one or more members of the Stock Awards Committee
participate by telephone), or acts approved in writing by a
majority of the Stock Awards Committee, shall be the acts of
the Stock Awards Committee. Notwithstanding the foregoing, the
Stock Awards Committee may not undertake any action which the
provisions of Rule 16b-3, promulgated pursuant to the Act,
require to be undertaken by "disinterested persons" (as defined
in said Rule) as a condition of the continued qualification of
the Plan under Rule 16b-3.
ARTICLE XII
Termination or Amendment of the Plan
Section 12.1. Termination or Amendment.
(a) The Board may at any time terminate the Plan and
may from time to time alter or amend the Plan or any part
thereof (including any amendment deemed necessary to ensure
that the Company may comply with any regulatory requirement
referred to in Article IX); provided, however, that, unless
otherwise required by law, the rights of a Participant with
respect to Stock Awards granted prior to such termination,
alteration or amendment may not be impaired without the consent
of such Participant and, provided further, without the approval
of the Company's stockholders, no alteration or amendment may
be made which would (i) increase the aggregate number of shares
of Common Stock that may be issued under the Plan (except by
operation of Article X), or (ii) change the category of
employees eligible to receive Stock Awards under the Plan. The
Company intends that the Plan shall comply with the
requirements of Rule 16b-3 promulgated pursuant to the Act.
Should any provisions hereof not be necessary in order to
comply with the requirements of such Rule or should any
additional provisions be necessary in order to so comply, the
Committee may amend the Plan accordingly, without the necessity
of obtaining the approval of the Company's stockholders.
(b) The Committee may at any time adopt any
amendment to the Plan which (i)(A) does not increase Plan
liabilities by an amount in excess of five million dollars
($5,000,000) and does not increase Plan expense by an amount in
excess of five hundred thousand dollars ($500,000) or (B) is
required by an applicable law, regulation or ruling, (ii) can
be undertaken by the Board of Directors under the terms of the
Plan, (iii) does not involve a termination of the Plan, (iv)
does not affect the limitations contained in this sentence, and
(v) does not affect the composition or compensation of the
Committee.
(c) The Committee shall have the power to cancel all
Rights theretofore granted pursuant to the Plan in the event
that it shall determine that the accounting effects of the
grant or exercise of Rights under the Plan would not be in the
best interests of the Company.
(d) Any action which may be undertaken by the
Committee pursuant to the terms hereof may be undertaken by the
Board, except as provided in Rule 16b-3 promulgated pursuant to
the Act.
ARTICLE XIII
Miscellaneous
Section 13.1. No Right To Employment. Nothing in the
Plan shall be deemed to confer upon any Participant the right
to remain in the employ of the Company.
Section 13.2. Withholding of Taxes.
(a) The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock
or the payment of any cash hereunder, payment by the
Participant of any taxes required by law with respect thereto.
(b) The Committee may permit any such withholding
obligation to be satisfied by reducing the number of shares of
Common Stock otherwise deliverable. A Reporting Person may
elect to have a sufficient number of shares of Common Stock
withheld to fulfill such tax obligations (hereinafter a
"Withholding Election") only if the election complies with the
following conditions: (x) the Withholding Election shall be
subject to the disapproval of the Committee and (y) the
Withholding Election is made (i) during the period beginning on
the third business day following the date of release for
publication of the quarterly or annual summary statements of
sales and earnings of the Company and ending on the twelfth
business day following such date, (ii) six months before the
Stock Award becomes taxable, or (iii) during any other period
in which a Withholding Election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the Act. Any
fraction of a share of Common Stock required to satisfy such
tax obligations shall be disregarded and the amount due shall
be paid instead in cash by the Participant.
Section 13.3. No Assignment of Benefits. No benefit
payable under the Plan shall, except as otherwise specifically
provided by law, be subject in any manner to anticipation,
alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
attach, sell, transfer, assign, pledge, encumber or charge any
such benefit shall be void, and any such benefit shall not in
any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment
or legal process for or against such person. If any person
entitled to a benefit hereunder shall be adjudicated a bankrupt
or shall attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge such benefit, or if any
attempt is made to subject any such benefit to the debts,
contracts, liabilities, engagements or torts of any person
entitled to such benefit, then such benefit shall, in the
discretion of the Committee, cease and terminate, and in that
event the Committee may cause such benefit, or any part
thereof, to be held or applied for the benefit of such person,
his or her spouse, children or other dependents, or any of
them, in such manner and in such proportion as the Committee
shall determine.
Section 13.4. Death; Disability; Termination. The
Committee shall establish the provisions which shall govern in
the event of the death, disability, or termination (including
layoff) of a Participant, which provisions may be different
than the provisions otherwise described herein with respect to
death, disability, and termination. If, for any reason, the
Committee shall determine that it is not desirable because of
the incapacity of the person who shall be entitled to receive
any payments hereunder, to make such payments directly to such
person, the Committee may apply such payment for the benefit of
such person in any way that the Committee shall deem advisable
or may make any such payment to any third person who, in the
judgment of the Committee, will apply such payment for the
benefit of the person entitled thereto. In the event of such
payment, the Company, the Board of Directors and the Committee
shall be discharged from all further liability therefor. An
Employee's employment shall be deemed terminated for purposes
of the Plan as of the date benefit payments would have
commenced under the Warner-Lambert Long Term Disability
Benefits Plan had the Participant been enrolled in such plan,
except as otherwise provided herein. Absence on leave approved
by the Company shall not be considered an interruption of
employment for any purpose of the Plan.
Section 13.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on the New
York Stock Exchange, the issue of any shares of stock pursuant
to a Stock Award shall be conditioned upon the shares so to be
issued being listed on such Exchange. Warner-Lambert shall
make application for listing on such Exchange unlisted shares
subject to Stock Awards, but shall have no obligation to issue
such shares unless and until such shares are so listed, and the
right to exercise any Option or Right with respect to such
shares shall be suspended until such listing has been effected.
(b) If at any time counsel to Warner-Lambert shall
be of the opinion that any sale or delivery of shares of Common
Stock pursuant to a Stock Award is or may in the circumstances
be unlawful under the statutes, rules or regulations of any
applicable jurisdiction, Warner-Lambert shall have no
obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or
registration under the Securities Act of 1933, as amended, or
otherwise with respect to shares of Common Stock or Stock
Awards, and the right to exercise any Option or Right shall be
suspended until, in the opinion of said counsel, such sale or
delivery shall be lawful.
(c) Upon termination of any period of suspension
under this Section 13.5, any Stock Award affected by such
suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such
suspension shall extend any Option Period.
Section 13.6. Governing Law. This Plan shall be governed
by the law of the State of New Jersey (regardless of the law
that might otherwise govern under applicable New Jersey
principles of conflict of laws).
Section 13.7. Construction. Wherever any words are used
herein in the masculine gender they shall be construed as
though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they
would so apply.
Section 13.8. Laws of Foreign Jurisdictions. Without
amending the Plan, but subject to the limitations specified in
Article XII hereof, the Committee may grant, amend, administer,
annul or terminate Stock Awards on such terms and conditions,
which may be different from those specified in the Plan, as it
may deem necessary or desirable to make available tax or other
benefits of the laws of any foreign jurisdiction.
Section 13.9. Other Plans. Nothing contained herein
shall prevent the Company from adopting additional compensation
plans or arrangements.
ARTICLE XIV
Effective Date; Expiration
Section 14.1. Effective Date. The Plan shall be
submitted to the stockholders of Warner-Lambert for their
approval at the Annual Meeting of Stockholders to be held in
1989. The Plan shall become effective upon the affirmative
vote of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote at the meeting.
Section 14.2. Expiration. No Stock Awards may be granted
hereunder after April 25, 1994. The expiration of the Plan as
herein provided shall not affect any Stock Award granted prior
to such expiration.
WARNER-LAMBERT COMPANY