WARNER-LAMBERT COMPANY
1987 STOCK OPTION PLAN
AS AMENDED TO JANUARY 27, 1998
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. Except as otherwise provided by
the Committee, 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 expiration of a Reference
Option, the employment of the Grantee by the Company should terminate, by
reason other than death, the related Right shall terminate, except that if,
after a Grantee shall have remained in the employ of the Company for one
year after the date of the grant of the Right, such Grantee's employment
should terminate on or after age 55, the Right theretofore granted shall be
exercisable until the later of (i) the three-year period after termination
of employment, or (ii) the period after termination of employment which is
equal to the number of full months that the Reference Option has been
outstanding prior to such termination, but in no event after the expiration
of the Option Period, without, however, giving effect to the limitations,
if any, which may have been imposed by the Committee pursuant to paragraph
(b)(ii) of Article 7 hereof.
(e)Death of Grantee. If a Grantee should die prior to the termination of
the Reference Option:
(i)while in the employ of the Company, the Right theretofore granted shall,
if the Grantee was entitled to exercise the Right at the date of
death, be exercisable by the estate of the Grantee, or by a person
who acquired the right to exercise such Right by bequest or
inheritance or by reason of the death of the Grantee, without,
however, giving effect to the limitations, if any, which may have
been imposed by the Committee pursuant to paragraph (b)(ii) of
Article 7 hereof with respect to the percent of the total number of
shares to which the Right relates which may be purchased from time to
time during the Option Period; provided, however, that such Right
shall be exercisable until the later of (i) the three-year period
after termination of employment, or (ii) the period after termination
of employment which is equal to the number of full months that the
Reference Option has been outstanding prior to such termination, but
in no event after the expiration of the Option Period; or
(ii)after the date of the termination of employment on or after age 55, the
Right theretofore granted shall, if the Grantee was entitled to
exercise the Right at the date of death, be exercisable by the estate
of the Grantee, or by a person who acquired the right to exercise
such Right by bequest or inheritance or by reason of the death of the
Grantee, without, however, giving effect to the limitations, if any,
which may have been imposed by the Committee pursuant to paragraph
(b)(ii) of Article 7 hereof with respect to the percent of the total
number of shares to which the Right relates which may be purchased
from time to time during the Option Period; provided, however, that
such Right shall be exercisable until the latest of (i) the three-
year period after termination of employment, (ii) the period after
termination of employment which is equal to the number of full months
that the Reference Option has been outstanding prior to such
termination, or (iii) the twelve-month period after the death of the
Grantee provided such death occurs before the later of (i) or (ii),
but in no event after the expiration of the Option Period.
(f) Notwithstanding anything herein to the contrary, Limited Rights may be
granted hereunder by the Committee with respect to the Options granted
under the Plan (which are not Reference Options), which shall entitle the
holder to receive a payment of cash promptly following a Change in Control
of Warner-Lambert Company which Change in Control is outside the control of
any person subject to the reporting requirements of Section 16(a) of the
Act within the meaning of Rule 16b-3 under the Act. Such payment of cash
shall be made to a person subject to the reporting requirements of Section
16(a) of the Act only if such person has held such Limited Right at least
six months from the date of its grant. Promptly following any such Change
in Control, the Optionee shall be entitled to receive a cash payment equal
to the excess of the Fair Market Value of a share of Common Stock on the
Valuation Date over the Option Price of the related Option multiplied by
the number of shares with respect to which the Limited Right is being
exercised (in such case the method of determining the Fair Market Value in
the third sentence of Section 6(i) shall apply). Limited Rights shall
expire on the first to occur of the date of exercise or expiration of the
right of exercise of the Limited Right or of the related Option. Further,
upon exercise of a Limited Right, the related Option shall be cancelled.
The Board of Directors reserves the right to cancel all outstanding Limited
Rights in accordance with Sections 11 and 12 of the Executive Severance
Plan. Except as otherwise provided herein, the provisions of the Plan
relating to Rights shall also apply to Limited Rights.
9.Administration of the Plan. The Plan shall be administered under the
supervision of the Board of Directors of Warner-Lambert Company by a
Committee consisting of not less than three Directors of Warner-Lambert
Company, who shall be appointed by, and shall serve at the pleasure of, the
Board of Directors. No person who is or, within one year prior thereto,
has been the holder of an Option or a Right under the Plan may be a member
of the Committee, and no person may be granted an Option or a Right while a
member of the Committee. A majority of the Committee shall constitute a
quorum and the acts of a majority of the members present at any meeting at
which a quorum is present, expressed from time to time by a vote at a
meeting (including a meeting held by telephone conference call or in which
one or more members of the Committee participate by telephone), or acts
approved in writing by a majority of the Committee, shall be the acts of
the Committee.
In addition to the Committee's discretionary authority set forth in other
Articles hereof, the Committee is authorized to establish such rules and
regulations for the proper administration of the Plan as it may deem
advisable and not inconsistent with the provisions of the Plan. Unless
otherwise determined by the Board of Directors, all questions arising under
the Plan or under any rule or regulation with respect to the Plan adopted
by the Committee, whether such questions involve an interpretation of the
Plan or otherwise, shall be decided by the Committee, and its decisions
shall be conclusive and binding in all cases.
The Committee shall determine the Employees to whom Options and Rights
under the Plan are to be granted and the number of shares to be covered by
each Option granted and the Reference Option to which each Right is to
relate. In selecting the individuals to whom Options or Rights shall be
granted, as well as in determining the number of shares subject to each
Option and the Reference Option to which each Right is to relate, the
Committee shall consider the positions and responsibilities of the
Employees being considered, the nature of the services and accomplishments
of each, the value to the Company of their services, their present and
potential contribution to the success of the Company, the anticipated
number of years of service remaining, and such other factors as the
Committee may deem relevant.
The Committee shall establish the provisions which shall govern in the
event of the death, disability or termination of an Optionee or Grantee,
which provisions may be different than the provisions otherwise described
herein with respect to death, disability and termination. If, for any
reason, the Committee shall determine that it is not desirable because of
the incapacity of the person who shall be entitled to receive any payments
hereunder, to make such payments directly to such person, the Committee may
apply such payment for the benefit of such person in any way that the
Committee shall deem advisable or may make any such payment to any third
person who, in the judgment of the Committee, will apply such payment for
the benefit of the person entitled thereto. In the event of such payment,
the Company, the Board of Directors and the Committee shall be discharged
from all further liability therefor. An Employee's employment shall be
deemed terminated for purposes of the Plan as of the date benefit payments
would have commenced under the Warner-Lambert Long Term Disability 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.