WARNER-LAMBERT COMPANY
1989 STOCK PLAN
AS AMENDED TO JANUARY 27, 1998
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 Optionshave 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. Except as otherwise
provided by the Committee, 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