WARNER-LAMBERT COMPANY
1992 STOCK PLAN
As Amended to January 27, 1998
WARNER-LAMBERT COMPANY
1992 STOCK PLAN
ARTICLE I
Purpose of Plan
Section 1.1. Purpose.
(a) The purpose of the 1992 Stock Plan is to provide additional incentive to
selected officers and other employees of the Company (as hereinafter defined),
to recognize and reward their efforts and accomplishments in order to
strengthen the desire of employees to remain with the Company and stimulate
their efforts on behalf of the Company and to attract and retain persons of
competence, and, by encouraging ownership of a stock interest in the Company,
to gain for the Company the advantages inherent in employees having a sense of
proprietorship.
(b) In addition, the Plan (as hereinafter defined) will assist in the
attraction and retention of non-employee members of the Board of Directors by
providing the opportunity for such Directors to obtain a proprietary interest
in the Company's success and progress and with increased flexibility in the
timing of the receipt of fees for services on, and attending meetings of, the
Board of Directors and committees thereof.
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:
Account: A Cash Account or a Stock Account.
Act: The Securities Exchange Act of 1934, as amended.
Affiliate: Any corporation, partnership, association, joint-stock company,
business trust, joint venture or unincorporated organization controlled,
directly or indirectly, by Warner-Lambert. Warner-Lambert shall be deemed to
control any such entity if Warner-Lambert possesses, directly or indirectly,
the power to direct or cause the direction of its management and policies,
whether through the ownership of voting securities, by contract or otherwise.
Board of Directors (or Board): The Board of Directors of Warner-Lambert.
Business Day: A day except for a Saturday, Sunday or a legal holiday.
Cash Account: The Account which reflects the Compensation deferred by a
Director pursuant to Section 11.3.
Cash Credit: A credit to a Director's Cash Account, expressed in whole
dollars and fractions thereof, pursuant to Section 11.3.
Closing Price: The closing price of the Common Stock on the Composite Tape
for New York Stock Exchange issues.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The committee appointed to administer the Plan in accordance with
Section 12.1 hereof.
Common Stock: Common Stock, par value $1.00 per share, of Warner-Lambert.
Company: Warner-Lambert and its Affiliates.
Compensation: All cash remuneration payable to a Director for services to the
Company as a Director or as a consultant, other than reimbursement for
expenses, and shall include retainer fees for service on, and fees for
attendance at meetings of, the Board and any committees thereof.
Deferred Compensation Account: An account established by the Company for a
Director under a Predecessor Plan.
Director: Any member of the Board of Directors who is not an employee of the
Company or any of its Affiliates.
Effective Date: The date specified in Article XV hereof.
Employee: Officers and other employees of the Company or any of its
Affiliates (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 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 a date
on which the Common Stock shall not trade on the New York Stock Exchange,
determination of Fair Market Value shall be made as of the first date prior
thereto on which the Common Stock shall have traded 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 one or more Options have been granted in
accordance with the provisions of Articles IV and V hereof.
Option Period: The period of time during which an Option may be exercised in
accordance with the provisions hereof.
Option Price: The price per share payable to the Company for shares of Common
Stock upon the exercise of an Option.
Participant: Each Employee to whom a Stock Award is granted under the Plan.
Performance Awards: Awards made to Employees in accordance with the
provisions of Article VIII hereof.
Plan: The Warner-Lambert Company 1992 Stock Plan.
Plan Year: The calendar year.
Predecessor Plans: The Warner-Lambert Directors' Fees Deferral Plan, the
Warner-Lambert Consulting Fees Deferral Plan and the Deferred Compensation
Plan for Directors of Warner-Lambert Company.
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, excluding former officers and directors whose transactions
in Common Stock are no longer subject to Section 16 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.
Secretary: The Secretary of Warner-Lambert.
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 Account: The Account which reflects the Compensation deferred by a
Director pursuant to Section 11.4.
Stock Award: A grant of Options, Rights, Restricted Stock or Performance
Awards in accordance with the provisions hereof.
Stock Credit: A credit to a Director's Stock Account, expressed in whole
shares and fractions thereof, pursuant to Section 11.4.
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 a Right is exercised.
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. Stock Awards may not be granted in any year
which provide for the issuance of more than 1.75% of the shares of Common
Stock outstanding (including issued shares reacquired by the Company) on the
January 1 of the year of grant. Shares of Common Stock issued under the Plan
may be either authorized and unissued shares or issued shares reacquired by
the Company. Notwithstanding the above limitation, in any year in which Stock
Awards are granted which provide for the issuance of less than the maximum
permissible number of shares, the balance of such unused shares shall be added
to the limitation in subsequent years. In addition, 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 be added to the limitation in subsequent years; 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 be added to the limitation
in subsequent years so long as the Participant received no "benefits of
ownership" (within the meaning of Section 16 of the Act) in connection with
such grant. To the extent permitted by Section 16 of the Act, 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 422 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 the Company.
(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 the Company a signed copy of a notice of exercise in a form to
be supplied by the Company and the exercise of an Option or Right shall be
effective on the date on which the Company 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 or pursuant to a "qualified domestic
relations order" (as defined in the Code), 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" 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 representing twenty percent (20%)
or more of the combined voting power of Warner-Lambert's then outstanding
securities, (ii) upon the consummation of a merger, consolidation, sale or
disposition of all or substantially all of Warner-Lambert's assets or plan of
liquidation which is approved by the stockholders of Warner-Lambert (a
"Transaction"), or (iii) the composition of 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 obtaining actual knowledge of a Change
in Control of Warner-Lambert, "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 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 occurs as a result of a tender
or exchange offer or consummation of a Transaction, then the highest price per
share of Common Stock pursuant thereto. Any consideration other than cash
forming a part or all of the consideration for Common Stock to be paid
pursuant to the applicable transaction shall be valued at the valuation placed
thereon by the Board. 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 422 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, 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.
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 the period of time specified by the
Committee, except that upon the occurrence of a Change in Control of Warner-
Lambert all Options may be exercised without giving effect to the period of
employment 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 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 and have not been removed pursuant to Section
5.3(a).
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, but 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 and have not been removed pursuant to Section 5.3(a); 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 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 (10%) 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.
(d) Option Price. The Option Price of an incentive stock option shall not be
less than the Fair Market Value per share on the date of grant.
(e) Subsidiary. Incentive stock options may only be granted to employees of
Warner-Lambert and its Subsidiaries.
(f) Aggregate Limit. The aggregate number of shares of Common Stock which
may be issued pursuant to the exercise of incentive stock options shall not
exceed the lesser of (i) 10,000,000 shares or (ii) the number of shares
determined in accordance with the share limitation specified in Section 3.2
hereof.
The Company intends that Options designated by the Committee as incentive
stock options shall constitute incentive stock options under Section 422 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 the period specified by the Committee, except that upon the
occurrence of a Change in Control of Warner-Lambert, all Rights may be
exercised without giving effect to the period of employment 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, if any, 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 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.
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 permitted under the provisions of Rule
16b-3 promulgated pursuant to the Act. In addition, a payment of cash shall
be made to a Reporting Person who has held the Right at least six months from
the date of its grant promptly following a Change in Control of Warner-Lambert
which Change in Control is outside the control of any Reporting Person 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 the period specified by the Committee, 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 shall entitle the holder to receive a payment of cash
promptly following a Change in Control of Warner-Lambert which Change in
Control is outside the control of any Reporting Person within the meaning of
Rule 16b-3 under the Act. Such payment of cash shall be made to a Reporting
Person 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 relates (in such case the method of
determining the Fair Market Value in the third sentence of Section 4.6(a)
shall apply). Limited Rights shall expire on the first to occur of their date
of payment or expiration of the Limited Right or the related Option. Further,
upon payment of a Limited Right, the related Option (and any other Right
related thereto) shall be cancelled. 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 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, 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, 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, or (b) if the Change in
Control of Warner-Lambert occurs as a result of a tender or exchange offer or
consummation 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 the applicable transaction 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 (e.g., phantom stock or restricted stock units), 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. The limitations on transfer set forth in
Section 4.4 shall be applicable to all Performance Awards.
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, 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 Warner-
Lambert, the Committee may make such equitable adjustments to prevent dilution
or enlargement of rights as it may deem appropriate, including adjustments (i)
in the number and class of shares authorized to be granted hereunder,
(including adjustment to the share limitation of Section 3.2 hereof), (ii) in
the number and kind of shares available under any outstanding Stock Awards
(including substitution of shares of another corporation), (iii) in the price
of any Option, and (iv) in the number of Stock Credits in each Director's
Stock Account; 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. Stock Awards 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
Directors' Deferred Compensation
Section 11.1. Election To Participate.
(a) Each Director may elect to defer payment of all or any portion of his or
her Compensation that is payable during the immediately succeeding Plan Year.
Such election must be made with respect to all Compensation payable in such
succeeding Plan Year by the date established by the Secretary of the Company
but in no event later than December 31 of such preceding Plan Year.
(b) An election to defer any Compensation shall be: (i) in writing, (ii)
delivered to the Secretary, and (iii) irrevocable. A Director may file a new
election each Plan Year applicable to the immediately succeeding Plan Year.
If no election or revocation of a prior election is received by such date as
may be permissible under the preceding paragraph, the election, if any, in
effect for such Plan Year will continue to be effective for the immediately
succeeding Plan Year. If a Director does not elect to defer Compensation
payable during a Plan Year, all such Compensation shall be paid directly to
such Director in accordance with resolutions adopted by the Board from time to
time.
Section 11.2. Mode of Deferral. A Director who has elected to defer all or a
portion of his or her Compensation as provided in Section 11.1 hereof may
further elect to have such deferred amounts credited to a Cash Account, a
Stock Account, or a combination of both such Accounts. The Secretary shall
maintain such Accounts in the name of the Director. The election referred to
in this Section 11.2 may be made once per year and shall become effective on
the January 1st which follows such election; provided, however, that no
election to defer amounts into the Stock Account shall become effective unless
the transaction qualifies as exempt under Rule 16b-3(d) under the Act. Any
such election shall be specified in a writing delivered by the Director to the
Secretary and shall be irrevocable. If a Director fails to elect the Account
to which deferral shall be made or if any such election would result in a
transaction which would not qualify as exempt under Rule 16b-3(d) under the
Act, he or she shall be deemed to have elected deferral to the Cash Account.
In addition, a Director may cease deferring amounts into the Stock Account at
any time by written notice delivered to the Secretary and thereafter such
amounts shall be credited to the Cash Account. Compensation deferred to a
Cash Account or Stock Account shall result in Cash Credits or Stock Credits,
respectively.
Section 11.3. Cash Account. The Cash Account of a Director shall be
credited, as of the day the deferred Compensation otherwise would have been
payable to such Director, with Cash Credits equal to the dollar amount of such
deferred Compensation. The Cash Account shall be adjusted and increased each
year, as if interest was credited thereon, at the rate utilized for adjusting
deferred bonus accounts under the Warner-Lambert Company Incentive
Compensation Plan.
Section 11.4. Stock Account. The Stock Account of a Director shall be
credited, as of the day the deferred Compensation otherwise would have been
payable to such Director, with Stock Credits equal to the number of shares of
Common Stock (including fractions of a share) that could have been purchased
with the amount of such deferred Compensation at the Closing Price of shares
of Common Stock on the day the deferred Compensation otherwise would have been
payable to such Director. As of the date of any dividend record date for the
Common Stock, the Director's Stock Account shall be credited with additional
Stock Credits equal to the number of shares of Common Stock (including
fractions of a share) that could have been purchased, at the Closing Price of
shares of Common Stock on such date, with the amount which would have been
paid as dividends on that number of shares (including fractions of a share) of
Common Stock which is equal to the number of Stock Credits then attributed to
the Director's Stock Account; provided, however, that in the event that there
is not then in effect an election under Section 11.2 hereof to have any of
such Director's Compensation credited to a Stock Account and, further, that
the Director has elected under Section 11.5(a) hereof to transfer his or her
Stock Account to a Cash Account then the amount which would have been credited
to the Stock Account in accordance with this sentence but for this proviso
shall instead be credited to such Director's Cash Account. In the case of
dividends paid in property other than cash, the amount of the dividend shall
be deemed to be the fair market value of the property at the time of the
payment of the dividend, as determined in good faith by the Committee.
Section 11.5. Conversions.
(a) Stock Account to Cash Account. A Director may elect to convert all or
any portion of his or her Stock Account to his or her Cash Account; provided,
however, that no such election shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(f) under the Act. The amount to be
credited to such Director's Cash Account shall be obtained by multiplying the
number of Stock Credits credited to his or her Stock Account as of the last
day of the month in which such election is made by the Closing Price of shares
of Common Stock on such date.
(b) Cash Account to Stock Account. A Director may elect to convert all or
any portion of his or her Cash Account to his or her Stock Account; provided,
however, that no such election shall become effective unless the transaction
qualifies as exempt under Rule 16b-3(f) under the Act. The number of Stock
Credits to be credited to such Director's Stock Account shall be obtained by
dividing the number of Cash Credits credited to his or her Cash Account as of
the last day of the month in which such election is made by the Closing Price
of shares of Common Stock on such date.
(c) An election under this Section 11.5 shall be in a writing delivered to
the Secretary and may be revoked or revised at any time prior to the last day
of the month in which the election is made.
Section 11.6. Distribution of Cash Account or Stock Account.
(a) Distributions in respect of a Director's Cash Account and Stock Account
shall become payable in full to such Director, annually, over a period of ten
(10) years, except as otherwise agreed to by the Committee and the Director,
beginning with the first day of the calendar year following the year in which
the individual ceases to be a member of the Board of Directors.
(b) Distributions in respect of a Director's Cash Account and Stock Account
shall be made only in cash.
Section 11.7. Installment Amount.
(a) The amount of each distribution with respect to a Director's Cash Account
shall be the amount obtained by multiplying the balance in such Account by a
fraction, the numerator of which is one (1) and the denominator of which is
the number of years in which distributions remain to be made (including the
current distribution).
(b) The amount of each distribution with respect to a Director's Stock
Account shall be the amount obtained by multiplying the number of Stock
Credits attributable to such installment (determined as hereinafter provided)
by the average of the Closing Prices of shares of Common Stock on each
Business Day in the month immediately prior to the month in which such
installment is to be paid. The number of Stock Credits attributable to an
installment shall be equal to the amount obtained by multiplying the current
number of Stock Credits in such Stock Account by a fraction, the numerator of
which is one (1) and the denominator of which is the number of years in which
distributions remain to be made (including the current distribution).
Section 11.8. Financial Hardship. Notwithstanding any other provision
hereof, at the written request of a Director or a Director's legal
representative, the Committee, in its sole discretion, upon a finding that
continued deferral will result in financial hardship to the Director, may
authorize (i) the payment of all or a part of a Director's Accounts in a
single installment prior to his or her ceasing to be a Director or (ii) the
acceleration of payment of any multiple installments thereof; provided,
however, that Directors may not receive distributions under this Section 11.8
if such distribution would result in liability of the Director under Section
16 of the Act.
Section 11.9. Distribution upon Death. Upon the death of a Director, the
Committee shall pay all of such Director's Cash Account and Stock Account in a
single installment to the beneficiary designated by the Director. All such
designations shall be made in writing and delivered to the Secretary. A
Director may from time to time revoke or change any such designation by
written notice to the Secretary. If there is no designation on file with the
Secretary at the time of the Director's death, or if the beneficiary
designated therein shall have predeceased the Director, such distributions
shall be made to the executor or administrator of the Director's estate. Any
distribution under this Section 11.9 shall be made as soon as practicable
following notification to the Committee of the Director's death and the value
of the Stock Account for the purpose of such distribution shall be based upon
the Closing Price of shares of Common Stock on the date of the Director's
death.
Section 11.10. Certain Events. Notwithstanding any other provision hereof,
in the event of a Change in Control of Warner-Lambert which is outside of the
control of any Reporting Person within the meaning of Rule 16b-3 under the
Act, the balance in the Stock Account of each Director shall be converted to
the Cash Account. For this purpose, the balance in the Stock Account shall be
determined by multiplying the number of Stock Credits by the higher of (i) the
highest Closing Price during the period commencing 30 days prior to such
Change in Control or (ii) if the Change in Control of Warner-Lambert occurs as
a result of a tender or exchange offer or consummation of a Transaction, then
the highest price per share of Common Stock pursuant thereto. Any
consideration other than cash forming a part or all of the consideration for
Common Stock to be paid pursuant to the applicable transaction shall be valued
at the valuation placed thereon by the Board of Directors. Adjustments, if
any, shall be made in accordance with Article X hereof. Within 30 days after
a Change in Control of Warner-Lambert, each Director may designate a
distribution schedule which may provide for a lump sum payment or installment
payments over a period of up to 15 years, provided, however, that no payment
shall be made for a period of one year after the Change in Control. In the
event that a Director shall not make a designation in accordance with the
preceding sentence, the balance in the Cash Account shall be distributed in a
lump sum one year after the Change in Control.
Section 11.11. Valuations. Notwithstanding any other provision hereof, in
any instance in which a Director's Stock Account is to be valued by reference
to the Closing Price of shares of Common Stock on a single day, the Committee
may declare such price to be unrepresentative of the market value of such
Common Stock and, in lieu thereof, shall base such valuation on the average of
the Closing Prices of shares of Common Stock on each Business Day during the
calendar quarter ending coincident with or immediately preceding the day which
would otherwise serve as the basis for the valuation.
Section 11.12. Funding. The Company's sole obligation to a Director or any
person claiming under or through any Director in respect of the payment of any
balance in an Account shall be solely a contractual obligation in accordance
with the terms of the Plan. No promise hereunder shall be secured by any
specific assets of the Company, nor shall any assets of the Company be
designated as attributable or allocated to the satisfaction of such promises.
Section 11.13. Status of Stock Credits. Stock Credits are not, and do not
constitute, shares of Common Stock, and no right as a holder of shares of
Common Stock shall devolve upon a Director by reason of his or her
participation in the Plan.
Section 11.14. Non-Trading Date. In the event that the date of the
determination of a Closing Price hereunder shall be a date which shall not be
a date on which the Common Stock is traded on the New York Stock Exchange,
determination of such Closing Price shall be made as of the first date
thereafter on which the Common Stock is so traded.
Section 11.15. No Right To Reelection. Nothing in the Plan shall be deemed
to create any obligation on the part of the Board to nominate any Director for
reelection by the Company's stockholders, nor confer upon any Director the
right to remain a member of the Board of Directors.
Section 11.16. Predecessor Plans. Upon the Effective Date of the Plan, no
further benefits shall accrue under any Predecessor Plans, except as provided
in Section 11.18 hereof.
Section 11.17. Deferred Compensation Accounts. Upon the Effective Date of
the Plan, all Deferred Compensation Accounts shall become subject to the terms
and conditions of this Plan in lieu of the terms and conditions of the
Predecessor Plans, except as provided in Section 11.18 hereof.
Section 11.18. Retired Directors. Benefits accrued under Predecessor Plans
which are in pay status on the Effective Date shall continue to be paid in
accordance with the provisions of the Predecessor Plans.
Section 11.19. Federal Securities Law. The Company intends that the
provisions of this Article XI, and all transactions effected in accordance
with this Article XI, shall comply with Rule 16b-3 under the Act. In the
event that any provision of this Article XI is not necessary to so comply or
any additional provision is necessary to obtain or maintain such compliance,
the Committee is authorized to revise the Plan accordingly without obtaining
approval of the stockholders of Warner-Lambert. By way of illustration, and
not limitation, the Committee may bifurcate the provisions of this Article XI,
and such other provisions as it shall deem necessary, into a separate plan
(which plan shall be recognized as having received approval of the
stockholders of Warner-Lambert), if the Committee shall deem such action
necessary to maintain qualification of Article XI (and transactions
thereunder) under Rule 16b-3 under the Act and the qualification of the
provisions of the Plan affecting Employees (and transactions thereunder) under
Rule 16b-3 under the Act.
ARTICLE XII
Administration
Section 12.1. 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 an award under the Plan
or any other plan of the Company which would result in loss of "disinterested
person" status within the meaning of Section 16 of the Act 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 has discretionary authority to construe and
interpret the Plan and 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 has discretionary authority to 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 12.2. 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 "Non-Employee Directors" (as defined in said Rule) as a
condition of the continued qualification of the Plan (and transactions
thereunder) under Rule 16b-3.
ARTICLE XIII
Termination or Amendment of the Plan
Section 13.1. 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 or the rights of a Director with respect to his or her Accounts
prior to such termination, alteration or amendment may not be impaired without
the consent of such Participant or Director, as the case may be, and, provided
further, without the approval of the Company's stockholders, no alteration or
amendment may be made which would require approval of such stockholders as a
condition of compliance with Rule 16b-3 under the Act. The Company intends
that the Plan (and transactions thereunder) 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
approval of the stockholders of Warner-Lambert.
(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 XIV
Miscellaneous
Section 14.1. 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 14.2. 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 or the Director, as the case may be, 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, or (ii) 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 14.3. 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 14.4. 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 or a Director, 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. The employment of an Employee who becomes disabled 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 14.5. 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 14.5, 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 14.6. 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 14.7. 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 14.8. Laws of Foreign Jurisdictions. Without amending the Plan, but
subject to the limitations specified in Article XIII 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 14.9. Other Plans. Nothing contained herein shall prevent the
Company from adopting additional compensation plans or arrangements.
Section 14.10. Federal Securities Law. Notwithstanding any other provision
of the Plan, no transaction shall be given effect on any date which would, in
the opinion of counsel to the Company, result in liability under Section 16(b)
of the Act.
ARTICLE XV
Effective Date; Term of Plan
Section 15.1. 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 1992. 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 15.2. Term of Plan. No Stock Awards may be granted hereunder after
April 28, 1997. This Section 15.2 shall not affect any Stock Award granted
prior to such date. Further, the provisions of Article XI hereof (as amended
from time to time) are ongoing and shall continue until terminated by the
Board.
WARNER-LAMBERT COMPANY