WARNER-LAMBERT COMPANY
1996 STOCK PLAN
As Amended to January 27, 1998
WARNER-LAMBERT COMPANY
1996 STOCK PLAN
ARTICLE I
Purpose of Plan
Section 1.1. Purpose.
(a) The purpose of the 1996 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 1996 Stock Plan.
Plan Year: The calendar year.
Predecessor Plans: The Warner-Lambert Directors' Fees Deferral Plan, the
Warner-Lambert Consulting Fees Deferral Plan, the Deferred Compensation
Plan for Directors of Warner-Lambert Company and the Warner-Lambert 1992
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, 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.
(a) Stock Awards may not be granted in any year which provide for the
issuance of more than 1.65% of the shares of Common Stock outstanding
(including issued shares reacquired by the Company) on the January 1 of the
year of grant. Restricted Stock may not be granted in any year for more
than 20% of the shares authorized under the preceding sentence. 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 (including Restricted
Stock) 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.
(b) Stock Awards may not be granted in any year to any individual which
provide for the issuance of more than 600,000 shares of Common Stock (as
such number shall be adjusted in accordance with Article X).
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.
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; provided, however, that the Option Price shall not be less than the
Fair Market Value of Warner-Lambert Common Stock on the date of grant. 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 or as otherwise determined by the Committee, 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) 20,000,000 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, Section 6.5 and Section 6.6, or as otherwise determined by the
Committee, 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. Subject to the provisions of Section 7.3, 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, and 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, equitable adjustments shall be made
to prevent dilution or enlargement of rights (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, (iv)
in the number of Stock Credits in each Director's Stock Account and (v) in
any other aspect of the Plan as the Committee shall deem appropriate;
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 424(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. Prior to January 1, 1998, 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 shall be made
only in cash. Distributions in respect of a Director's Stock Account shall
be made only in shares of Common Stock.
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 number of Stock Credits attributable to each distribution shall be
equal to the number 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.
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 and account
balances accrued under any Predecessor Plans shall be governed by the
provisions of this Plan, 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(d) 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 or under Company
policy. 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.
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 1996. Approval will require 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. If approved, the Plan
shall become effective January 1, 1997.
Section 15.2. Term of Plan. No Stock Awards may be granted hereunder
after April 23, 2007. 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