WARNER-LAMBERT COMPANY
1996 STOCK PLAN
AS AMENDED TO NOVEMBER 25, 1997
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.
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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.
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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.
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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
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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
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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. 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
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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)
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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
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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
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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.
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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.
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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
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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
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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
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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
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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,
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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
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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
19
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
20
(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
21
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.
22
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.
23
(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.
24
(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,
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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.
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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
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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.
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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