Warner Lambert Co – ‘PREM14A’ on 12/20/99

On:  Monday, 12/20/99   ·   Accession #:  912057-99-9883   ·   File #:  1-03608

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Preliminary Proxy Solicitation Material — Merger or Acquisition   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Solicitation Material -- Merger    182    910K 
                          or Acquisition                                         

Document Table of Contents

PREM14A
1st Page of 182
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
SCHEDULE 14A
(RULE 14A-101)

   INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES 
EXCHANGE ACT OF 1934

Filed by registrant /X/                                                 
Filed by a party other than registrant / /                              
Check appropriate box:                                                  
/X/  Preliminary Proxy Statement                                        
/ /  Confidential, for Use of the Commission Only (as permitted by      
Rule 14a-6(e)(2))                                             
/ /  Definitive Proxy Statement                                         
/ /  Definitive Additional Materials                                    
/ /  Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12      

              WARNER-LAMBERT COMPANY
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (Check the appropriate box):                              

/ /  No Fee Required                                                            
/X/  Fee computed on table below per Exchange Act Rules 14a-6(i)(1)             
and 0-11.                                                             
(1) Title of each class of securities to which transaction applies:   
    Common Stock, par value $1.00 per share, of Warner-Lambert Company
("Warner-Lambert Common Stock")                               
        Common Stock, par value $0.33 1/3 per share, of American Home Products
Corporation ("AHP Common Stock")                              
(2) Aggregate number of securities to which transaction applies:      
      932,915,207 shares of Warner-Lambert Common Stock to be converted in
the merger                                                    
(3) Per unit price or other underlying value of transaction computed  
       pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):    
$80.47*                                                       
(4) Proposed maximum aggregate value of transaction:                  
$75,071,686,707.30*                                           
(5) Total fee paid:                                                   
 $15,014,338 (1/50th of 1% of the maximum aggregate value of the
transactions, rounded up to the nearest whole dollar amount). 
--------------------------                                    
       * Estimated solely for purpose of calculating the filing fee pursuant
           to Exchange Act Rule 0-11, the per unit value is $80.47, which is the
       average of the high and low sales prices of Warner-Lambert Common
      Stock on the consolidated reporting system on December 14, 1999.
/ /  Fee paid previously with preliminary materials.                            
/X/  Check box if any part of the fee is offset as provided by Exchange Act     
  Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
 paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.           
(1) Amount Previously Paid:                                           
   A fee of $19,818,926 was paid by the registrant and American Home
        Products Corporation in connection with the registration of the shares
of AHP Common Stock to be issued in exchange for shares of    
        Warner-Lambert Common Stock in the merger. The entire fee payable with
this filing is offset by the amount previously paid.          
(2) Form, Schedule or Registration Statement No.                      
Registration Statement on Form S-4, File No. 333-93067        
(3) Filing Party:                                                     
American Home Products Corporation                            
(4) Date Filed:                                                       
December 17, 1999                                             

PREM14A
2nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 2nd
[PRELIMINARY DRAFT DATED DECEMBER 17, 1999--SUBJECT TO COMPLETION]

                                                                [Download Table]
              
[LOGO]  [LOGO]

MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT

The boards of directors of American Home Products Corporation and       
Warner-Lambert Company have unanimously approved a merger of equals designed to 
create the world's largest pharmaceutical and consumer health products company. 
In addition to its leading global business in pharmaceuticals and consumer      
health care products, the combined company will also have a powerful pipeline of
innovative products and strong biotechnology capabilities. The combined company 
will be named AmericanWarner, Inc.                                              

When the merger is completed, Warner-Lambert stockholders will receive  
1.4919 shares of AmericanWarner common stock for each share of Warner-Lambert   
common stock. AHP stockholders will continue to own their existing shares which 
after the merger will automatically represent shares of AmericanWarner. We      
estimate that AmericanWarner will issue approximately   billion shares to       
Warner-Lambert stockholders in the merger. Each company's stockholders as a     
group will own approximately 50% of the combined company.                       

The shares of the combined company will be traded on the New York Stock 
Exchange under the symbol "AWI."                                                

We are asking the AHP stockholders to approve an amendment to AHP's     
certificate of incorporation to increase the number of shares of common stock   
that AHP is authorized to issue and to change the name of AHP to                
AmericanWarner, Inc., to approve the issuance of shares of common stock to      
Warner-Lambert stockholders in connection with the merger and to approve an     
amendment to AHP's by-laws increasing the size of AHP's board of directors. We  
are asking the Warner-Lambert stockholders to approve the merger and adopt the  
merger agreement.                                                               

We cannot complete the merger unless the stockholders of Warner-Lambert 
approve the merger and adopt the merger agreement and the stockholders of AHP   
approve the amendment to AHP's certificate of incorporation and the issuance of 
common stock in connection with the merger.                                     

  We have each scheduled a special meeting of our respective stockholders to
vote on these important matters.                                                

The dates, times and places of the meetings are:                        

For AHP stockholders:                                                   
, 2000                                            

[TIME]                                                                  

[PLACE]                                                                 

For WARNER-LAMBERT stockholders:                                        

, 2000                                            

[TIME]                                                                  

[PLACE]                                                                 

This document provides you with detailed information about the proposed 
merger. It also contains information about our companies from documents that we 
have filed with the Securities and Exchange Commission. We encourage you to read
this document carefully. IN PARTICULAR, YOU SHOULD READ THE "RISK FACTORS"      
SECTION BEGINNING ON PAGE 19 FOR A DESCRIPTION OF THE VARIOUS RISKS YOU SHOULD  
CONSIDER IN EVALUATING THE PROPOSED TRANSACTION.                                

    We are very enthusiastic about this merger and the strength and capabilities
we expect from the combined company.                                            

    WE JOIN WITH ALL THE OTHER MEMBERS OF THE TWO COMPANIES' BOARDS OF DIRECTORS
IN RECOMMENDING THAT YOU VOTE IN FAVOR OF THE PROPOSALS.                        

                                                                [Download Table]
                                                                              
Very truly yours,                                                             

John R. Stafford                                       Lodewijk J.R. de Vink  
Chairman, President and                                Chairman, President and
Chief Executive Officer                                Chief Executive Officer
American Home Products Corporation                     Warner-Lambert Company 

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR     
DISAPPROVED THE SECURITIES TO BE ISSUED UNDER THIS DOCUMENT OR DETERMINED IF    
THIS DOCUMENT IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A  
CRIMINAL OFFENSE.                                                               

THIS JOINT PROXY STATEMENT/PROSPECTUS IS DATED       , 2000 AND IS FIRST BEING  
MAILED TO THE STOCKHOLDERS OF AHP AND WARNER-LAMBERT ON OR ABOUT       , 2000.  

PREM14A
3rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 3rd
[LOGO]

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 

  NOTICE IS HEREBY GIVEN that American Home Products Corporation will hold a
special meeting of its stockholders on       ,         , 2000 at       a.m.,    
local time, at             for the following purposes:                          

    1.  To consider and vote upon a proposal to amend AHP's restated certificate
      of incorporation to change the name of AHP to "AmericanWarner, Inc." and
     increase the total number of authorized shares of AHP common stock from
2,400,000,000 to           .                                      

   2.  To consider and vote on a proposal to approve the issuance of shares of
       AHP common stock, $0.33 1/3 par value per share, pursuant to an Agreement
       and Plan of Merger, dated as of November 3, 1999, among AHP, a subsidiary
  of AHP and Warner-Lambert Company. A copy of the merger agreement is
attached as Appendix A to the joint proxy statement/prospectus    
accompanying this notice.                                         

   3.  To consider and vote upon a proposal to amend AHP's by-laws to increase
the maximum number of AHP directors from 15 to 24.                

   4.  To transact such other business as may properly come before the special
meeting.                                                          

The board of directors of AHP has fixed the close of business on        
       , 2000 as the record date for the determination of stockholders
entitled to receive notice of and vote at the AHP special meeting or any        
adjournment or postponement thereof. A list of the stockholders entitled to vote
at the AHP special meeting will be available for inspection by stockholders of  
record during ordinary business hours at [meeting place/city of meeting place]  
during the ten-day period prior to the date of the AHP special meeting, and will
also be available at the AHP special meeting.                                   

   YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE THE
PROPOSALS LISTED ABOVE, WHICH ARE DESCRIBED IN DETAIL IN THE ACCOMPANYING JOINT 
PROXY STATEMENT/PROSPECTUS.                                                     

                                                                [Download Table]
                                                       
                     By Order of the Board of Directors

                     Eileen M. Lach                    
                     SECRETARY                         

Madison, New Jersey                                    
          , 2000                                       

-- IMPORTANT -- 

    Your vote is important and we urge you to complete, sign, date
and mail your proxy card as promptly as possible or use the toll-free 
telephone number on the proxy card to submit your proxy by telephone by 
following the instructions on the proxy card. In this way, if you are unable
to attend in person, your shares can nevertheless be voted at the AHP 
special meeting. A return envelope is enclosed for your convenience.
Remember, your vote is important, so please act today!

PREM14A
4th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 4th
[LOGO]

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 

   A special meeting of stockholders of Warner-Lambert Company will be held at
   a.m., local time, on            , 2000 at             , to consider and
vote on the following matters described in the accompanying joint proxy         
statement/prospectus:                                                           

1.  To approve and adopt an Agreement and Plan of Merger, dated as of   
November 3, 1999, among American Home Products Corporation,       
Warner-Lambert Company and a subsidiary of American Home Products 
Corporation, and the merger contemplated by that agreement; and   

   2.  To transact such other business as may properly come before the special
meeting.                                                          

The board of directors of Warner-Lambert Company has fixed the close of 
business on             , 2000 as the record date for the determination of      
stockholders entitled to receive notice of and to vote at the meeting or any    
adjournment or postponement thereof. A list of the stockholders entitled to vote
will be open to the examination of stockholders at Warner-Lambert Company, [35  
Waterview Boulevard, Parsippany, New Jersey] during ordinary business hours from
           , 2000 to the date of the meeting and will also be available at the
Warner-Lambert special meeting.                                                 

   YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE THE
MERGER AND ADOPT THE MERGER AGREEMENT, BOTH OF WHICH ARE DESCRIBED IN DETAIL IN 
THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS.                              

                                      By Order of the Board of Directors

                  Rae G. Paltiel
             SECRETARY

, 2000                                                          
Warner-Lambert Company                                                          
201 Tabor Road                                                                  
Morris Plains, NJ 07950                                                         

YOUR VOTE IS IMPORTANT

    To be sure your shares are represented at the meeting,
please complete, date, sign and mail your proxy card
in the enclosed postage-paid envelope as soon as possible.
You may vote in person at the meeting even if you 
send in your proxy card.

PREM14A
5th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 5th
TABLE OF CONTENTS 

                                                                [Download Table]
                                               
QUESTIONS AND ANSWERS ABOUT THE                
  AHP/WARNER-LAMBERT MERGER.............      1
SUMMARY.................................      4
  The Companies.........................      4
  The Special Meetings..................      4
  Votes Required........................      4
  The Record Dates for Voting at the           
    Meetings............................      5
  Our Recommendations to our                   
    Stockholders........................      5
  The Merger Agreement..................      5
  What You Will Receive in the Merger...      5
  Board of Directors and Management of         
    AmericanWarner Following the               
    Merger..............................      5
  Interests of Certain Persons in the          
    Merger..............................      6
  Conditions to the Merger..............      6
  Termination...........................      6
  Termination Fees......................      7
  Stock Option Agreements...............      8
  Regulatory Approvals..................      8
  Accounting Treatment..................      8
  Opinions of Financial Advisors........      8
  Material United States Federal Income        
    Tax Consequences....................      8
  No Appraisal Rights...................      9
  Listing of AmericanWarner Common             
    Stock...............................      9
  The Certificate of Incorporation             
    Amendment...........................      9
  The By-Law Amendment..................      9
  Selected Historical Financial                
    Information.........................     10
  Significant Events Affecting Financial       
    Trends..............................     11
  Unaudited Pro Forma Combined Selected        
    Financial Information...............     14
  Summary Unaudited Financial                  
    Projections.........................     15
  Comparative Per Share Information.....     16
  Comparative Per Share Market Price and       
    Dividend Information................     18
RISK FACTORS............................     19
FORWARD-LOOKING STATEMENTS..............     21
THE PROPOSED MERGER.....................     23
  AHP Proposals.........................     23
  Warner-Lambert Proposal...............     23
  Background of the Merger..............     23
  Our Reasons for the Merger............     38
  Factors Considered by, and                   
    Recommendation of, the Board of            
    Directors of Warner-Lambert.........     41
  Factors Considered by, and                   
    Recommendation of, the Board of            
    Directors of AHP....................     45
  Opinion of Financial Advisor to              
    Warner-Lambert......................     47
  Opinions of Financial Advisors to            
    AHP.................................     47
  Accounting Treatment..................     47
  Material United States Federal Income        
    Tax Consequences....................     47
  Regulatory Approvals..................     49
  No Appraisal Rights...................     49
  Certain Litigation....................     49
THE COMPANIES...........................     51
  American Home Products Corporation....     51
  Warner-Lambert Company................     51
THE SPECIAL MEETINGS....................     53
  Date, Times and Places................     53
  Matters to be Considered at the              
    Special Meetings....................     53
  Record Date; Stock Entitled to Vote;         
    Quorum; Plan Participants...........     53
  Votes Required........................     54
  Share Ownership of Management.........     54
  Shares Held in Street Name; Voting of        
    Proxies.............................     55
UNAUDITED PRO FORMA COMBINED CONDENSED         
  FINANCIAL STATEMENTS..................     57
INTERESTS OF CERTAIN PERSONS IN THE            
  MERGER................................     67
  AHP's Arrangements with Executive            
    Officers............................     67
  Warner-Lambert's Arrangements with           
    Executive Officers..................     68
  Board of Directors....................     69
  Ownership of Common Stock; Stock             
    Options.............................     69
  Indemnification; Directors' and              
    Officers' Insurance.................     69
THE MERGER AGREEMENT....................     71
  General...............................     71
  Closing Matters.......................     71
  Consideration to be Received in the          
    Merger; Treatment of Stock                 
    Options.............................     71
  Exchange of Certificates in the              
    Merger..............................     72
  Fractional Shares.....................     73
  Listing of AmericanWarner Stock.......     73

i 

PREM14A
6th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 6th
                                                                [Download Table]
                                               
  Name Change; Board of Directors;             
    Executive Officers; and Company            
    Headquarters........................     73
  Covenants.............................     74
  Other Covenants and Agreements........     77
  Representations and Warranties........     78
  Conditions............................     79
  Termination of the Merger Agreement...     80
  Amendments, Extensions and Waivers....     83
STOCK OPTION AGREEMENTS.................     84
  The Stock Options.....................     84
  When the Stock Options May Be                
    Exercised...........................     84
  Cash Election.........................     84
  Limitation on Total Profit............     85
  Other Provisions......................     85
  Effect of Stock Option Agreements.....     86
BOARD OF DIRECTORS AND MANAGEMENT OF           
  AMERICANWARNER FOLLOWING THE MERGER...     87
  Directors.............................     87
  Committees of the Board of                   
    Directors...........................     87
  Compensation of Directors.............     87
  Officers..............................     88
  Chief Executive Officer and                  
    Chairman............................     88
  Other Senior Management...............     88
  Executive Compensation................     88
COMPARISON OF STOCKHOLDERS' RIGHTS......     89
  Authorized Capital....................     89
  Board of Directors....................     89
  Committee of Directors................     90
  Newly Created Directorships and              
    Vacancies...........................     90
  Removal of Directors..................     91
  Classified Board......................     91
  Officers..............................     91
  Advance Notice of Stockholder-Proposed       
    Business at Annual Meetings.........     92
  Amendments to Governing Documents.....     93
  Rights Plans..........................     94
DESCRIPTION OF AMERICANWARNER CAPITAL          
  STOCK.................................     95
  AmericanWarner Common Stock...........     95
  AmericanWarner Preferred Stock........     95
  AmericanWarner Rights Plan............     96
  Transfer Agent and Registrar..........     97
LEGAL MATTERS...........................     98
EXPERTS.................................     98
FUTURE STOCKHOLDER PROPOSALS............     98
WHERE YOU CAN FIND MORE INFORMATION.....     99

                                                                [Download Table]
                                                        
Appendix A              Merger Agreement........     A-1
Appendix B              Warner-Lambert Stock            
                        Option Agreement........     B-1
Appendix C              AHP Stock Option                
                        Agreement...............     C-1
Appendix D              Opinion of Bear, Stearns        
                        & Co. Inc...............     D-1
Appendix E              Opinion of Chase                
                        Securities Inc..........     E-1
Appendix F              Opinion of Morgan               
                        Stanley & Co.                   
                        Incorporated............     F-1

ii

PREM14A
7th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 7th
QUESTIONS AND ANSWERS 
ABOUT THE AHP/WARNER-LAMBERT MERGER 

                                                                [Download Table]
                                             
Q:   WHY ARE THE TWO COMPANIES PROPOSING TO  
     MERGE?                                  
A:   The boards of directors of AHP and      
     Warner-Lambert believe that this merger 
     of equals will create the world's       
     largest pharmaceuticals and consumer    
     health care company, with the scientific
     depth, global marketing strength and    
     financial resources to take greater     
     advantage of new opportunities and to   
     bring innovative new products to market 
     faster.                                 
Q:   WHAT WILL BE THE STRENGTHS OF THE       
     COMBINED COMPANY?                       
A:   We expect the combined company to       
     benefit from:                           
     - a strong diversified pipeline with    
     over 20 new products expected by 2002;  
     - leading products in major therapeutic 
       areas;                                
     - its number one position in over-the-  
       counter products with a portfolio of  
       globally recognized brand names;      
     - complementary technologies and larger 
       R&D spending than any of our          
       competitors;                          
     - a strong management team; and         
     - significant cost savings.             
Q:   WHAT WILL BE THE NAME OF THE COMBINED   
     COMPANY?                                
A:   The combined company will be named      
     AmericanWarner, Inc. upon completion of 
     the merger.                             
Q:   WHAT WILL WARNER-LAMBERT STOCKHOLDERS   
     RECEIVE FOR THEIR WARNER-LAMBERT SHARES?
A:   Warner-Lambert stockholders will receive
     1.4919 shares of AmericanWarner common  
     stock in exchange for each of their     
     shares of Warner-Lambert common stock.  
     AmericanWarner will not issue fractional
     shares in the merger. As a result, the  
     total number of shares of AmericanWarner
     common stock that Warner-Lambert        
     stockholders will receive in the merger 
     will be rounded down to the nearest     
     whole number, and Warner-Lambert        
     stockholders will receive a cash payment
     for the value of the remaining fraction 
     of a share of AmericanWarner common     
     stock that they would otherwise receive,
     if any.                                 
     EXAMPLE:  IF YOU CURRENTLY OWN 200      
     SHARES OF WARNER-LAMBERT COMMON STOCK,  
     THEN AFTER THE MERGER YOU WILL BE       
     ENTITLED TO RECEIVE 298 SHARES OF       
     AMERICANWARNER COMMON STOCK AND A CHECK 
     FOR THE MARKET VALUE OF THE 0.38        
     FRACTIONAL SHARE.                       
Q:   WILL AHP STOCKHOLDERS RECEIVE ANY SHARES
     AS A RESULT OF THE MERGER?              
A:   No. AHP stockholders will continue to   
     hold the AHP shares they currently own. 
     After the merger, these shares will     
     automatically represent shares of       
     AmericanWarner.                         
Q:   HOW IS THIS TRANSACTION BEING           
     STRUCTURED?                             
A:   The transaction is a merger of equals.  
     Neither company is acquiring the other  
     and, following the merger,              
     AmericanWarner will operate as one      
     company.                                
Q:   WHO WILL MANAGE AMERICANWARNER?         
A:   Lodewijk J.R. de Vink, the Chairman,    
     President and Chief Executive Officer of
     Warner-Lambert, will be the Chief       
     Executive Officer and a member of the   
     board of directors of AmericanWarner and
     will report to the board of directors of
     AmericanWarner. John R. Stafford, the   
     Chairman, President and Chief Executive 
     Officer of AHP, will be the Chairman of 
     the board of directors of AmericanWarner
     until 18 months following the completion
     of the merger. Following Mr. Stafford's 
     retirement, Mr. de Vink will succeed him
     as Chairman. AHP and Warner-Lambert will
     each have equal representation on       
     AmericanWarner's board of directors, and
     the employees of AmericanWarner will    
     work together to create a single new    
     business entity.                        

1 

PREM14A
8th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 8th
                                                                [Download Table]
                                             
Q:   WHEN DO YOU EXPECT THE MERGER TO BE     
     COMPLETED?                              
A:   We are working to complete the merger in
     the second quarter of 2000. However, it 
     is possible that delays in obtaining    
     regulatory approvals and other factors  
     outside the control of the parties could
     require us to complete the merger at a  
     later time.                             
Q:   WHAT HAPPENS TO MY FUTURE DIVIDENDS?    
A:   Although dividends are subject to future
     approval and declaration by AHP's and   
     Warner-Lambert's respective boards of   
     directors, AHP and Warner-Lambert each  
     currently plan to continue to pay       
     regular quarterly dividends on their    
     common stock until the closing of the   
     merger. AHP's current quarterly dividend
     is $0.23 per share of common stock, or  
     $0.92 per share on an annual basis.     
     Warner-Lambert's current quarterly      
     dividend is $0.20 per share of common   
     stock, or $0.80 per share on an annual  
     basis. The dividend policy of           
     AmericanWarner will be determined by its
     board of directors following the merger.
     In formulating this policy, we expect   
     that the AmericanWarner board of        
     directors will consider various factors,
     including the earnings, financial       
     position, cash flows and growth         
     strategies of AmericanWarner.           
Q:   WHAT ARE THE TAX CONSEQUENCES OF THE    
     MERGER TO STOCKHOLDERS?                 
A:   Warner-Lambert stockholders who exchange
     their shares of Warner-Lambert common   
     stock solely for shares of              
     AmericanWarner common stock pursuant to 
     the merger will not recognize any gain  
     or loss on the exchange for United      
     States federal income tax purposes,     
     except with respect to the cash, if any,
     received in lieu of fractional share    
     interests of AmericanWarner. The merger 
     will not have any tax consequences for  
     AHP stockholders. To review the tax     
     consequences to stockholders in greater 
     detail, see page 47.                    
Q:   WHAT WILL WARNER-LAMBERT STOCKHOLDERS'  
     TAX BASIS BE IN THE AMERICANWARNER      
     COMMON STOCK THEY RECEIVE IN THE MERGER?
A:   Each Warner-Lambert stockholder's tax   
     basis in his or her total shares of     
     AmericanWarner common stock will equal  
     the stockholder's current tax basis in  
     his or her Warner-Lambert common stock  
     reduced by the amount of basis allocable
     to fractional shares for which the      
     stockholder receives a cash payment.    
Q:   WHAT DO I NEED TO DO NOW?               
A:   After you have carefully read this      
     document, indicate in your proxy card   
     how you want to vote and mail your      
     signed proxy card in the enclosed return
     envelope as soon as possible, so that   
     your shares may be represented at your  
     company's special meeting. AHP          
     stockholders may also choose to use the 
     toll-free telephone number on the proxy 
     card to submit their proxy by telephone 
     by following the instructions on the    
     proxy card. The AHP and Warner-Lambert  
     special meetings will both take place on
              , 2000.                        
Q:   IF MY SHARES ARE HELD IN "STREET NAME"  
     BY MY BROKER, WILL MY BROKER VOTE MY    
     SHARES FOR ME?                          
A:   No. Your broker will vote your shares on
     proposals other than AHP's by-law       
     amendment only if you provide           
     instructions on how to vote. You should 
     instruct your broker how to vote your   
     shares, following the directions        
     provided by your broker. Your broker    
     will not be able to vote your shares on 
     proposals other than AHP's by-law       
     amendment without instructions from you.
Q:   SHOULD I SEND IN MY STOCK CERTIFICATES  
     NOW?                                    
A:   No. After the merger is completed, we   
     will send Warner-Lambert stockholders   
     who hold stock certificates written     
     instructions for exchanging their share 
     certificates. If you are an AHP         
     stockholder and hold stock certificates 
     for your shares, you should retain your 
     certificates as the company's name      
     change will not require surrender of    
     your AHP stock certificates. AHP stock  
     certificates will automatically         
     represent shares of AmericanWarner after
     the merger.                             

2 

PREM14A
9th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 9th
                                                                [Download Table]
                                             
Q:   CAN I CHANGE MY VOTE AFTER I HAVE MAILED
     MY PROXY CARD?                          
A:   Yes. You can change your vote at any    
     time before your proxy is voted at your 
     company's special meeting. You can do   
     this in one of three ways. First, you   
     can send a written notice to your       
     company's Corporate Secretary stating   
     that you would like to revoke your      
     proxy. Second, you can complete and     
     submit a new proxy card (or, AHP        
     stockholders may choose to use the      
     toll-free telephone number on the proxy 
     card to submit their new proxy by       
     telephone) by following the instructions
     on the proxy card. Third, you can attend
     your company's special meeting and vote 
     in person. If you have instructed a     
     broker to vote your shares, you must    
     follow directions received from your    
     broker to change those instructions.    

Q:   WHO CAN HELP ANSWER QUESTIONS?          
A:   If you have more questions about the    
     merger or need assistance in voting your
     shares, please contact:                 

                AHP STOCKHOLDERS:            
             D. F. KING & CO., INC.          
                 77 Water Street             
             New York, New York 10005        
                  1-800-628-8509             

                        or                   

            MACKENZIE PARTNERS, INC.         
                 156 Fifth Avenue            
             New York, New York 10010        
                  1-800-322-2885             

           WARNER-LAMBERT STOCKHOLDERS:      
              GEORGESON SHAREHOLDER          
               COMMUNICATIONS INC.           
                 17 State Street             
             New York, New York 10004        
                  1-800-223-2064             

3 

PREM14A
10th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 10th
SUMMARY 

   THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO BETTER UNDERSTAND   
THE MERGER AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE MERGER,
YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS WE HAVE        
REFERRED TO YOU. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 99.          

THE COMPANIES (SEE PAGE 51)                                                     

AMERICAN HOME PRODUCTS CORPORATION                                              
Five Giralda Farms                                                              
Madison, New Jersey 07940                                                       
(973) 660-5000                                                                  
Internet address: http://www.ahp.com                                            

  AHP is one of the world's largest research-based pharmaceutical and health
care products companies and is a leader in the discovery, development,          
manufacturing and marketing of prescription drugs (human and veterinary) and    
vaccines, consumer health care, biotechnology and agricultural products.        

WARNER-LAMBERT COMPANY                                                          
201 Tabor Road                                                                  
Morris Plains, New Jersey 07950                                                 
(973) 385-2000                                                                  
Internet address: http://www.warnerlambert.com                                  

   Warner-Lambert develops, manufactures and markets a widely diversified line
of health care and consumer products. Its principal industry segments are       
pharmaceutical products, consisting principally of pharmaceuticals, biologicals 
and empty hard-gelatin capsules; consumer health care products, consisting      
principally of over-the-counter health care, shaving and pet care products; and 
confectionery products, consisting principally of chewing gums and breath mints.
Warner-Lambert markets its pharmaceutical products throughout most of the world 
under the Parke-Davis name.                                                     

THE SPECIAL MEETINGS (SEE PAGE 53)                                              

AHP.  The special meeting of stockholders of AHP will be held at        
           ,            ,            . At the AHP special meeting, we will ask
the AHP stockholders to approve:                                                

    Proposal 1--the amendment to the AHP certificate of incorporation increasing
    the number of authorized shares of common stock and changing the name of AHP
to AmericanWarner, Inc.,                                                

    Proposal 2--the issuance of shares of AmericanWarner common stock to Warner-
Lambert stockholders, and                                               

  Proposal 3--the amendment to the AHP by-laws increasing the maximum number
of directors on the board of AHP from 15 to 24.                         

    The merger will not be completed unless AHP's stockholders approve proposals
1 and 2. Approval of proposal 3, however, is not required to complete the       
merger.                                                                         

   WARNER-LAMBERT.  The special meeting of stockholders of Warner-Lambert will
be held at             ,            ,            . At the Warner-Lambert special
meeting, we will ask the holders of shares of Warner-Lambert common stock to    
approve the merger and adopt the merger agreement.                              

The merger will not be completed unless the Warner-Lambert stockholders 
approve the merger and adopt the merger agreement.                              

VOTES REQUIRED (SEE PAGE 54)                                                    

   AHP.  Proposal 1 requires the affirmative vote of the holders of a majority
of all of the outstanding shares of AHP common stock and AHP preferred stock,   
voting together as a single class, and the holders of a majority of the         
outstanding shares of AHP common stock, voting separately as a single class.    
Proposal 2 requires the affirmative vote of a majority of the votes cast on the 
proposal by the holders of outstanding shares of AHP common stock and AHP       
preferred stock, voting together as a single class. Proposal 3 requires the     
affirmative vote of the holders of at least 80% of the voting power of the      
outstanding shares of AHP common stock and AHP preferred stock, voting together 
as a single class.                                                              

4 

PREM14A
11th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 11th
 WARNER-LAMBERT.  The adoption of the merger agreement and approval of the
merger requires the affirmative vote of a majority of the outstanding shares of 
Warner-Lambert common stock entitled to vote on the proposal.                   

THE RECORD DATES FOR VOTING AT THE MEETINGS (SEE PAGE 53)                       

AHP.  The close of business on             , 2000 is the record date for
determining which holders of AHP capital stock are entitled to vote at the AHP  
special meeting. At the record date, there were       shares of AHP common stock
and       shares of AHP preferred stock entitled to vote at the AHP special     
meeting.                                                                        

  WARNER-LAMBERT.  The close of business on             , 2000 is the record
date for determining which holders of Warner-Lambert common stock are entitled  
to vote at the Warner-Lambert special meeting. At the record date, there were   
shares of Warner-Lambert common stock entitled to vote at the   
Warner-Lambert special meeting.                                                 

OUR RECOMMENDATIONS TO OUR STOCKHOLDERS (SEE PAGE 41)                           

 AHP.  AHP's board of directors believes that the merger agreement and the
merger are fair to and in the best interests of AHP and its stockholders and has
approved and declared advisable the merger agreement and the merger and each of 
the AHP proposals. The AHP board recommends that AHP stockholders vote FOR each 
of the AHP proposals.                                                           

WARNER-LAMBERT.  Warner-Lambert's board of directors believes that the  
merger agreement and the merger are fair to and in the best interests of        
Warner-Lambert and its stockholders and has approved and declared advisable the 
merger agreement and the merger. The Warner-Lambert board recommends that       
Warner-Lambert stockholders vote FOR the proposal to adopt the merger agreement 
and approve the merger.                                                         

   COVENANT TO RECOMMEND.  Each company's board of directors has agreed not to
alter its recommendation under the merger agreement but is permitted to withdraw
or change its recommendation if that company receives an acquisition proposal   
from a third party which the board concludes is superior to the proposed merger 
between AHP and Warner-Lambert or if a material adverse development occurs with 
respect to the other party.                                                     

THE MERGER AGREEMENT (SEE PAGE 71)                                              

The merger agreement is attached as Appendix A to this joint proxy      
statement/ prospectus. We encourage you to read the merger agreement as it is   
the legal document that governs the merger.                                     

WHAT YOU WILL RECEIVE IN THE MERGER (SEE PAGE 71)                               

AHP STOCKHOLDERS.  After the merger, each share of AHP common stock will
remain outstanding and will automatically represent one share of common stock of
AmericanWarner.                                                                 

WARNER-LAMBERT STOCKHOLDERS.  At the effective time of the merger, each 
share of Warner-Lambert common stock will be converted into 1.4919 shares of    
AmericanWarner common stock. AmericanWarner will not issue fractional shares in 
the merger. As a result, the total number of shares of AmericanWarner common    
stock that Warner-Lambert stockholders will receive in the merger will be       
rounded down to the nearest whole number, and Warner-Lambert stockholders will  
receive a cash payment for the value of the remaining fraction of a share of    
AmericanWarner common stock that they would otherwise receive.                  

BOARD OF DIRECTORS AND MANAGEMENT OF AMERICANWARNER FOLLOWING THE MERGER (SEE   
PAGE 73)                                                                        

    Upon completion of the merger, the board of directors of AmericanWarner will
consist of either 14 or 20 members, half selected by Warner-Lambert and half    
selected by AHP. Whether the AmericanWarner board of directors will consist of  
14 or 20 members will be determined prior to the effective time of the merger   
and will depend upon whether the AHP stockholders approve the amendment to AHP's
by-laws at the AHP special meeting which would                                  

5 

PREM14A
12th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 12th
allow the AHP board of directors to increase its size beyond the current maximum
of 15 directors. If the AHP stockholders approve this amendment,                
AmericanWarner's board of directors will consist of 20 members. If this         
amendment is not approved, AmericanWarner's board of directors will consist of  
14 members. Regardless of its size, the AmericanWarner board of directors will  
consist of individuals who are directors or officers of AHP or Warner-Lambert.  
AHP and Warner-Lambert will be represented equally on the board of              
AmericanWarner.                                                                 

 Immediately after the merger, Lodewijk J. R. de Vink, Chairman, President
and Chief Executive Officer of Warner-Lambert, will be the Chief Executive      
Officer of AmericanWarner, reporting to its board of directors, and John R.     
Stafford, Chairman, President and Chief Executive Officer of AHP, will be       
Chairman. Mr. Stafford will serve as Chairman for a period of 18 months         
following the merger, at which time he will retire, and Mr. de Vink will assume 
the duties of Chairman. The remainder of the senior management team of          
AmericanWarner will be made up of individuals who currently hold senior         
executive positions at AHP or Warner-Lambert.                                   

INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGE 67)                        

   When AHP and Warner-Lambert stockholders consider their respective board of
directors' recommendations that they vote in favor of the AHP or Warner-Lambert 
proposals, as the case may be, AHP and Warner-Lambert stockholders should be    
aware that a number of AHP and Warner-Lambert officers and directors may have   
interests in the merger that may be different from, or in addition to, their    
interests.                                                                      

CONDITIONS TO THE MERGER (SEE PAGE 79)                                          

 The completion of the merger depends upon the satisfaction of a number of
conditions, including the following:                                            

- AHP stockholders' approval of the amendment to AHP's certificate of   
     incorporation and the issuance of common stock in the merger--but not the
approval of the by-law amendment;                                   

    - Warner-Lambert stockholders' adoption and approval of the merger agreement
and the merger;                                                     

 - the material accuracy as of the closing of each party's representations
and warranties contained in the merger agreement;                   

- the performance by each party of its obligations under the merger     
agreement;                                                          

   - the clearance of the merger under antitrust laws and the receipt of other
required regulatory approvals;                                      

- the absence of any injunction that prohibits the merger;              

 - the ability of AmericanWarner to account for the merger as a pooling of
interests;                                                          

  - the occurrence, or in some cases the non-occurrence, of specified events
related to settlement of AHP's diet-drug litigation; and            

- the receipt of legal opinions as to the tax-free nature of the merger.

TERMINATION (SEE PAGE 80)                                                       

We can agree to terminate the merger agreement without completing the   
merger, and either party can terminate the merger agreement if any of the       
following occurs:                                                               

- the merger is not completed by November 15, 2000;                     

- after taking a vote, the required approvals of either AHP or          
Warner-Lambert stockholders are not received;                       

- a court or other governmental authority permanently prohibits the     
transactions contemplated by the merger agreement;                  

    - the board of directors of the other party withdraws, modifies or qualifies
in any adverse manner its approval or recommendation in favor of the
merger, or resolves to take such action; or                         

6 

PREM14A
13th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 13th
- a third party acquires 15% or more of the other party's common stock. 

In addition, Warner-Lambert may terminate the merger agreement:                 

  - at any time during the ten business day period following the earlier of:

(1) June 30, 2000, if on or before that date the diet-drug litigation   
settlement condition is not satisfied; or                       

(2) the date prior to June 30, 2000 on which the satisfaction of the    
 diet-drug litigation settlement condition is determined to be not
possible; or                                                    

  - at any time during the ten business day period following the delivery to
     Warner-Lambert of a fully executed settlement agreement relating to AHP's
     diet-drug litigation if that settlement agreement is not substantially on
the same terms as the memorandum of understanding relating to the   
     diet-drug litigation, and the terms in the settlement agreement which are
    not substantially the same as in the memorandum of understanding are, in
the aggregate, materially adverse to AHP.                           

TERMINATION FEES (SEE PAGE 81)                                                  

Either AHP or Warner-Lambert will be required to pay the other a fee of 
$1.8 billion if:                                                                

  (1) the other party terminates the merger agreement as a result of a third
    party acquiring 15% or more of the non-terminating party's shares of
common stock; or                                                

(2) the other party terminates the merger agreement because the         
      non-terminating party has changed its recommendation of the merger and
either:                                                         

     (a) the recommendation change was by reason of a superior proposal or

     (b) at or before the recommendation change there was a more favorable
business combination proposal outstanding; or           

(3) the merger is not completed by November 15, 2000 and the merger     
agreement is terminated in the following circumstances:         

  (a) on or before November 15, 2000 there is outstanding a business
           combination proposal with respect to that party from a third party,

        (b) following the business combination proposal and prior to termination
          of the merger agreement, that party breaches any of its covenants,
           which breach materially contributes to the failure of the merger to
be completed prior to November 15, 2000, and            

     (c) within 12 months of the termination of the merger agreement, that
     party enters into an agreement with a third party regarding a
 business combination or completes a business combination.

   In the case of clause (3) above, if both clauses (a) and (c) apply, but not
clause (b), either AHP or Warner-Lambert will only be required to pay the other 
a fee of $180 million.                                                          

Either AHP or Warner-Lambert will be required to pay the other a fee of 
$900 million if it changes its recommendation of the merger, the other party    
terminates the merger agreement, and at that time there is not a more favorable 
business combination proposal from a third party outstanding. In addition, if   
within 12 months the party paying this fee enters into an agreement regarding a 
more favorable business combination or completes a more favorable business      
combination, then that party will be required to pay an additional fee of       
$1 billion, subject to a $100 million reduction if the stock option agreement is
exercisable.                                                                    

Either AHP or Warner-Lambert will be required to pay the other a fee of 
$900 million if it fails to obtain its required stockholder approval and at or  
before that time there is a business combination proposal from a third party. In
addition, if within 12 months the party paying this fee enters into an agreement

7 

PREM14A
14th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 14th
regarding a business combination or completes a business combination, then that 
party will be required to pay an additional fee of $900 million.                

STOCK OPTION AGREEMENTS (SEE PAGE 84)                                           

    In connection with the merger agreement, AHP and Warner-Lambert entered into
two stock option agreements under which AHP granted to Warner-Lambert an option 
to purchase approximately 14.9% of AHP's outstanding common stock, at a price of
$56.00 per share, and Warner-Lambert granted to AHP an option to purchase       
approximately 14.9% of Warner-Lambert's outstanding common stock, at a price of 
$83.81 per share. These exercise prices represent our closing stock prices on   
November 3, 1999, the last trading day prior to the public announcement of the  
execution of the merger agreement. The option is exercisable under circumstances
in which AHP is required to pay Warner-Lambert or Warner-Lambert is required to 
pay AHP, as applicable, aggregate termination fees in the amount of at least    
$1.8 billion as described above.                                                

The stock option agreements limit the amount of profit either party is  
permitted to receive as a result of payment of the termination fee and the      
exercise of the option to $2 billion in total. We have attached the stock option
agreements as Appendices B and C to this joint proxy statement/prospectus.      

REGULATORY APPROVALS (SEE PAGE 49)                                              

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,   
prohibits us from completing the merger until after we have filed the required  
notification and report forms and furnished additional information and materials
to the Antitrust Division of the United States Department of Justice and the    
United States Federal Trade Commission, if requested, and the required waiting  
period has expired or terminated. AHP and Warner-Lambert each filed the required
notification and report forms with the Antitrust Division and the Federal Trade 
Commission on             .                                                     

  AHP and Warner-Lambert each conduct business in countries that are members
of the European Union, and the merger requires the prior review of the European 
Commission. AHP and Warner-Lambert intend to formally notify the European       
Commission of the merger shortly.                                               

  AHP and Warner-Lambert each conduct business in foreign countries that are
not members of the European Union. The merger may require the review and        
approval of regulatory bodies in some of these countries.                       

ACCOUNTING TREATMENT (SEE PAGE 47)                                              

   We expect the merger to qualify as a pooling of interests, which means that
we will treat our companies as if they had always been combined for accounting  
and financial reporting purposes.                                               

OPINIONS OF FINANCIAL ADVISORS (SEE PAGE 47)                                    

In deciding to approve the merger, our boards of directors considered   
opinions from our respective financial advisors to the effect that, as of the   
date of the opinions and based upon and subject to various qualifications and   
assumptions described in the opinions, the exchange ratio of 1.4919 shares of   
AmericanWarner common stock for each share of Warner-Lambert common stock was   
fair from a financial point of view to our respective stockholders.             
Warner-Lambert received an opinion from its financial advisor, Bear, Stearns &  
Co. Inc. and AHP received separate opinions from its two financial advisors,    
Chase Securities Inc. and Morgan Stanley & Co. Incorporated. These opinions are 
attached as Appendices D, E and F, respectively, to this joint proxy            
statement/prospectus. We encourage you to read these opinions in their entirety.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE 47)            

Neither AHP nor Warner-Lambert, nor their respective stockholders, will 
recognize any gain or loss for United States federal income tax purposes as a   
result of the merger, except for tax that may be payable by Warner-Lambert      
stockholders because of cash received for fractional shares. We have conditioned
the                                                                             

8 

PREM14A
15th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 15th
merger on our receipt of legal opinions to this effect.                         

THE TAX CONSEQUENCES OF THE MERGER TO WARNER-LAMBERT STOCKHOLDERS WILL  
DEPEND ON THE PARTICULAR FACTS OF EACH WARNER-LAMBERT STOCKHOLDER'S OWN         
SITUATION. THEREFORE, WARNER-LAMBERT STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX  
ADVISORS REGARDING THE MERGER'S SPECIFIC TAX CONSEQUENCES.                      

NO APPRAISAL RIGHTS (SEE PAGE 49)                                               

   Both of our companies are organized under Delaware law. Under Delaware law,
neither AHP nor Warner-Lambert stockholders are entitled to dissenters'         
appraisal rights in connection with the merger.                                 

LISTING OF AMERICANWARNER COMMON STOCK (SEE PAGE 73)                            

The shares of AmericanWarner common stock to be issued to Warner-Lambert
stockholders in the merger will be listed on the New York Stock Exchange and its
trading symbol will be "AWI."                                                   

THE CERTIFICATE OF INCORPORATION AMENDMENT                                      

AHP stockholders are being asked to approve the amendment to the AHP    
certificate of incorporation that would increase the number of authorized shares
of common stock from 2.4 billion to      billion shares and change the name of  
AHP to AmericanWarner, Inc.                                                     

   After the merger, the AHP certificate of incorporation, as amended, will be
the certificate of incorporation of AmericanWarner.                             

THE BY-LAW AMENDMENT                                                            

AHP stockholders are also being asked to approve the amendment to AHP's 
by-laws that would increase the maximum number of AHP directors from 15 to 24.  

   Pursuant to the merger agreement, the AHP board of directors will also make
amendments to the AHP by-laws to implement various governance arrangements      
consistent with a merger of equals structure, such as board composition and     
management of the combined company.                                             
After the merger, the AHP by-laws, as amended, will be the by-laws of   
AmericanWarner.                                                                 

9 

PREM14A
16th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 16th
SELECTED HISTORICAL FINANCIAL INFORMATION 

  We are providing the following financial information to assist you in your
analysis of the financial aspects of the merger. We derived the AHP information 
from audited financial statements of AHP as of and for the years ended          
December 31, 1994 through 1998 and unaudited financial statements as of and for 
the nine months ended September 30, 1999 and 1998. We derived the Warner-Lambert
information from the audited statements of income for the years ended           
December 31, 1996 through 1998, audited balance sheets as of December 31, 1998  
and 1997, and unaudited financial statements as of and for all other periods    
presented, all of which were restated to reflect the consummation of the        
acquisition of Agouron Pharmaceuticals, Inc. in May 1999, which was accounted   
for under the pooling of interests method of accounting. The information is only
a summary and should be read in conjunction with the historical financial       
statements of AHP and Warner-Lambert and related notes contained in the annual  
reports and other information that has been filed with the Securities and       
Exchange Commission. See "Where You Can Find More Information" on page 99 for   
information on where you can obtain copies of this other information.           

AHP HISTORICAL FINANCIAL INFORMATION                                            

                                                        [Enlarge/Download Table]

                                       FOR THE NINE MONTHS                                                         
                                              ENDED                                                                
                                          SEPTEMBER 30,                  FOR THE YEARS ENDED DECEMBER 31,          
                                    -------------------------  ----------------------------------------------------
                                       1999          1998        1998       1997       1996       1995       1994  
                                    -----------   -----------  --------   --------   --------   --------   --------
                                    (UNAUDITED)   (UNAUDITED)                                                      
                                                                                                                   
(IN MILLIONS, EXCEPT FOR PER SHARE                                                                                 
  AMOUNTS)                                                                                                         
Net sales..........................   $10,083       $10,232    $13,463    $14,196    $14,088    $13,376     $8,966 
Net (loss) income..................    (1,820)        2,125      2,474      2,043      1,883      1,680      1,528 
Basic (loss) earnings per share....     (1.39)         1.62       1.88       1.58       1.48       1.36       1.24 
Diluted (loss) earnings per share                                                                                  
  (1)..............................     (1.39)         1.59       1.85       1.56       1.46       1.34       1.24 
Dividends per common share.........     0.675         0.645       0.87       0.83     0.7825      0.755      0.735 
Book value per common share........      4.31          7.10       7.33       6.29       5.44       4.42       3.48 
Total assets.......................    23,743        21,038     21,079     20,825     20,785     21,363     21,675 
Long-term debt.....................     3,622         3,923      3,859      5,032      6,021      7,809      9,973 

------------------------                                                        
(1) For the nine months ended September 30, 1999, the average number of common  
shares outstanding used in calculating the diluted loss per share is the
same as the average number of common shares outstanding used in the     
 calculation of the basic loss per share since the inclusion of the common
 stock equivalents in the diluted loss per share calculation would have an
antidilutive effect.                                                    

WARNER-LAMBERT HISTORICAL FINANCIAL INFORMATION                                 

                                                        [Enlarge/Download Table]

                                          FOR THE NINE MONTHS                                                         
                                                 ENDED                                                                
                                             SEPTEMBER 30,                  FOR THE YEARS ENDED DECEMBER 31,          
                                       -------------------------  ----------------------------------------------------
                                          1999          1998        1998       1997       1996       1995       1994  
                                       -----------   -----------  --------   --------   --------   --------   --------
                                       (UNAUDITED)   (UNAUDITED)                          (1)        (1)        (1)   
                                                                                                                      
(IN MILLIONS, EXCEPT FOR PER SHARE                                                                                    
  AMOUNTS)                                                                                                            
Net sales.............................   $ 9,394        $7,708    $10,744     $8,408     $7,231     $7,040     $6,417 
Net income............................     1,246           925      1,273        862        747        724        687 
Basic earnings per share..............      1.46          1.09       1.50       1.03       0.89       0.88       0.84 
Diluted earnings per share............      1.41          1.05       1.45       0.99       0.88       0.87       0.83 
Dividends per common share............      0.60          0.48       0.64       0.51       0.46       0.43       0.41 
Book value per common share...........      5.35          4.33       4.57       3.61       3.23       2.80       2.24 
Total assets..........................    10,538         8,858      9,520      8,352      7,339      6,216      5,569 
Long-term debt........................     1,281         1,289      1,267      1,836      1,721        635        536 

------------------------                                                        
(1) Warner-Lambert financial statements have been restated for the acquisition  
  of Agouron Pharmaceuticals, Inc. in May 1999. Restated amounts in 1995 and
1994 as well as the 1996 balance sheet amounts have been derived from   
unaudited financial statements.                                         

10

PREM14A
17th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 17th
SIGNIFICANT EVENTS AFFECTING FINANCIAL TRENDS 

    AHP and Warner-Lambert report quarterly and annual earnings results in their
SEC filings using methods required by U.S. generally accepted accounting        
principles, or "GAAP." Sometimes the financial results reported in this way     
include significant events and transactions which are not expected to occur     
regularly in the future. Examples of these events and transactions include gains
or losses on the sales of businesses, the costs of completing major acquisitions
and other business development activities, the costs of business restructurings,
a significant litigation settlement and other unusual operating activities.     

 A description of significant events and transactions which help to review
and understand both companies' past performances are briefly described below.   
See "--Selected Historical Financial Information."                              

SIGNIFICANT EVENTS AFFECTING AHP'S FINANCIAL TRENDS                             

NINE MONTHS ENDED SEPTEMBER 30, 1999                                            

Net loss for the nine months ended September 30, 1999 included:         

- an after-tax diet drug litigation charge of $3,287 million ($2.51 per 
share--diluted) in connection with litigation brought against AHP by
people who used the antiobesity products REDUX (dexfenfluramine) or 
 PONDIMIN (fenfluramine). The charge provides for expected payments to
     settlement funds contemplated by the nationwide, class action settlement,
  other judgments and settlements including claims for primary pulmonary
   hypertension and any opt outs, and future legal costs, net of available
insurance;                                                          

- an after-tax special charge of $53 million ($0.04 per share--diluted) 
related to the suspension of shipments and administration, and trade
returns of ROTASHIELD, AHP's rotavirus vaccine;                     

   - an after-tax special charge of $127 million ($0.10 per share--diluted) to
 provide for the restructuring of AHP's Cyanamid Agricultural Products
("Cyanamid") business and the impairment of a Cyanamid manufacturing
facility; and                                                       

 - an after-tax operating charge of $93 million ($0.07 per share--diluted)
     for the Cyanamid U.S. inventory buyback program instituted as a result of
      changes in the way Cyanamid will market and distribute its products and in
      preparation for the launch of new U.S. soybean herbicide premixed products
containing glyphosate and Cyanamid's imidazolinone chemistry.       

  Excluding these charges, net income and diluted earnings per share for the
nine months ended September 30, 1999 were $1,740 million and $1.33,             
respectively. The $1.33 diluted earnings per share calculation includes the     
$0.02 per share benefit of excluding the dilutive impact of common stock        
equivalents.                                                                    

  Total assets at September 30, 1999 increased compared to December 31, 1998
due primarily to increased deferred tax assets generated as a result of the diet
drug litigation charge previously discussed and the impact of marketable        
securities purchased by Immunex Corporation, a majority-owned subsidiary of AHP,
from the proceeds of a $450 million convertible subordinated note issued to AHP 
by Immunex.                                                                     

Long-term debt for the same period reflected a decrease due primarily to
AHP's $1 billion 7.7% notes, due February 15, 2000, being classified as         
short-term debt at September 30, 1999. This decrease was offset, in part, by an 
increase in borrowings through the use of commercial paper to finance treasury  
stock acquisitions as part of the AHP stock repurchase program and financing the
$450 million convertible subordinated note issued to AHP by Immunex Corporation,
as previously discussed.                                                        

11

PREM14A
18th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 18th
NINE MONTHS ENDED SEPTEMBER 30, 1998                                            

Net income for the nine months ended September 30, 1998 included an     
after-tax gain of $331 million ($0.25 per share-diluted) due to the sale of the 
Sherwood-Davis & Geck medical devices business. Excluding the gain on sale, net 
income and diluted earnings per share for the nine months ended September 30,   
1998 were $1,794 million and $1.34, respectively.                               

    Long-term debt at September 30, 1998 decreased compared to December 31, 1997
as the proceeds from the sale of the Sherwood-Davis & Geck medical devices      
business were used primarily to reduce outstanding commercial paper.            

1998                                                                            

Net income for the year ended December 31, 1998 included:               

 - an after-tax gain of $331 million ($0.25 per share--diluted) due to the
sale of the Sherwood-Davis & Geck medical devices business; and     

- an after-tax restructuring charge of $241 million ($0.18 per          
   share--diluted) related to the reorganization of the pharmaceutical and
nutritional supply chains (primarily in the Asian-Pacific and Latin 
American regions), the reorganization of the U.S. pharmaceutical and
  consumer health care distribution systems and a reduction in personnel
from the globalization of certain business units.                   

 Excluding these items, net income and diluted earnings per share for 1998
were $2,384 million and $1.78, respectively.                                    

   Long-term debt at December 31, 1998 decreased compared to December 31, 1997
due primarily to the reduction of outstanding commercial paper from the proceeds
of the sale of the Sherwood-Davis & Geck medical devices business offset, in    
part, by an increase in commercial paper used to finance the acquisition of the 
vitamin and nutritional supplement products business of Solgar Vitamin and Herb 
Company Inc., which was accounted for under the purchase method of accounting.  

1997                                                                            

  Net income for the year ended December 31, 1997 included after-tax special
charges aggregating $117 million ($0.09 per share--diluted) to record the       
one-time costs associated with the voluntary market withdrawal of the           
antiobesity products REDUX and PONDIMIN. Excluding these charges, net income and
diluted earnings per share for 1997 were $2,160 million and $1.65, respectively.

Long-term debt at December 31, 1997 reflected a decrease compared to    
December 31, 1996 due primarily to the pay-down of commercial paper and notes   
payable with cash flows provided by operating activities offset, in part, by the
commercial paper used to finance the acquisition of the worldwide animal health 
business of Solvay S.A., which was accounted for under the purchase method of   
accounting.                                                                     

1996                                                                            

Net income for the year ended December 31, 1996 included:               

    - an after-tax gain of $706 million ($0.55 per share--diluted) from the sale
 of a majority interest (80%) in the American Home Foods business, and

- after-tax special charges aggregating $698 million ($0.54 per         
      share--diluted) relating to the acquisition by AHP of the remaining equity
     interest in Genetics Institute, Inc. In conjunction with the acquisition,
  these after-tax special charges were recognized for the portion of the
    purchase price allocated to acquired in-process research and development
($470 million) and for                                              

12

PREM14A
19th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 19th
   the liquidation of Genetics Institute's outstanding stock options as of
   December 31, 1996 ($228 million). Excluding these items, net income and
diluted earnings per share for 1996 were $1,875 million and $1.45,  
respectively.                                                       

 Total assets at December 31, 1996 decreased compared to December 31, 1995
due primarily to the sale of a majority interest in the American Home Foods     
business as described above. Proceeds received from the sale were used primarily
to purchase the remaining equity interest in Genetics Institute. Long-term debt 
decreased due primarily to the pay-down of commercial paper with cash flows     
provided by operating activities.                                               

1995                                                                            

Net income for the year ended December 31, 1995 included:               

 - an after-tax gain of $624 million ($0.50 per share--diluted) due to the
sale of the South American oral health care business;               

- after-tax special charges aggregating $308 million ($0.25 per         
    share--diluted) attributable to provisions for environmental liabilities
   related to American Cyanamid Company due to changes in estimates and to
provisions for other special charges, including the shutdown and    
discontinuance of the U.S. infant nutritional business and other    
contingent liability adjustments;                                   

- an after-tax restructuring charge of $117 million ($0.09 per share    
    diluted) to recognize the costs of implementing the integration plan for
the American Cyanamid acquisition related to AHP operations; and    

- the effects of the acquisition of American Cyanamid Company in        
      November 1994. The acquisition was accounted for under the purchase method
of accounting.                                                      

   Excluding the environmental and restructuring charges and the gain on sale,
net income and diluted earnings per share for 1995 were $1,481 million and      
$1.18, respectively.                                                            

Long-term debt at December 31, 1995 reflected a significant decrease as 
compared to December 31, 1994 due primarily to the pay-down of commercial paper 
with cash flows provided by operating activities and proceeds from sales of     
businesses and other assets.                                                    

1994                                                                            

    Net income for the year ended December 31, 1994 included an after-tax charge
of $113 million ($0.09 per share--diluted) for the cost of implementing two     
restructuring programs related primarily to the U.S. pharmaceutical and consumer
health care businesses. These programs resulted in the elimination of excess    
production capacity and associated workforce, primarily through the closure of a
manufacturing facility and further workforce reductions through various         
organizational effectiveness initiatives. Excluding this charge, net income and 
diluted earnings per share for 1994 were $1,641 million and $1.33, respectively.

SIGNIFICANT EVENTS AFFECTING WARNER-LAMBERT'S FINANCIAL TRENDS                  

   The historical financial information for Warner-Lambert on page 59 reflects
steadily improving financial performance. A major contributor to this           
performance was the launch of Warner-Lambert's cholesterol-lowering agent       
LIPITOR in February 1997.                                                       

In May 1999, Warner-Lambert consummated the acquisition of Agouron      
Pharmaceuticals, Inc., which was accounted for under the pooling of interests   
method of accounting. Under the pooling of interests method of accounting, the  
financial statements of both Warner-Lambert and Agouron were combined as if they
were always one company. Accordingly, Warner-Lambert restated its consolidated  
balance sheets at December 31, 1998 and 1997, and the related consolidated      
statements of income and comprehensive income and of cash flows for each of the 
three years in the period ended December 31, 1998, in a Current Report on       
Form 8-K filed on December 17, 1999.                                            

13

PREM14A
20th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 20th
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION 

We expect that the merger will be accounted for under the pooling of    
interests method of accounting, which means that for accounting and financial   
reporting purposes we will treat our companies as if they had always been       
combined. For a more detailed description of pooling of interests accounting,   
see "The Proposed Merger--Accounting Treatment" on page 47.                     

 The following unaudited pro forma combined selected financial information
has been derived from, and should be read in conjunction with, the "Unaudited   
Pro Forma Combined Condensed Financial Statements" and related notes on         
pages 57 through 66.                                                            

We have presented below unaudited pro forma combined selected financial 
information that reflects the pooling of interests method of accounting and is  
intended to give you a better picture of what our businesses might have looked  
like had they always been combined, I.E., giving effect to the merger between   
AHP and Warner-Lambert as if it had occurred on January 1, 1996, the first day  
of the first period for which financial information is presented here. The      
companies may have performed differently if they were combined. You should not  
rely on the unaudited pro forma combined selected financial information as being
indicative of the historical results that would have occurred or the future     
results that will result after the merger. You should also review the discussion
of the significant events affecting each company under "--Significant Events    
Affecting Financial Trends" on page 11.                                         

                                                        [Enlarge/Download Table]

                                                FOR THE NINE MONTHS                                
                                                       ENDED              FOR THE YEARS ENDED      
                                                   SEPTEMBER 30,              DECEMBER 31,         
                                                -------------------  ------------------------------
                                                  1999       1998      1998       1997       1996  
                                                --------   --------  --------   --------   --------
                                                                                                   
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)                                                        
Net sales...................................... $19,477    $17,940   $24,207    $22,604    $21,319 
Net (loss) income (1)..........................    (574)     3,050     3,747      2,905      2,630 
Basic (loss) earnings per share (1)............   (0.22)      1.18      1.45       1.14       1.05 
Diluted (loss) earnings per share (1)(2).......   (0.22)      1.15      1.42       1.11       1.03 
Dividends per common share (3)                                                                     
Book value per common share....................    3.95       5.04      5.23       4.39       3.82 
Total assets...................................  34,281                                            
Long-term debt.................................   4,903                                            

(1) Excluding the after-tax diet drug litigation charge of $3,287, the after-tax
  ROTASHIELD special charge of $53, the after-tax Cyanamid special charge of
    $127 and the after-tax impact of the Cyanamid U.S. inventory buyback program
   of $93, net income was $2,986 and earnings per share-basic and diluted both
    were $1.16 for the nine months ended September 30, 1999. For the nine months
ended September 30, 1999, the diluted earnings per share calculation    
includes the $0.03 per share benefit of excluding the dilutive impact of
common stock equivalents.                                               

(2) For the nine months ended September 30, 1999, the average number of common  
shares outstanding used in calculating the diluted loss per share is the
same as the average number of common shares outstanding used in the     
 calculation of the basic loss per share since the inclusion of the common
 stock equivalents in the diluted loss per share calculation would have an
antidilutive effect.                                                    

(3) AHP's current quarterly dividend is $0.23 per share of common stock ($0.92  
  per share annualized) and is subject to future approval and declaration by
  the board of directors of AHP. Warner-Lambert's current quarterly dividend
is $0.20 per share of common stock ($0.80 per share annualized) and is  
subject to future approval and declaration by the board of directors of 
   Warner-Lambert. The dividend policy of AmericanWarner will be determined by
its board of directors following the effective time of the merger. In   
formulating such policy, it is expected that the board of directors will
  consider various factors, including the earnings, financial position, cash
    flows and growth strategies of AmericanWarner. The initial dividend rate, as
   well as all future dividends declared by AmericanWarner, will be subject to
the discretion of the board of directors of AmericanWarner.             

14

PREM14A
21st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 21st
SUMMARY UNAUDITED FINANCIAL PROJECTIONS 

 We expect AmericanWarner to have significant growth in the next few years
from its combined operations as follows:                                        

                                                        [Enlarge/Download Table]

                                                                    FOR THE YEARS ENDED           
                                                                       DECEMBER 31,               
                                                         -----------------------------------------
                                                           1999       2000       2001       2002  
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)              --------   --------   --------   --------
                                                                                                  
Net sales............................................... $26,311    $29,674    $32,753    $36,121 
  Pharmaceuticals.......................................  17,244     19,749     22,007     24,477 
  Consumer health care..................................   4,440      4,860      5,280      5,749 
Net income (1)..........................................   3,923      4,759      5,736      6,818 
Diluted earnings per share (1)..........................    1.48       1.79       2.15       2.55 

------------------------                                                        

(1) For the year ended December 31, 1999, this information excludes the AHP diet
   drug litigation charge, the ROTASHIELD special charge, the Cyanamid special
charge and the anticipated AmericanWarner one-time costs of the merger  
transaction.                                                            

We have based this information on management's estimate of the combined 
operations of AmericanWarner as if the transaction had closed on January 1,     
1999. The net income estimates include the gradual phase-in of $1.2 billion of  
estimated annual pre-tax cost synergy savings starting mid-year 2000, which are 
expected to be substantially achieved by the end of 2002.                       

   We expect net sales to grow approximately 11%, on a compounded basis, while
net income and diluted earnings per share are expected to grow approximately 20%
on a compounded basis during the periods presented. This growth is expected to  
be derived, in part, from over 20 anticipated pharmaceutical product launches   
during the periods presented. There is also potential for additional revenue    
synergies, which have not been factored into the projections. The annual cost   
synergy savings estimate of $1.2 billion represents approximately 9% of the 1999
projected applicable base pre-merger operating expenses of the combined         
pharmaceutical and consumer health care segments and corporate functions.       

 SINCE PROJECTIONS ARE INHERENTLY SPECULATIVE IN NATURE, YOU SHOULD EXPECT
THAT, IN ADDITION TO NEW INFORMATION DISCOVERED BY AMERICANWARNER SUBSEQUENT TO 
THE DATE OF THEIR PREPARATION, ONE OR MORE OF THE ASSUMPTIONS USED IN THE       
PROJECTIONS MAY NOT MATERIALIZE OR MAY VARY SIGNIFICANTLY FROM ACTUAL RESULTS.  
THE LIKELIHOOD OF SUCH VARIANCES WILL INCREASE OVER TIME. ACCORDINGLY, ACTUAL   
RESULTS ACHIEVED DURING THE PERIODS PRESENTED MAY VARY FROM THE PROJECTIONS, AND
THESE VARIATIONS MAY BE MATERIAL AND ADVERSE. IN PARTICULAR, THE PROJECTIONS    
ASSUME THE CONSUMMATION OF CERTAIN INTEGRATION INITIATIVES THAT WILL PRODUCE THE
PROJECTED COST SYNERGY SAVINGS. IF SOME OR ALL OF THESE INITIATIVES DO NOT OCCUR
OR ARE MATERIALLY DELAYED, THE PROJECTIONS MAY NOT BE ACHIEVED. Furthermore, the
projections and cost synergy savings estimates were not prepared with a view    
toward compliance with published guidelines of the SEC, the American Institute  
of Certified Public Accountants or generally accepted accounting principles.    
AHP's and Warner-Lambert's independent public accountants did not prepare,      
examine or compile the projections and, accordingly, do not express an opinion  
or any form of assurance with respect to the projections. Therefore, you should 
not place undue reliance on the summary unaudited financial projections as      
indicators of the future results of AmericanWarner. The independent public      
accountants' reports incorporated by reference in this document relate to the   
historical financial statements of AHP and Warner-Lambert. These reports do not 
extend to the summary unaudited financial projections and should not be read to 
do so.                                                                          

15

PREM14A
22nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 22nd
COMPARATIVE PER SHARE INFORMATION 

   The following table sets forth selected historical per share information of
AHP and Warner-Lambert and combined per share information on an unaudited pro   
forma combined basis after giving effect to the merger between AHP and          
Warner-Lambert as if it had occurred on January 1, 1996 under the pooling of    
interests method of accounting assuming that 1.4919 shares of AmericanWarner    
common stock had been issued in exchange for each outstanding share of          
Warner-Lambert common stock. You should read this information in conjunction    
with the selected historical audited and unaudited financial information,       
included elsewhere in this document, and the historical audited and unaudited   
financial statements of AHP and Warner-Lambert and related notes that are       
incorporated in this document by reference. The pro forma per share information 
combining AHP and Warner-Lambert is derived from, and should be read in         
conjunction with, the unaudited pro forma combined condensed financial          
statements and related notes included elsewhere in this document. Unaudited Pro 
Forma Warner-Lambert Per Share Equivalents are calculated by multiplying the    
Unaudited Pro Forma Combined per share amounts by 1.4919. The AHP historical per
share information is derived from audited financial statements of AHP as of and 
for the years ended December 31, 1998, 1997 and 1996 and unaudited financial    
statements of AHP as of and for the nine months ended September 30, 1999 and    
1998. The Warner-Lambert historical per share information is derived from the   
audited statements of income for the years ended December 31, 1998, 1997 and    
1996, audited balance sheets as of December 31, 1998 and 1997 and unaudited     
financial statements as of and for all other periods presented, all of which    
were restated to reflect the consummation of the acquisition by Warner-Lambert  
of Agouron Pharmaceuticals, Inc., in May 1999.                                  

   The unaudited pro forma combined comparative per share information does not
purport to represent what the actual financial position or results of operations
of AHP and Warner-Lambert would have been had the merger occurred on January 1, 
1996 or to project AHP's and Warner-Lambert's financial position or results of  
operations for any future date or period.                                       

                                                        [Enlarge/Download Table]

                                                   FOR THE NINE MONTHS                                   
                                                          ENDED                 FOR THE YEARS ENDED      
                                                      SEPTEMBER 30,                 DECEMBER 31,         
                                                -------------------------  ------------------------------
                                                   1999          1998        1998       1997       1996  
                                                -----------   -----------  --------   --------   --------
                                                (UNAUDITED)   (UNAUDITED)                                
                                                                                                         
UNAUDITED PRO FORMA COMBINED                                                                             
Basic (loss) earnings per share (1)............   $(0.22)       1$.18       $1.45      $1.14     $1.05   
Diluted (loss) earnings per share (1)(2).......    (0.22)       1.15         1.42       1.11      1.03   
Dividends per common share (3).................                                                          
Book value per common share....................     3.95        5.04         5.23       4.39      3.82   

UNAUDITED PRO FORMA WARNER-LAMBERT PER SHARE                                                             
EQUIVALENTS                                                                                              
Basic (loss) earnings per share (1)............    (0.33)       1.76         2.16       1.70      1.57   
Diluted (loss) earnings per share (1)(2).......    (0.33)       1.72         2.12       1.66      1.54   
Dividends per common share (3).................                                                          
Book value per common share....................     5.89        7.52         7.80       6.55      5.70   

WARNER-LAMBERT--HISTORICAL                                                                               
Basic earnings per share.......................     1.46        1.09         1.50       1.03      0.89   
Diluted earnings per share.....................     1.41        1.05         1.45       0.99      0.88   
Dividends per common share.....................     0.60        0.48         0.64       0.51      0.46   
Book value per common share (4)................     5.35        4.33         4.57       3.61      3.23   

AMERICAN HOME PRODUCTS--HISTORICAL                                                                       
Basic (loss) earnings per share (1)............    (1.39)       1.62         1.88       1.58      1.48   
Diluted (loss) earnings per share (1)(2).......    (1.39)       1.59         1.85       1.56      1.46   
Dividends per common share.....................     0.675       0.645        0.87       0.83      0.7825 
Book value per common share....................     4.31        7.10         7.33       6.29      5.44   

16

PREM14A
23rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 23rd
------------------------                                                        

(1) Excluding the after-tax diet drug litigation charge, the after-tax          
ROTASHIELD special charge, the after-tax Cyanamid special charge and the
    after-tax impact of the Cyanamid U.S. inventory buyback program for the nine
   months ended September 30, 1999, basic and diluted earnings per share would
 both be $1.16 per share for Unaudited Pro Forma Combined, $1.73 per share
  for Unaudited Pro Forma Warner-Lambert Per Share Equivalents and $1.33 per
    share for AHP--Historical. For the nine months ended September 30, 1999, the
diluted earnings per share calculation for Unaudited Pro Forma Combined,
    Unaudited Pro Forma Warner-Lambert Per Share Equivalents and AHP--Historical
includes the respective $0.03, $0.04, and $0.02 per share benefit of    
excluding the dilutive impact of common stock equivalents.              

(2) For the nine months ended September 30, 1999, the average number of common  
shares outstanding used in calculating the diluted loss per share is the
same as the average number of common shares outstanding used in the     
 calculation of the basic loss per share since the inclusion of the common
 stock equivalents in the diluted loss per share calculation would have an
antidilutive effect.                                                    

(3) AHP's current quarterly dividend is $0.23 per share of common stock ($0.92  
  per share annualized) and is subject to future approval and declaration by
  the board of directors of AHP. Warner-Lambert's current quarterly dividend
is $0.20 per share of common stock ($0.80 per share annualized) and is  
subject to future approval and declaration by the board of directors of 
   Warner-Lambert. The dividend policy of AmericanWarner will be determined by
its board of directors following the effective time of the merger. In   
formulating such policy, it is expected that the board of directors will
  consider various factors, including the earnings, financial position, cash
    flows and growth strategies of AmericanWarner. The initial dividend rate, as
   well as all future dividends declared by AmericanWarner, will be subject to
the discretion of the board of directors of AmericanWarner.             

(4) Warner-Lambert--Historical financial information has been restated for the  
   acquisition of Agouron Pharmaceuticals, Inc. in May 1999. The restated 1996
  balance sheet used to calculate Warner-Lambert--Historical 1996 book value
per common share has been derived from an unaudited balance sheet.      

17

PREM14A
24th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 24th
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION 

  AHP common stock is listed on the New York Stock Exchange under the symbol
"AHP." Warner-Lambert common stock is listed on the New York Stock Exchange     
under the symbol "WLA" and is also listed on the Chicago, Pacific, London and   
Zurich stock exchanges.                                                         

The table below sets forth, for the calendar quarters indicated, the    
reported high and low sale prices of AHP common stock and Warner-Lambert common 
stock as reported on the NYSE Composite Transaction Tape and the dividends      
declared on such stock.                                                         

                                                        [Enlarge/Download Table]

                                                                AHP                        WARNER-LAMBERT         
                                                           COMMON STOCK                     COMMON STOCK          
                                                  -------------------------------  -------------------------------
                                                     MARKET PRICE         CASH        MARKET PRICE         CASH   
                                                  -------------------   DIVIDENDS  -------------------   DIVIDENDS
                                                    HIGH       LOW      DECLARED     HIGH       LOW      DECLARED 
                                                  --------   --------   ---------  --------   --------   ---------
                                                                                                                  
1997                                                                                                              
  First Quarter..................................  $34.44     $28.81     $0.205     $31.08     $23.17      $0.13  
  Second Quarter.................................   40.38      28.50      0.205      41.83      27.88       0.13  
  Third Quarter..................................   42.44      34.19      0.205      49.08      41.44       0.13  
  Fourth Quarter.................................   39.41      33.72      0.215      50.88      36.17       0.13  

1998                                                                                                              
  First Quarter..................................  $48.88     $37.75     $0.215     $56.88     $39.38      $0.16  
  Second Quarter.................................   54.25      43.75      0.215      71.56      55.00       0.16  
  Third Quarter..................................   58.75      46.19      0.215      85.94      64.75       0.16  
  Fourth Quarter.................................   56.50      43.94      0.225      82.00      60.13       0.16  

1999                                                                                                              
  First Quarter..................................  $68.19     $51.19     $0.225     $77.00     $63.50      $0.20  
  Second Quarter.................................   70.25      51.00      0.225      72.63      61.00       0.20  
  Third Quarter..................................   58.44      38.50      0.225      73.50      60.81       0.20  

   On November 2, 1999, the last full trading day on the NYSE before rumors of
the merger appeared in the marketplace, the AHP common stock closed at $50.38   
per share and the Warner-Lambert common stock closed at $78.44 per share. On    
November 3, 1999, the last full trading day on the NYSE prior to the public     
announcement of the execution of the merger agreement, AHP common stock closed  
at $56.00 per share and Warner-Lambert common stock closed at $83.81 per share. 
On        , 2000, the most recent practicable date prior to the printing of this
joint proxy statement/ prospectus, the closing price on the NYSE Composite      
Transaction Tape was $      per share of AHP common stock and $     per share of
Warner-Lambert common stock. AHP and Warner-Lambert stockholders are urged to   
obtain current market quotations for the shares of AHP common stock and         
Warner-Lambert common stock prior to making any decision with respect to the    
merger. The "equivalent per share price" of shares of Warner-Lambert common     
stock in the table below represents the per share closing market price for AHP  
common stock reported on the NYSE Composite Transaction Tape at such specified  
date, multiplied by the exchange ratio of 1.4919.                               

                                                        [Enlarge/Download Table]

                                                                                        WARNER-    
                                                                                        LAMBERT    
                                                                    WARNER-LAMBERT    EQUIVALENT   
                                                   AHP SHARE PRICE   SHARE PRICE    PER SHARE PRICE
                                                   ---------------  --------------  ---------------
                                                                                                   
November 2, 1999..................................      $50.38          $78.44          $75.16     
November 3, 1999..................................       56.00           83.81           83.55     
          , 2000..................................                                                 

 Following the consummation of the merger, shares of Warner-Lambert common
stock will cease to be traded on the NYSE and shares of AmericanWarner common   
stock, including all shares of AHP previously traded on the NYSE under the      
trading symbol "AHP," will be traded on the NYSE under the new trading symbol,  
"AWI."                                                                          

18

PREM14A
25th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 25th
RISK FACTORS

   AHP AND WARNER-LAMBERT STOCKHOLDERS SHOULD CAREFULLY CONSIDER THE FOLLOWING
FACTORS, IN ADDITION TO THOSE FACTORS DISCUSSED IN THE DOCUMENTS THAT WE HAVE   
FILED WITH THE SEC WHICH WE HAVE INCORPORATED BY REFERENCE INTO THIS DOCUMENT,  
AND THE OTHER INFORMATION SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS,   
BEFORE VOTING ON THE PROPOSALS RELATING TO THE MERGER.                          

THE VALUE OF AMERICANWARNER SHARES TO BE RECEIVED IN THE MERGER WILL FLUCTUATE  

 The number of shares of AmericanWarner common stock to be received in the
merger for each share of Warner-Lambert common stock is fixed. However, the     
market prices of AHP common stock and Warner-Lambert common stock when the      
merger takes place may vary from their market prices at the date of this        
document and at the date of the special meetings of the stockholders of AHP and 
Warner-Lambert. For example, during the 12 month period ending on       , the   
most recent date prior to the mailing of this joint proxy statement/prospectus, 
the closing price of AHP common stock varied from a low of $      to a high of  
$      and ended that period at $      , and the closing price of Warner-Lambert
common stock varied from a low of $      to a high of $      and ended that     
period at $      . See "Summary--Comparative Per Share Market Price and Dividend
Information" on page 18 for more detailed share price information.              

These variations may be the result of various factors including:        

    - changes in the business, operations or prospects of AHP, Warner-Lambert or
AmericanWarner;                                                     

- litigation developments;                                              

   - market assessments as to whether and when the merger will be consummated;

- the timing of the merger;                                             

- regulatory considerations; and                                        

- general market and economic conditions.                               

The merger may not be completed until a significant period of time has  
passed after the AHP and Warner-Lambert special meetings. Therefore, at the time
of their special meetings, AHP and Warner-Lambert stockholders will not know the
exact value of the AmericanWarner common stock that will be issued in connection
with the merger.                                                                

 Stockholders of AHP and Warner-Lambert are urged to obtain current market
quotations for AHP and Warner-Lambert common stock.                             

WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE OUR OPERATIONS AND REALIZE THE FULL  
COST SAVINGS WE ANTICIPATE                                                      

 The merger involves the integration of two companies that have previously
operated independently. The difficulties of combining the companies' operations 
include:                                                                        

- the necessity of coordinating geographically separated organizations; 

- integrating personnel with diverse business backgrounds; and          

- combining different corporate cultures.                               

The process of integrating operations could cause an interruption of, or
loss of momentum in, the activities of one or more of the combined company's    
businesses and the loss of key personnel. The diversion of management's         
attention and any delays or difficulties encountered in connection with the     
merger and the integration of the two companies' operations could have an       
adverse effect on the business, results of operations or financial condition of 
AmericanWarner.                                                                 

Among the factors considered by the AHP and the Warner-Lambert boards of
directors in connection with their respective approvals of the merger agreement 
were the opportunities for                                                      

19

PREM14A
26th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 26th
economies of scale and operating efficiencies that could result from the merger.
We cannot give any assurance that these savings will be realized within the time
periods contemplated or realized at all.                                        

WE WILL INCUR SIGNIFICANT EXPENSES AND RESTRUCTURING CHARGES IN CONNECTION WITH 
THE MERGER TRANSACTION                                                          

AHP and Warner-Lambert expect AmericanWarner to incur pre-tax charges to
operations, currently estimated to be between $1.5 and $2.1 billion, to reflect 
costs associated with combining the operations of the two companies, transaction
fees and other costs incidental to the merger. The majority of these costs will 
be recorded upon the consummation of the merger. This estimate includes an      
anticipated one-time pre-tax charge of approximately $      million for direct  
incremental merger-related transaction costs and between $      and $           
billion of other related charges and restructuring expenses. These amounts are  
preliminary estimates and are therefore subject to change. Additional           
unanticipated expenses may be incurred in the integration of the businesses of  
AHP and Warner-Lambert. Although AHP and Warner-Lambert expect that the         
elimination of duplicative expenses as well as the realization of other         
efficiencies related to the integration of the businesses may offset additional 
expenses over time, we cannot give any assurance that this net benefit will be  
achieved in the near term, or at all. See "Unaudited Pro Forma Combined         
Condensed Financial Statements" on page 57 for more detail on the charges we    
expect to incur in connection with the merger.                                  

THE MERGER MAY CAUSE DILUTION TO HISTORICAL AHP EARNINGS                        

   The merger and the transactions contemplated by the merger agreement have a
dilutive effect on historical earnings per share of AHP due to the additional   
shares that will be issued in the merger. On a historical basis for AHP, diluted
earnings per share was $1.85 for the year ended December 31, 1998, as compared  
to $1.42 on a pro forma basis for AmericanWarner. However, since AHP's results  
of operations yielded a loss for the nine months ended September 30, 1999, the  
merger and the transactions contemplated by the merger agreement do not have a  
dilutive effect on historical loss per share of AHP for this period. The pro    
forma amounts do not include synergies resulting from the merger. See "Unaudited
Pro Forma Combined Condensed Financial Statements" on page 57 for additional pro
forma financial information for AmericanWarner.                                 

OBTAINING REQUIRED REGULATORY APPROVALS MAY DELAY CONSUMMATION OF THE MERGER    

  Consummation of the merger is conditioned upon the receipt of all material
governmental authorizations, consents, orders and approvals, including the      
expiration or termination of the applicable waiting periods, and any extension  
of the waiting periods, under the Hart-Scott-Rodino Antitrust Improvements Act  
of 1976. AHP and Warner-Lambert intend to vigorously pursue all required        
regulatory approvals, including approval by the European Commission. No         
assurance can be given, however, that these approvals will be obtained, or, if  
they are obtained, as to the terms, conditions and timing of these approvals.   
The requirement for these approvals could delay the consummation of the merger  
for a significant period of time after AHP and Warner-Lambert stockholders have 
approved the proposals relating to the merger at their respective special       
meetings. See "The Merger Agreement--Conditions" on page 79 for a discussion of 
the conditions to the consummation of the merger and "The Proposed              
Merger--Regulatory Approvals" on page 49 for a description of the regulatory    
approvals necessary in connection with the merger.                              

20

PREM14A
27th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 27th
FORWARD-LOOKING STATEMENTS

  We have made forward-looking statements in this document, and in documents
that are incorporated by reference in this document, that are subject to risks  
and uncertainties. These statements are based on the beliefs and assumptions of 
each company's management. Generally, forward-looking statements include        
information concerning possible or assumed future actions, events or results of 
operations of AHP, Warner-Lambert and AmericanWarner. Forward-looking statements
include the information in this document, specifically, regarding:              

                                                                [Download Table]
                                                                        
- projections                  - the combined company                   
- efficiencies/cost avoidance  - future economic performance            
- cost savings                 - the timetable for completing the merger
- revenue synergies            - future acquisitions                    
- income and margins           - management's plans                     
- earnings per share           - business portfolios                    
- growth                       - merger and integration related expenses
- economies of scale           - product launches                       
- combined operations                                                   

These statements may be preceded by, followed by or include the words   
"believes," "expects," "anticipates," "intends," "plans," "estimates" or similar
expressions.                                                                    

  With respect to all forward-looking statements, we claim the protection of
the safe harbor for forward-looking statements contained in the Private         
Securities Litigation Reform Act of 1995.                                       

Forward-looking statements are not guarantees of performance. You should
understand that the following important factors, in addition to those discussed 
in "Risk Factors" above and elsewhere in this document and in the documents     
which are incorporated by reference in this document, could affect the future   
results of AHP and Warner-Lambert, and of AmericanWarner after the completion of
the merger, and could cause those results or other outcomes to differ materially
from those expressed or implied in our forward-looking statements:              

COMPETITIVE FACTORS                                                             

- the impact of competitive products, including generic competition     

- the timing of the introduction of new products                        

- the financial resources of competitors                                

   - the ability to respond to price pressures imposed by managed care groups,
institutions and government agencies                                

  - the ability to respond to technological advances attained by competitors
and patents granted to competitors                                  

- the ability to manufacture products competitively and cost effectively

OPERATING FACTORS                                                               

- changes in the favorable market reaction to AHP's and Warner-Lambert's
significant pharmaceutical products                                 

    - the ability to identify new viable chemical compounds and technologies and
commercialize innovative and competitive products worldwide         

21

PREM14A
28th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 28th
- the ability to successfully complete clinical trials and obtain and   
  maintain regulatory approval for new products in the United States and
other countries                                                     

- the ability to gain consumer acceptance for our new products and      
technologies                                                        

 - the ability to secure and defend intellectual property rights and, when
appropriate, license required technology                            

- the ability to generate cash flows or obtain financing to fund growth 

   - the ability to complete and integrate appropriate acquisitions, strategic
alliances and joint ventures                                        

  - the ability to respond to unexpected safety or efficacy concerns arising
with respect to marketed products, whether or not scientifically    
justified, leading to product recalls, litigation, withdrawals or   
declining sales                                                     

- the ability to complete successful remediation efforts related to the 
calendar year 2000                                                  

ECONOMIC AND INDUSTRY CONDITIONS                                                

   - the effect of economic conditions, inflation and interest rates generally

- the effect of changes in currency exchange rates and political and    
economic conditions worldwide                                       

- the effect of changes in laws and regulations, including changes in   
 accounting standards, trade, tax, price controls and other regulatory
matters                                                             

- the calendar year 2000 causing a general economic downturn relating to
  year 2000 failures in the U.S. and other countries, failures in global
   banking systems and capital markets, or extended failures by public and
     private utility companies or common carriers supplying services to AHP or
Warner-Lambert                                                      

22

PREM14A
29th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 29th
THE PROPOSED MERGER 

  We are furnishing this joint proxy statement/prospectus to stockholders of
AHP and Warner-Lambert in connection with the solicitation of proxies by the    
boards of directors of AHP and Warner-Lambert for use at the special meetings of
their respective stockholders.                                                  

AHP PROPOSALS                                                                   

At AHP's special meeting, stockholders will be asked to vote to approve:

(1) Proposal 1--the amendment of the certificate of incorporation of AHP
providing for:                                                    

- changing the name of AHP to AmericanWarner, Inc.; and           

      - increasing in the number of authorized shares of AHP common stock from
2,400,000,000 to          .                                   

(2) Proposal 2--the issuance of shares of AmericanWarner common stock in
connection with the merger.                                       

   (3) Proposal 3--the amendment of the by-laws of AHP to increase the maximum
number of directors on AHP's board of directors from 15 to 24.    

    THE MERGER WILL NOT BE COMPLETED UNLESS AHP'S STOCKHOLDERS APPROVE PROPOSALS
1 AND 2. APPROVAL OF PROPOSAL 3, HOWEVER, IS NOT NECESSARY TO COMPLETE THE      
MERGER.                                                                         

WARNER-LAMBERT PROPOSAL                                                         

At Warner-Lambert's special meeting, Warner-Lambert stockholders will be
asked to vote to adopt the merger agreement and approve the merger.             

   THE MERGER WILL NOT BE COMPLETED UNLESS WARNER-LAMBERT'S STOCKHOLDERS ADOPT
THE MERGER AGREEMENT AND APPROVE THE MERGER.                                    

BACKGROUND OF THE MERGER                                                        

    In recent years, AHP's management and board of directors have concluded that
the pharmaceutical and consumer healthcare businesses are in an era of          
accelerating change that will have a significant impact on the future           
competitive position of companies engaged in those businesses. As demand for    
research and development increases and companies look for ways to speed the     
development and marketing of breakthrough products in these fields, many        
companies have sought and, AHP believes, will continue to seek opportunities    
through consolidation to create efficiencies and growth and to become world     
leaders in the most advanced science and technology. In this regard, in the     
fourth quarter of 1997, representatives of AHP engaged in preliminary           
discussions with representatives of SmithKline Beecham PLC regarding a possible 
strategic merger between the two companies. On May 31, 1998, AHP and Monsanto   
Company entered into a merger agreement contemplating a merger of equals        
transaction between the two companies. Neither the SmithKline Beecham           
discussions nor the Monsanto merger agreement resulted in completed business    
combinations for AHP. From time to time thereafter, AHP continued to consider   
the possibility of a business combination transaction with a large              
pharmaceutical company, as well as other strategic alternatives, to enhance its 
competitive position and stockholder value.                                     

In June 1998, Warner-Lambert's management, with the assistance of       
McKinsey & Company, began reviewing the growth initiatives available to         
Warner-Lambert in preparation for assisting the Warner-Lambert board in its     
determination of the company's strategic path.                                  

23

PREM14A
30th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 30th
Notwithstanding Warner-Lambert's excellent performance and prospects, in
November 1998, the Warner-Lambert board, with the assistance of management and  
outside advisors, commenced a review of Warner-Lambert's growth initiatives.    
This review grew out of the Warner-Lambert board's belief that it needed to     
maintain an ongoing proactive effort to address future value enhancement for the
benefit of Warner-Lambert's stockholders. Following the November 1998           
Warner-Lambert board meeting, Warner-Lambert management, with McKinsey &        
Company's assistance, continued this strategic review process for approximately 
eight months. During this period, Warner-Lambert management evaluated           
Warner-Lambert's long-term position in the pharmaceutical and consumer          
healthcare industries in order to develop the company's strategic plan for the  
future. Among the possible alternatives management and the Warner-Lambert board 
examined were: pursuing an internal growth strategy only; engaging in a series  
of acquisitions, joint ventures, alliances and licensing arrangements; and      
engaging in a strategic business combination. This process culminated in the    
June 27, 1999 board meeting described below.                                    

Prior to the June 1999 Warner-Lambert board meeting, John R. Stafford,  
chairman of the board, president and chief executive officer of AHP, telephoned 
Lodewijk J.R. de Vink, chairman of the board, president and chief executive     
officer of Warner-Lambert. During the course of the telephone conversation,     
Mr. Stafford expressed his interest in exploring the possibility of a business  
combination between the two companies. Mr. de Vink deferred any discussions     
until after the June board meeting consideration of Warner-Lambert's strategic  
alternatives.                                                                   

 On June 27, 1999, the Warner-Lambert board of directors met to review and
discuss, among other things, Warner-Lambert's strategic path. The Warner-Lambert
board reviewed management's evaluation and concluded that Warner-Lambert, with  
its world class research facilities and staff and its future product pipeline,  
had excellent capabilities and growth prospects. The Warner-Lambert board also  
concluded that those strong capabilities and prospects could be better enhanced 
for stockholders if Warner-Lambert engaged in a strategic merger, with a company
with complementary products and pipeline, that enhanced Warner-Lambert's already
strong position.                                                                

As part of that June board meeting review of Warner-Lambert's strategic 
path, the Warner-Lambert board considered an analysis of industry participants  
that might best satisfy the strategy favored by the board. AHP was at the top of
the list, and the clear first choice, based on a comparative assessment of a    
number of criteria, including expansion and strengthening of therapeutic area   
focus, building and strengthening of a technology platform, strengthening of the
overall pipeline (particularly near term), continued building of an OTC presence
and expected ease of integration. The Warner-Lambert board, in light of these   
findings, discussed the contacts from Mr. Stafford and the possibility of       
exploring a transaction with AHP. The Warner-Lambert board concluded that a     
transaction with AHP would not only enhance Warner-Lambert's growth potential   
based on Warner-Lambert's highly successful growth strategy, but would insure   
that Warner-Lambert stockholders would have a very large participation in that  
value creation. At the conclusion of the meeting, the Warner-Lambert board      
authorized Mr. de Vink to explore whether a business combination with AHP could 
be developed.                                                                   

   On July 7, 1999, Messrs. de Vink and Stafford met briefly and discussed the
concept of a strategic business combination of Warner-Lambert and AHP and agreed
to discuss the topic in more detail at a future date.                           

On July 12, July 16 and July 21, 1999, Messrs. de Vink and Stafford     
discussed their views on the parameters of a business combination of            
Warner-Lambert and AHP. During these conversations, Messrs. de Vink and Stafford
discussed the strategic benefits of a transaction, the potential for significant
cost savings, potential management structures of a combined company and the     
issues involved in integrating both companies. Mr. Stafford also discussed with 
Mr. de Vink that any such transaction should include both termination fees and  
stock option agreements. In connection with these discussions, Warner-Lambert   
and AHP signed a mutual confidentiality and standstill agreement on             

24

PREM14A
31st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 31st
July 27, 1999 restricting the disclosure of confidential information and the    
purchase of the other company's common stock.                                   

    Messrs. de Vink and Stafford met again on July 28, 1999 to further discuss a
number of aspects of a possible business combination of Warner-Lambert and AHP, 
including the basis for an acceptable exchange ratio, the strategic benefits of 
such a transaction, the potential areas for cost savings and issues involving   
senior management positions in a combined company. Messrs. de Vink and Stafford 
agreed that each would recommend to their respective boards of directors that a 
strategic business combination of Warner-Lambert and AHP be structured as a     
"merger of equals." On July 29, 1999, the Warner-Lambert board met and Mr. de   
Vink reported on his conversations with Mr. Stafford. At the conclusion of the  
meeting, the Warner-Lambert board authorized Mr. de Vink to pursue further      
discussions with AHP. These discussions continued throughout August 1999.       

On August 6, 1999, a jury in Texas awarded a significant verdict for the
plaintiff in one of a large number of personal injury diet drug lawsuits against
AHP. AHP's stock price declined following the announcement of this award. The   
case was subsequently settled for less than 10% of the award.                   

On August 9, 1999, Mr. Stafford informed AHP board members of his       
discussions with Warner-Lambert. On August 16, 1999, Mr. de Vink reported to the
Warner-Lambert board on the status of discussions with AHP, recent events       
affecting AHP and its stock price and his plans to meet with Mr. Stafford later 
that evening to discuss further developing a proposal for a strategic business  
combination of Warner-Lambert and AHP. On the evening of August 16, 1999,       
Messrs. de Vink and Stafford met again to discuss a possible transaction, at    
which time they discussed, among other things, the recent jury verdict against  
AHP involving diet drugs, the effect of recent events on AHP's stock price, the 
basis for an acceptable exchange ratio in light of the recent decline in AHP's  
stock price, the composition of the board, the succession of chief executive    
officer and chairman of the board of a combined company, the name of the        
combined company, and selections to certain senior management positions. In late
August, following the meeting with Mr. de Vink, Mr. Stafford again advised AHP  
board members of his discussions with Mr. de Vink.                              

 Because of the uncertainty surrounding AHP's diet drug litigation and its
impact on AHP's stock price, the parties were unable to reach agreement on the  
basis for establishing an exchange ratio and on determining how to handle the   
risks associated with the diet drug litigation. Accordingly, on August 31, 1999,
Messrs. de Vink and Stafford agreed that they would suspend discussions         
regarding a business combination between the two companies for 30 days while AHP
pursued a settlement of the litigation and that during this period neither party
would talk to other merger candidates.                                          

 On September 3, 1999, and again on September 28, 1999, the Warner-Lambert
board met to discuss the status of discussions with AHP and the recent court    
ruling which related to AHP. The Warner-Lambert board reviewed the strategic    
benefits of a business combination of Warner-Lambert and AHP and discussed the  
impact of recent events on discussions with AHP and the potential for           
accomplishing a business combination with AHP.                                  

  On October 7, 1999, AHP announced that it had entered into a memorandum of
understanding regarding a comprehensive national settlement relating to its diet
drug litigation. In light of this development, strategic business combination   
discussions between Warner-Lambert and AHP were revived.                        

On the evening of October 11, 1999, Messrs. de Vink and Stafford met to 
continue to discuss the potential strategic business combination of             
Warner-Lambert and AHP. At this meeting, they reviewed the recent proposed      
settlement of the diet drug litigation, including its potential effect on AHP,  
and the strategic benefits and synergies that could result from combining the   
two companies in a merger of equals. At the meeting, Messrs. de Vink and        
Stafford also discussed the potential basis for establishing an acceptable      
exchange ratio. Messrs. de Vink and Stafford considered their respective roles  
in a                                                                            

25

PREM14A
32nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 32nd
combined company, and agreed that Mr. Stafford should remain chairman of the    
board of the combined company for 18 months following the merger and that       
Mr. de Vink should be chief executive officer of the combined company reporting 
to the board of directors following the merger and become chairman of the board 
at the expiration of Mr. Stafford's 18-month term as chairman. They also        
exchanged views with respect to the composition of the board and senior         
management of the combined company.                                             

   On October 12, 1999, members of senior management of Warner-Lambert and AHP
met to discuss possible transaction structures, further due diligence that      
Warner-Lambert and AHP expected to conduct, potential terms of a merger         
transaction and a possible timetable for the transaction. Representatives of    
Skadden, Arps, Slate, Meagher & Flom LLP, Warner-Lambert's special outside      
counsel, and Simpson Thacher & Bartlett, AHP's special outside counsel, were    
also present at the meeting. At the meeting, counsel to AHP indicated that as   
had been previously stated by Mr. Stafford and in light of the fact that AHP had
had two prior potential transactions not close, AHP was unwilling to engage in a
transaction without the reciprocal termination fee provisions and stock option  
agreements which were being discussed by the parties. At the conclusion of the  
meeting, AHP's outside legal counsel provided Warner-Lambert and its outside    
legal counsel with a draft merger agreement and, shortly thereafter, draft stock
option agreements.                                                              

 On October 12, 1999, Warner-Lambert engaged Debevoise & Plimpton, special
outside counsel to Warner-Lambert, to undertake a due diligence examination of  
AHP's diet drug litigation and an examination of the announced settlement to    
resolve such litigation. Throughout the remainder of October, Debevoise &       
Plimpton reported to Warner-Lambert's senior management on the results of its   
examination of AHP's diet drug litigation and the announced settlement to       
resolve such litigation.                                                        

At a meeting of the board of directors of Warner-Lambert held on        
October 14, 1999, Mr. de Vink informed the board of directors of the recent     
conversations with AHP and indicated that meetings with AHP's management were to
be held later in the week. The board reviewed the proposed business combination 
with AHP, including the strategic rationale for the merger, recent events       
affecting AHP, the basis discussed for establishing an acceptable exchange      
ratio, the name of a combined company, succession of the chief executive officer
and chairman of the board of a combined company and the composition of the board
of directors of a combined company. Mr. de Vink informed the Warner-Lambert     
board of directors that management intended, subject to the board of directors' 
concurrence, to continue negotiations with AHP and, assuming these negotiations 
were successful, to reconvene the board of directors in the near future, at     
which time a more in-depth analysis and presentation would be made to the board 
of directors regarding the proposed business combination.                       

    From mid-October through November 3, 1999, representatives of Warner-Lambert
and AHP and their advisors participated in numerous telephone calls and meetings
to conduct continuing reciprocal legal, business, accounting and financial due  
diligence. Commencing the week of October 18 representatives of Warner-Lambert  
and Skadden, Arps and AHP and Simpson Thacher engaged in discussions regarding  
the proposed merger agreement and related documents.                            

On October 21, 1999, the second trading day preceding the October 25(th)
letter from Pfizer discussed below, Mr. William C. Steere, Jr., chairman of the 
board and chief executive officer of Pfizer and Dr. Henry A. McKinnell,         
president and chief operating officer of Pfizer, sold 180,000 and 160,956 shares
of Pfizer, respectively, for aggregate proceeds of $7,255,800 and $6,488,136,   
respectively. According to THE WALL STREET JOURNAL, a spokesman for Pfizer      
stated that Messrs. Steere and McKinnell made their transactions on             
October 21(st) "ahead of any knowledge of a merger combination."                

26

PREM14A
33rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 33rd
   On October 25, 1999, without any prior indication to Warner-Lambert that he
might do so, and in violation of the standstill and confidentiality provisions  
of the LIPITOR agreements discussed below, Mr. Steere of Pfizer delivered a     
letter to Mr. de Vink "seek[ing]... permission to make a [business combination] 
proposal along the lines we have in mind." The October 25(th) letter did not    
elaborate on what was intended by a business combination and did not include any
economic terms. A copy of the October 25(th) letter follows:                    

October 25, 1999                                                        

Mr. Lodewijk de Vink                                                    

Chairman and CEO                                                        

Warner-Lambert Co.                                                      

201 Tabor Road                                                          

Morris Plains, NJ 07950                                                 

Dear Lodewijk:                                                          

As I am sure you are aware, there are "rumors on the street" that a     
significant company, or companies, in our industry are considering a    
   business combination with your Company. As we have come to know the quality
of products, management and operations of Warner-Lambert over the last  
  several years, we expect you will attract substantial acquisition interest
  over time. The need for more resources and to share science and technology
is more apparent every day and is evidenced by continued industry       
consolidation. Our strategic relationship with you since 1996 is a good 
    example of the advantages obtainable through consolidation of our strengths,
and has convinced us of the value of exploring a business combination   
between our Companies.                                                  

As you know, our respective Companies entered into a Confidentiality    
Agreement as of March 4, 1996 with respect to the joint development and 
    marketing of LIPITOR. That Confidentiality Agreement contains a "standstill"
   provision. If you have any interest in exploring a business combination, we
  believe a transaction between our companies makes the most business sense,
  and we should collectively consider expanding the relationship between our
    companies beyond the initiative we recently both announced. We would like to
   explore with you the merits of our interest and ideas. We believe that such
    a business combination would provide substantial value both in the short and
 long run to our shareholders, employees, customers and other constituents
   that you serve. Because of our strategic relationship with your Company, we
 represent the best opportunity to establish a combined business that will
 provide your shareholders the highest possible value. The concept that we
 have in mind would yield to them, on a tax-free basis, an investment in a
larger and stronger Company with more liquidity and combined growth     
   potential that would substantially enhance profitability. Our opportunities
   for your employees and management would also be enhanced and the risk of an
    undesirable suitor would be effectively eliminated. We believe strongly that
   the combination of our Companies would provide the opportunity for the best
possible transaction in what could be the strongest, most creative      
 pharmaceutical company in the world. Our continuing business relationship
   with Warner-Lambert is very important to us and we certainly would not take
any action that could jeopardize that relationship. Also, of course, the
    March 4(th) Confidentiality Agreement requires us to seek your permission to
    make a proposal along the lines we have in mind. Recognizing the significant
  advantages to our respective shareholders, we would encourage you to grant
that permission so that you and your Board can review for yourselves the
value we place on our historical relationship with your Company, on your
 talented management and employee pool, and on the positive effects that a
business combination between our Companies could have.                  

27

PREM14A
34th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 34th
We would be delighted to meet with you to discuss our thoughts at your  
convenience.                                                            

Sincerely,                                                              
/s/ William C. Steere, Jr.                                              

   Warner-Lambert and Pfizer have had a business relationship since June 1996,
when Warner-Lambert had entered into a series of co-promotion and marketing     
agreements with Pfizer regarding LIPITOR, a drug discovered and developed by    
Warner-Lambert's research and development group for use in lowering cholesterol 
levels. Because the drug was such a valuable asset of Warner-Lambert's,         
Warner-Lambert specifically focused from the outset on the need for, and        
negotiated for and obtained, Pfizer's agreement to various confidential         
information use and standstill protections. These protections were designed to  
prevent Pfizer, once it had access to confidential information concerning       
LIPITOR, from influencing or controlling Warner-Lambert or its destiny for      
Pfizer's own purposes. These provisions were intended to protect the value of   
LIPITOR for Warner-Lambert stockholders, not Pfizer's. Pfizer agreed, among     
other things, that:                                                             

- It would not use confidential information about LIPITOR other than in 
performance of the LIPITOR arrangements.                            

- It would not offer or propose to acquire Warner-Lambert or its stock. 

 - It would not engage in any proxy contests or consent solicitations with
respect to Warner-Lambert.                                          

    - It would not seek to control or influence Warner-Lambert or its management
or board.                                                           

 - It would not seek to change the standstill or request Warner-Lambert to
   waive any of the standstill restrictions, including those listed above.

   - Once a business combination involving Warner-Lambert was announced (if at
      all), Pfizer would still not be released from the standstill restrictions,
unless the other party to the business combination was an "acquiring
person."                                                            

   Warner-Lambert and Pfizer are currently in litigation regarding the LIPITOR
agreements, including the standstill arrangements described above. See "Certain 
Litigation" on page 49 for a more complete description of the litigation.       

Promptly after receiving the letter from Pfizer, Mr. de Vink called a   
Warner-Lambert board meeting, which was convened on the morning of October 27,  
1999. The Warner-Lambert board discussed the October 25(th) letter from Pfizer  
and its implications for the pending transaction with AHP. The Warner-Lambert   
board found the letter somewhat surprising, first, in light of prior public     
statements by Pfizer that it was not interested in acquiring other              
pharmaceutical businesses, but would grow internally, and, second, because the  
letter plainly breached Pfizer's standstill agreement. Notwithstanding this,    
Mr. de Vink recommended, and the Warner-Lambert board concurred, that he should 
meet with Mr. Steere and advise Mr. Stafford of the letter and the proposed     
meeting. Mr. de Vink telephoned Mr. Steere that day and indicated that he was   
disappointed and surprised that, given the close business relationship between  
the companies, Mr. Steere would without notice deliver a letter of that nature  
rather than simply pick up the phone. Mr. de Vink further indicated, however,   
that while Warner-Lambert was not waiving the standstill agreement, he wished to
meet with Mr. Steere as soon as possible to discuss the letter. On the afternoon
of October 27(th), Messrs. de Vink and Steere met at Pfizer's offices for       
approximately 45 minutes to discuss Mr. Steere's October 25(th) letter.         

28

PREM14A
35th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 35th
  At the October 27(th) meeting, a number of matters were raised relating to
the letter, including the following:                                            

  - In direct response to the October 25(th) letter, Mr. de Vink inquired as
   to what Mr. Steere had in mind with respect to the business combination
referred to in his letter;                                          

   - Mr. Steere responded that he had not really given a lot of thought to the
matter, and indicated that he did not have any specific terms of a  
 transaction in mind, that he had not discussed a business combination
transaction between Pfizer and Warner-Lambert with Pfizer's board   
(although he personally believed Pfizer was the best partner for    
    Warner-Lambert), that management of the combined company could come from
      both companies, that the boards could be combined and that dislocations in
achieving cost savings could be shared by both companies;           

- Mr. Steere stated that if his means of communication had offended     
Warner-Lambert, he would be willing to "tear up" his letter;        

   - Mr. Steere also said Pfizer was separately pursuing a sizable acquisition
   and might not be capable of pursuing concurrently both that acquisition
and a Warner-Lambert transaction;                                   

  - Mr. Steere said that at a regularly scheduled Pfizer board meeting to be
     held the next day he would mention his discussion and meeting with Mr. de
  Vink to Pfizer's directors, who, according to Mr. Steere, at this time
were unaware of his letter; and                                     

- Although Mr. Steere referred to a potential premium that Pfizer might 
  offer, he said that he viewed Warner-Lambert as already "expensive" to
acquire.                                                            

Mr. Steere made no inquiry in that meeting as to the status of any      
transaction that Warner-Lambert might be pursuing. The meeting ended with       
Mr. Steere asking if he could talk to Mr. de Vink in two weeks. Mr. de Vink said
that this did not fit his timetable and that he would call Mr. Steere the next  
day following Pfizer's board meeting.                                           

    On October 27, 1999, Mr. de Vink telephoned Mr. Stafford and stated that, in
light of the Pfizer letter, it would not be possible for Warner-Lambert to      
proceed with a merger transaction in which the exchange ratio would value the   
AHP shares at any premium to market, as had been previously discussed by the    
parties. The next day, Mr. Stafford telephoned Mr. de Vink to inform him that he
would be prepared to recommend to the AHP board an at-market exchange ratio.    

 On the morning of October 28, 1999, the Warner-Lambert board of directors
met to discuss the meeting between Messrs. de Vink and Steere and the           
implications for the proposed AHP transaction of such meeting and the letter    
that preceded it. The board discussed, among other things, the vagueness and    
tentativeness of the thoughts expressed by Mr. Steere, including that he        
indicated he did not have any specific terms in mind with respect to a business 
combination involving Warner-Lambert, that he had not previously discussed the  
possibility with his board and that, because of another transaction the Pfizer  
board was actively considering, if any Warner-Lambert/Pfizer transaction might  
develop, its timing might only be in the indefinite future.                     

    At the October 28(th) board meeting, the Warner-Lambert board also discussed
the proposed strategic business combination with AHP, and the strategic         
rationale for such combination. For a number of reasons, the board concluded    
that it would not be in the best interests of Warner-Lambert's stockholders to  
pursue what, effectively, would be a possibility of an acquisition of           
Warner-Lambert by Pfizer. Among the Warner-Lambert board's reasons were:        

- the board of Warner-Lambert recently reached a clear conclusion, after
   extensive study, as to the best strategic path for Warner-Lambert. That
strategic path did not include being acquired at this time by a     
significantly larger company which would result in Warner-Lambert's 
carefully                                                           

29

PREM14A
36th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 36th
   developed strategy for growth and value enhancement being abandoned and
replaced by that of the larger company;                             

- the board of Warner-Lambert's continuing belief (although no final    
    decision had been made) that the proposed strategic combination with AHP
  represented a very valuable opportunity, both in absolute and relative
    terms (especially considering the recent decline in the trading price of
 the AHP shares as a result of the diet drug litigation and the recent
     discussions between Mr. de Vink and Mr. Stafford relating to the exchange
     ratio), for implementing the chosen strategic path for creating value for
Warner-Lambert stockholders; and                                    

- the advanced stage and satisfactory nature of the discussions between 
Warner-Lambert and AHP, and the significant risk of losing the AHP  
transaction after months of discussions between the parties if      
     Warner-Lambert were to suddenly pursue a possible transaction with Pfizer
that clearly was still, at best, in the most preliminary stages of  
  consideration by Pfizer. In that regard, the Warner-Lambert board took
note of the fact that Mr. Steere had proposed no terms, that he had 
     referred to Warner-Lambert as "expensive" even at current levels, that he
     said Pfizer was pursuing another transaction and was not sure that Pfizer
     could pursue two at once. The Warner-Lambert board also understood that a
    company in AHP's position would be expected to be very unwilling to play
  the "stalking horse" by keeping its transaction available while Pfizer
    made up its mind what it wanted to do. This was especially the case with
  AHP, which recently had been involved in a publicly announced business
combination and a separate series of publicly announced discussions 
regarding a business combination, neither of which had resulted in a
completed transaction.                                              

 On the afternoon of October 28, 1999, Messrs. de Vink and Steere spoke by
telephone during which Mr. de Vink informed Mr. Steere of the Warner-Lambert    
board's conclusion that it did not wish to abandon Warner-Lambert's strategic   
path to pursue a course involving an acquisition of Warner-Lambert by Pfizer.   
Mr. de Vink advised Mr. Steere that Warner-Lambert was considering a strategic  
business combination and that, were that to be accomplished, he would be open in
the future to talking again when the two companies could be of more comparable  
size. Mr. de Vink assured Mr. Steere that the strategic combination being       
considered by Warner-Lambert would not negatively affect Warner-Lambert's       
LIPITOR arrangements with Pfizer and expressed hope that Pfizer would also act  
in good faith. Mr. Steere expressed disappointment that Warner-Lambert did not  
select Pfizer, but wished Mr. de Vink good luck and indicated that he was not   
inclined at that time to take any action if Warner-Lambert were to announce a   
transaction with another party. Also, during this conversation Messrs. de Vink  
and Steere agreed to arrange a meeting between Dr. Anthony H. Wild, executive   
vice president and president of the pharmaceutical sector of Warner-Lambert and 
Dr. McKinnell to discuss outstanding issues on and finalize certain arrangements
relating to LIPITOR. At no time in the conversation did Mr. Steere make or      
indicate a desire to make a specific offer with respect to a business           
combination between Warner-Lambert and Pfizer, nor did he indicate that he had  
made any progress in his own mind in formulating the terms of any such proposal.
Mr. Steere said nothing to indicate that the Pfizer board had even considered   
the issue at its meeting earlier that day. Pfizer did not contact Warner-Lambert
again--and the parties had no further discussions concerning either a possible  
transaction with Pfizer or the AHP transaction--until the meeting between Drs.  
Wild and McKinnell, which was held on November 2, 1999, the day prior to        
execution of the merger agreement between Warner-Lambert and AHP.               

On October 30, 1999, Messrs. de Vink and Stafford met, together with    
Messrs. Larini and Blount, Warner-Lambert's and AHP's chief financial officers, 
and Messrs. Johnson and Hoynes, Warner-Lambert's and AHP's general counsels, to 
discuss a number of the remaining issues.                                       

  On October 31, 1999, the board of directors of Warner-Lambert met for over
five hours to consider the proposed business combination with AHP and to review 
the terms and conditions of the                                                 

30

PREM14A
37th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 37th
proposed merger agreement and related documents. Mr. de Vink reported on his    
October 28(th) conversation with Mr. Steere. Warner-Lambert management once     
again reviewed in detail the objectives and strategic benefits of a merger with 
AHP, including cost savings and the fit between the two companies' products,    
pipelines, complementary business strengths and research and development        
projects, and reported on the business, financial and legal due diligence they  
had conducted on AHP. Skadden Arps reviewed the fiduciary duties of the         
Warner-Lambert directors, as well as the principal terms and conditions of the  
proposed merger agreement and related documents. Debevoise & Plimpton gave a    
detailed presentation concerning its examination of AHP's diet drug litigation  
and the terms of the proposed settlement. A detailed discussion was held        
concerning, and the Warner-Lambert board reviewed, with the participation of    
Warner-Lambert's management and legal and financial advisors, among other       
things:                                                                         

- the strategic path that the Warner-Lambert board had selected;        

- the attributes of Warner-Lambert and AHP, separately and on a combined
basis, in light of the chosen strategic path;                       

   - the principal terms of the proposed merger agreement and the stock option
agreements, including:                                              

     - as they related generally to third party proposals that might be made
following their execution, and, in particular:                

           - the circumstances under which each company would be free to provide
      information to, and negotiate with, a third party who made a
competing proposal,                                   

     - the circumstances in which termination fees would be payable,

        - the fact that a third party making a competing proposal would be
           precluded from consummating a transaction with Warner-Lambert, or
            AHP, using the pooling of interests method of accounting and would
        have to utilize purchase accounting (which would result in the
recognition of a significant amount of goodwill),     

          - the fact that both Warner-Lambert and AHP would be obligated under
           the merger agreement to present the combination of Warner-Lambert
and AHP to their respective stockholders for approval 
           notwithstanding a competing proposal from a third party, even one
             which the board that received such proposal recommended as superior
          to the combination of Warner-Lambert and AHP, and that pending a
             stockholder vote on the Warner-Lambert/AHP combination the parties'
      rights plans (and rights thereunder) could not be amended or
redeemed,                                             

       - the provisions in the proposed merger agreement with respect to
AHP's diet drug litigation and liabilities, and       

         - the proposed timing of the stockholders' meetings, and the effect
of such timing;                                       

  - the financial terms of the proposed combination including their fairness
to the Warner-Lambert stockholders; and                             

    - due diligence activities with respect to AHP including an extensive report
    by counsel regarding AHP's diet drug litigation and proposed settlement.

The Warner-Lambert board discussed with its advisors the ability and    
likelihood of third parties making competing proposals to Warner-Lambert if such
third parties were unable to utilize pooling accounting. It was noted that      
non-U.S. companies generally do not utilize pooling accounting and that pooling 
accounting would not likely be available, even in the United States, after 2000.
The Warner-                                                                     

31

PREM14A
38th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 38th
Lambert board concluded that the merger of equals with AHP was a highly         
desirable business opportunity for Warner-Lambert and that Pfizer's interest was
vague and tentative, and questionable as to whether it would ever be pursued.   
The Warner-Lambert board also concluded that it would be unwise to delay and    
jeopardize the highly desirable and deliberately conceived AHP transaction.     
Warner-Lambert's board discussed with its advisors the remaining open issues in,
and the timing of, the proposed transaction with AHP. Thereafter,               
Warner-Lambert's board instructed management to finalize merger negotiations    
with AHP and complete the necessary transaction documents, with a view to having
a board meeting or meetings later during the week to review the results of      
additional due diligence and consider and vote on a definitive transaction.     

   On November 1, 1999, a telephonic meeting of the AHP board of directors was
convened to review and consider the status of the discussions relating to the   
proposed business combination transaction with Warner-Lambert. Mr. Stafford     
reviewed for the AHP board the proposed principal terms of the transaction and  
the strategic benefits of combining the two companies. Mr. Stafford also        
informed the AHP board of Pfizer's October 25 letter to Warner-Lambert and      
related developments. Representatives of Chase Securities Inc. and Morgan       
Stanley & Co. Incorporated also gave financial presentations relating to the    
proposed business combination.                                                  

   On November 1, 1999, Messrs. Stafford and de Vink agreed in principle on an
exchange ratio, subject to approval by the boards of AHP and Warner-Lambert.    
From November 1 through November 3, 1999, AHP, Warner-Lambert and their         
respective counsel continued to negotiate and finalize the terms of the merger  
agreement and related documents. During this period, Mr. Stafford and counsel to
AHP reiterated on several occasions the position that AHP was unwilling to      
engage in the transaction with Warner-Lambert without the reciprocal termination
fee provisions and stock option agreements which had been discussed by the      
parties since July of 1999.                                                     

   On November 2, 1999, Dr. Wild of Warner-Lambert and Dr. McKinnell of Pfizer
had their previously scheduled meeting to discuss certain of the arrangements   
between Warner-Lambert and Pfizer regarding LIPITOR. During the meeting         
Dr. McKinnell expressed his regret that Warner-Lambert was not choosing to      
engage in a business combination transaction with Pfizer and his concern as to  
the effect on the LIPITOR arrangements if Warner-Lambert pursued a transaction  
with a party of whom Pfizer did not approve. During the meeting Dr. McKinnell   
inquired as to how close Warner-Lambert was to announcing a transaction with a  
third party. Dr. Wild acknowledged that Warner-Lambert was involved in          
discussions with another company with respect to such a transaction, but did not
indicate when such a transaction would be agreed to or announced. At no time    
during the meeting did Dr. McKinnell make a specific offer or elaborate on the  
intentions of Pfizer with respect to a business combination. As Mr. Steere had  
to Mr. de Vink, Dr. McKinnell wished Dr. Wild good luck.                        

During the evening of November 2, reporters from THE WALL STREET JOURNAL
contacted both AHP and Warner-Lambert to inquire about a rumor to the effect    
that the parties were about to agree to a business combination of the two       
companies. As a result, the two companies decided to accelerate final           
consideration of the proposed AHP/Warner-Lambert merger, and meetings of the    
Warner-Lambert and AHP boards were scheduled for the evening of November 3. On  
the morning of November 3, 1999, an article appeared in THE WALL STREET JOURNAL 
and stories appeared in other media sources discussing a potential merger of AHP
and Warner-Lambert. Also that morning, representatives of AHP and Warner-Lambert
confirmed through media sources that the two parties were engaged in merger     
discussions.                                                                    

On November 3, 1999, following the appearance of the media stories,     
Mr. Steere sent another letter to Mr. de Vink stating that Pfizer was interested
in a business combination with Warner-Lambert and that he would like to meet to 
discuss his thoughts on the matter. This letter, again, did not                 

32

PREM14A
39th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 39th
elaborate on the meaning, or terms, of a business combination and made no       
specific proposal. A copy of the November 3(rd) letter follows:                 

November 3, 1999                                                        

Mr. Lodewijk de Vink                                                    

Chairman and CEO                                                        

Warner-Lambert Co.                                                      

201 Tabor Road                                                          

Morris Plains, NJ 07950                                                 

Dear Lodewijk:                                                          

 I was extremely surprised and disappointed to read in this morning's Wall
 Street Journal that WL is about to enter into a business combination with
AHP in a so called "merger of equals" and without any premium to the    
    shareholders of WL. This is especially the case in light of my recent letter
to you and our meeting of October 27, in which I made clear Pfizer's    
willingness to provide a vastly superior proposal to WL and its         
   shareholders. We are still anxious to have you and your Board's support for
our making an offer.                                                    

   Having read the article on your pending merger with AHP, a company not only
  substantially smaller than we are, but certainly not positioned in the key
   pharmaceutical industry as we are, I feel compelled to use this opportunity
to reiterate what I believe are the advantages of a transaction with us.
They include:                                                           

- The best possible price for your Shareholders                         

- Substantial increase in market depth and liquidity                    

- The greatest synergies for the combined companies                     

- Complimentary technology and science                                  

  - Worldwide marketing exposure for your products, especially your number 1
   product, LIPITOR, which is achieving its excellent market acceptance in
large part as a result of our world class marketing and sales       
organizations working in conjunction with yours.                    

 - Substantial expansion of opportunities for management and key employees

- Long term value for all our Shareholders                              

    - Substantial new R&D, marketing, manufacturing and capital resources for WL
important projects                                                  

- Strengthening your participation in future industry growth and        
consolidation--we would be putting together the two fastest growing 
companies in the industry.                                          

 Because of our strategic relationship with your Company, we represent the
best opportunity to establish a combined business that will provide your
  shareholders the highest possible value. We would like to discuss with you
    the merits of our interest and ideas. We believe that a business combination
   between our two companies would provide substantial value both in the short
and long term to your shareholders, employees, customers and other      
    constituents that you serve. The concept that we have in mind would yield to
 them, on a tax-free basis, an investment in a larger and stronger Company
  with more liquidity and combined growth potential that would substantially
  enhance profitability. Our opportunities for your employees and management
would also be enhanced. We believe strongly that the combination of our 
Companies would provide the                                             

33

PREM14A
40th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 40th
    opportunity for the best possible transaction with an attractive premium for
your shareholders in what could be the strongest, most creative         
pharmaceutical company in the world.                                    

We would be delighted to meet with you to discuss our thoughts. We would
urge that such a meeting take place at your earliest convenience.       

Sincerely,                                                              
/s/ William C. Steere, Jr.                                              

In addition, on November 3, 1999, M. Anthony Burns, a board member of   
Pfizer, telephoned W.R. Howell, a Warner-Lambert board member, to inquire       
whether the Warner-Lambert board was aware of the Pfizer interest, which        
Mr. Howell confirmed. Mr. Burns also indicated that he had been aware, at or    
about the time of Mr. Steere's first letter to Mr. de Vink, of Mr. Steere's     
interest in pursuing an acquisition of Warner-Lambert. Also on November 3, Dana 
G. Mead, also a board member of Pfizer, approached Robert N. Burt, a            
Warner-Lambert board member, at a conference to note Pfizer's interest in       
pursuing a transaction with Warner-Lambert. During this conversation, Mr. Mead, 
when informed by Mr. Burt of his belief that Pfizer would not be able to use    
pooling-of-interests accounting in an acquisition of Warner-Lambert, indicated  
that Pfizer understood that and that it was not a problem. At no time during the
conversation did Mr. Burt (who had been present at the October 27(th), 28(th)   
and 31(st) Warner-Lambert board meetings) indicate, as it has been subsequently 
alleged by Pfizer, that he was unaware of Pfizer's interest in a transaction    
with Warner-Lambert.                                                            

  Later, on November 3, 1999, a special meeting of the board of directors of
Warner-Lambert was held, at which all of Warner-Lambert's directors were        
present. At this meeting, Skadden Arps updated the board of directors on the    
final terms of the merger and stock option agreements, including changes since  
the prior meeting, and again reviewed with the board its fiduciary duties. Bear 
Stearns delivered its fairness opinion. In light of Pfizer's expression of      
interest, the Warner-Lambert board focused particularly on, and actively        
discussed, among other things:                                                  

   - the letters from Mr. Steere and contacts from the other Pfizer directors,
 and the fact that still no specific proposal had been made by Pfizer;

- the board's continuing belief in the stockholder value opportunity    
     represented by the strategic path the board previously had chosen and the
     unique implementation opportunity presented by the definitive transaction
terms with AHP;                                                     

    - its concern that it would not be in the best interests of Warner-Lambert's
    stockholders to pursue an indefinite expression of interest from Pfizer,
     which if it materialized at all seemed to be months away, particularly if
pursuing such interest would put the AHP transaction at risk;       

- AHP's position, as stated to Warner-Lambert and reported at the Board 
   meeting, that AHP would not continue discussions with Warner-Lambert or
    remain willing to agree to a business combination with Warner-Lambert if
Warner-Lambert commenced negotiations with Pfizer;                  

 - the board's specific resulting understanding that, in order to commence
      negotiations with Pfizer at that time, Warner-Lambert effectively would be
     abandoning the fully developed, extremely attractive transaction with AHP
that it had been working on for the prior four months;              

    - that AHP had not changed its position, which it had taken since the outset
    of discussions in July, that its willingness to enter into a transaction
with Warner-Lambert was conditioned on including in the terms of the
      transaction the termination fee and stock option grant to AHP which it had
been proposing, and the board's belief that such provisions were not
unusual in transactions of this type;                               

34

PREM14A
41st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 41st
    - as to the termination fee, the view of Warner-Lambert's financial advisor,
     Bear, Stearns & Co. Inc., as to the reasonableness of the fee in relation
to comparable transactions; and                                     

- as to the stock option grant by Warner-Lambert to AHP, the accounting 
     impact that it might have on third parties if they were to intervene. The
 Warner-Lambert board noted that some potential parties would not care
    about pooling accounting--possibly including Pfizer, based on the Pfizer
     director's comment--for reasons including that pooling accounting was not
     available to non-U.S. companies and, even in the U.S., pooling accounting
would not likely be available after December 31, 2000.              

In this regard, the Warner-Lambert board also took note of the fact that
Mr. de Vink had, notwithstanding the standstill obligations to which Pfizer was 
subject, clearly asked Mr. Steere what Mr. Steere had in mind with respect to   
the business combination suggested in his October 25(th) letter and that        
Mr. Steere responded, as described above, that he had not thought about specific
terms or raised it with the Pfizer board. In fact, Mr. Steere never indicated to
Mr. de Vink in any conversation that Pfizer had in fact formulated a concrete or
specific offer but was not informing Warner-Lambert of that offer because of the
continuing restriction of the standstill. Thus it was felt that Mr. Steere's    
failure at such time and thereafter to specify the terms of any transaction was 
not a result of the standstill agreement--which Pfizer had disregarded on       
several occasions--but rather because Pfizer had not formulated any terms for a 
transaction. The Warner-Lambert board also considered that all of the provisions
in the proposed transaction documents with AHP which placed some constraint on  
third party interest were mutual--that is, for example, AHP had granted         
Warner-Lambert a reciprocal option on AHP shares and had agreed to a termination
fee. It was felt that the time and effort expended on, expense incurred in, and 
potential opportunity cost of, agreeing to a large and complicated business     
combination were considerable, especially so with a transaction expected to be  
pending and open to third party intervention for over six months. Therefore, for
the benefit of Warner-Lambert stockholders, the Warner-Lambert board wanted to  
obtain protection in the event that a third party intervened by bidding for AHP,
thus possibly depriving Warner-Lambert stockholders of the benefit of the       
contemplated merger of equals with AHP. The Warner-Lambert board was aware of   
rumors that AHP might be a target. It was felt that this protection for         
Warner-Lambert could not be obtained without being willing to give AHP the same 
protections that it was demanding. Following these presentations and further    
discussion, the Warner-Lambert board of directors unanimously approved the      
merger and stock option agreements and decided to recommend that the            
Warner-Lambert stockholders approve and adopt the merger agreement and the      
merger.                                                                         

 Also, on November 3, 1999, a special meeting of the board of directors of
AHP was held, at which all of AHP's directors were present. At this meeting,    
Simpson Thacher & Bartlett reviewed for the AHP board of directors the final    
terms of the merger agreement and the stock option agreements and the board's   
fiduciary duties. AHP's senior management gave presentations, including with    
respect to the businesses of Warner-Lambert and the financial impact of the     
transaction. Chase Securities Inc. and Morgan Stanley & Co. Incorporated        
delivered their fairness opinions and discussed the contents thereof. Following 
these presentations and after discussion, the AHP directors unanimously approved
the merger agreement and the stock option agreements and decided to recommend   
that the AHP stockholders approve each of the AHP proposals relating to the     
merger.                                                                         

 On November 3, 1999, following the approval of AHP's and Warner-Lambert's
respective boards of directors, the parties executed the merger agreement and   
the related documents. Prior to the commencement of trading on November 4, 1999,
Warner-Lambert and AHP issued a joint press release announcing the execution of 
the merger agreement.                                                           

At 8:45 in the morning on November 4, 1999, Dr. Wild telephoned         
Dr. McKinnell to inform him of the execution of the merger agreement and to     
confirm Warner-Lambert's intention to move forward in finalizing the            
arrangements the parties had been discussing on LIPITOR.                        

35

PREM14A
42nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 42nd
 Within hours of the announcement and an analyst meeting in the morning at
which Warner-Lambert and AHP described the transaction and summarized its       
contemplated benefits, the prices of both companies' stock rose and by midday   
reflected an aggregate market value increase of over $10.4 billion from their   
combined market value prior to the media stories on the preceding day.          

On November 4, 1999, Mr. Steere, in violation of Pfizer's standstill and
confidentiality obligations, sent a letter to Mr. de Vink and to the            
Warner-Lambert board of directors containing a conditional offer to acquire     
Warner-Lambert in a merger in which stockholders of Warner-Lambert would receive
2.5 shares of Pfizer common stock for each share of Warner-Lambert common stock.
Pfizer conditioned its offer on the elimination of the termination fee and stock
option grant, to which Warner-Lambert is contractually bound in its signed      
agreements with AHP. Pfizer also started a lawsuit claiming these provisions to 
be invalid. Pfizer also publicly announced such proposal and letter. A copy of  
the November 4(th) letter follows:                                              

November 4, 1999                                                        

Mr. Lodewijk de Vink                                                    

Chairman and CEO                                                        

Warner-Lambert Co.                                                      

201 Tabor Road                                                          

Morris Plains, NJ 07950                                                 

Dear Lodewijk:                                                          

 As you know from our previous communications, my Board of Directors and I
  believe firmly that Pfizer and Warner-Lambert Co., the two fastest-growing
companies in the industry, would represent a compelling combination and 
  excellent strategic fit, creating superior value for all our shareholders.
    We have not made a definitive proposal prior to this time as a result of the
  "standstill" provision in the confidentiality agreement we entered into on
   March 4, 1996. Because of your announcement today relating to the agreement
  with American Home Products and the resulting release from the standstill,
we are pleased to make the following proposal.                          

   I want to reiterate that I have repeatedly tried over the past few weeks to
discuss with you the merits of a combination between Pfizer and         
 Warner-Lambert. Unfortunately, our efforts have been rejected--a response
    that is particularly disappointing given the substantial success represented
by our partnership in developing and marketing LIPITOR, which both our  
companies have publicly acknowledged. My letters dated November 3 and   
   October 25--as well as our conversation on October 27--clearly demonstrated
our desire to make the best possible proposal for your company and its  
shareholders within the "standstill" framework we had agreed to.        

  Since the standstill agreement is no longer operative, we are now prepared
 to offer a tax-free merger in which your shareholders would receive 2 1/2
   shares of Pfizer common stock for each outstanding share of common stock of
Warner-Lambert. Customary and appropriate provisions will be made for   
    outstanding options and warrants. Based on yesterday's closing market price,
this offer represents a $96.40 per share purchase price for each        
    Warner-Lambert share, a premium of 30% over the last month's average closing
    price of your shares. This $82.4 billion offer represents a very substantial
    premium over the proposed AHP transaction as well. In addition, our proposal
  envisions combining the Boards of both companies. Our offer is conditioned
    solely on the elimination of the egregious $2 billion "break-up fee" and the
  improper issuance of the stock option which would prevent us (but not AHP)
    from utilizing a pooling of interest accounting for this transaction as well
as entering into the appropriate documentation.                         

    The Pfizer Board has approved a transaction on the terms set forth above and
we are prepared to move expeditiously to definitive agreements.         

36

PREM14A
43rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 43rd
  A transaction with us offers distinct advantages to Warner-Lambert and its
shareholders. Specific strengths of this combination include:           

 - The 30% premium for your shareholders over the average closing price of
your shares for the last month                                      

- Enhanced, truly global scale--including $4 billion in combined R&D and
$28 billion in combined revenues                                    

- Complementary and broadly-diversified therapeutic pipelines           

- The opportunity to achieve at least $1.2 billion in cost savings and  
efficiencies                                                        

- Complementary operations on which to build growth--including          
Warner-Lambert's strong OTC platform and Pfizer's powerful global   
marketing and sales infrastructure                                  

- Opportunities to expand on our current highly successful relationship 

- Greater growth opportunities for management and key employees         

Given the demands of today's competitive environment, I hope that       
Warner-Lambert would settle for nothing less than a combination with the
best possible peer: Pfizer.                                             

Given what we could accomplish together for all our most important      
    constituencies, we remain surprised that you have not shown more interest in
   joining forces. Nevertheless, we stand ready to meet at any time to discuss
any--or all--aspects of our proposed transaction.                       

    On behalf of your shareholders, employees and all of your constituencies, we
   urge you and Warner-Lambert's Board of Directors to recognize the immediate
and long-term superior value of this transaction.                       

Sincerely,                                                              
/s/ William C. Steere, Jr.                                              
Chairman & CEO                                                          
cc: Warner-Lambert Board of Directors                                   

On November 4, 1999, the Warner-Lambert board met to consider the       
unsolicited conditional Pfizer proposal which had been publicly announced       
earlier that day and to discuss the litigation commenced by Pfizer. Under the   
merger agreement between AHP and Warner-Lambert, each party retained the right  
to deal with acquisition proposals made to it by third parties after the        
agreement was signed. Specifically, if a proposal were made to Warner-Lambert or
AHP which its board, in good faith, believes is, or is reasonably likely to     
result in, a "superior proposal"--that is, a proposal that (1) is better for its
stockholders from a financial point of view than the Warner-Lambert/AHP         
combination and (2) is reasonably capable of being completed--then such party   
may enter into discussions and negotiations with respect to such proposal. See  
"The Merger Agreement--Covenants--No Solicitation" for a discussion of each     
company's obligations with respect to acquisition proposals.                    

 Because Pfizer conditioned its proposal on the elimination of contractual
provisions in Warner-Lambert's agreement with AHP, which Warner-Lambert had no  
ability by itself to remove and had no reason to believe that AHP will agree to 
remove, and because the board did not believe that a legal challenge to such    
provisions would prevail, Warner-Lambert's board was unable to conclude that    
Pfizer's conditional proposal on its face was reasonably likely to be completed.
Accordingly, based on the facts then existing, the Warner-Lambert board         
concluded on November 4, 1999 that the Pfizer conditional proposal did not meet 
the capability of completion test, and that the board was not in a              

37

PREM14A
44th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 44th
position at that time to take any action with respect to the Pfizer proposal.   
Following the board meeting, Warner-Lambert issued a press-release to that      
effect and that it supported the transaction with AHP.                          

   On November 15, 1999, Warner-Lambert issued a press release announcing that
it was "reviewing Pfizer's actions and assessing the steps [Warner-Lambert]     
should take in light of any breaches of the LIPITOR agreements determined to    
have occurred as a result of such actions." Among the steps Warner-Lambert      
announced it was considering was the termination of its LIPITOR agreements with 
Pfizer. Warner-Lambert also announced that it was seeking to make public, for   
the benefit of Warner-Lambert and Pfizer stockholders, the confidential terms of
the LIPITOR agreements between Warner-Lambert and Pfizer that Pfizer was "using 
to its advantage in connection with its interest in acquiring Warner-Lambert."  
On November 15, Pfizer agreed with Warner-Lambert's request to make public the  
terms of the LIPITOR agreements, and, on the following day, Warner-Lambert made 
public all of those agreements.                                                 

On November 23, 1999, Pfizer sued Warner-Lambert and AHP alleging, among
other things, that Pfizer is not in breach of the LIPITOR agreements. On        
November 29, 1999, Warner-Lambert counterclaimed against Pfizer, alleging that  
Pfizer is in breach of the LIPITOR agreements and seeking a declaratory judgment
that Warner-Lambert is entitled to terminate such agreements. See "Certain      
Litigation" on page 49 for a discussion of the Pfizer litigation.               

  On November 30, in response to Warner-Lambert's filing of the counterclaim
against Pfizer, AHP informed Warner-Lambert that it was "prepared to work with  
Warner-Lambert to provide a mechanism, consistent with [the AHP/Warner-Lambert] 
merger agreement, for fairly allocating to Warner-Lambert's shareholders        
additional value ultimately created by the recovery of the marketing rights to  
LIPITOR."                                                                       

OUR REASONS FOR THE MERGER                                                      

While each of AHP and Warner-Lambert has excellent growth potential and 
prospects for its immediate and long term future as a stand-alone entity, we    
believe that a combination of the two companies will create a leading global    
pharmaceuticals and consumer healthcare company with greater diversity, breadth 
and financial resources that will have the opportunity to enhance stockholder   
value in ways that are unlikely to be achieved by AHP or Warner-Lambert on an   
individual basis. Specifically, the combined company would be uniquely          
positioned to:                                                                  

- realize enhanced revenue potential;                                   

- realize significant cost savings;                                     

    - realize the benefits of combining AHP's and Warner-Lambert's complementary
technology platforms;                                               

- realize the benefits of having market leadership in multiple major    
therapeutic categories; and                                         

- realize the benefits of a strong management team drawn from both      
companies.                                                          

  ENHANCED REVENUE POTENTIAL.  The combined company would be a substantially
larger enterprise with a broader and more diversified product line than either  
AHP or Warner-Lambert on a stand-alone basis, with pro-forma estimated 1999     
combined total sales of $26.3 billion. As competition intensifies in the        
industries in which AHP and Warner-Lambert participate, we believe that a       
combined company will benefit from an enhanced potential for revenue growth in  
the following areas and for the following reasons:                              

38

PREM14A
45th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 45th
 - PHARMACEUTICALS. The combined company will be the number one company in
      pharmaceutical sales with pro-forma estimated combined total 1999 sales of
$17.2 billion, selling such leading products as LIPITOR, PREMARIN,  
    REZULIN, EFFEXOR, NEURONTIN, ACCUPRIL, VIRACEPT, ENBREL, ZOSYN/ TAZOCIN,
     DILANTIN and several leading oral contraceptive products. We believe that
our enhanced market presence and sales penetration in key products, 
      coupled with our increased research and development capabilities which may
     lead to the development of novel pharmaceutical products and our enhanced
    capabilities to successfully bring such products to market, will lead to
enhanced potential for revenue growth.                              

- OVER THE COUNTER PRODUCTS. The combined company will be the number one
     company in over the counter sales with pro-forma estimated combined total
   1999 sales of $4.4 billion, selling such leading products with globally
   recognized brand names as ADVIL, ANACIN, SUDAFED, BENADRYL, ROBITUSSIN,
  DIMETAPP, ZANTAC 75, LUBRIDERM, CENTRUM, SOLGAR, LISTERINE, NEOSPORIN,
    CALTRATE AND PREPARATION H. In addition, given the increased size of the
    combined company's product portfolio, the combined company would have an
    enhanced ability to switch prescription products to the over the counter
     market. We believe that the combined company's strong global brand names,
  including our strength in nutritionals, coupled with our relationships
 with global retailers and our enhanced potential for over the counter
switches leads to enhanced potential for revenue growth.            

  - NEW PRODUCTS AND BROAD AND DIVERSIFIED PRODUCT LINE.  The combination of
 AHP's strong near term pipeline of new products with Warner-Lambert's
   strong mid- to long-term pipeline of new products provides the combined
     company with the potential for sustainable revenue growth for the future.
We estimate that by the end of 2002, the combined company will have 
  brought approximately 21 new products to market, which we believe will
      lead to enhanced potential for sustainable revenue growth for the combined
 company. In addition, the broader and diversified product line of the
    combined company reduces the dependence on any one product and the risks
  associated with such dependence. For example, sales of LIPITOR in 1999
will comprise approximately 47% of Warner-Lambert's estimated       
 pharmaceutical sales before giving effect to the merger. After giving
      effect to the merger, sales of LIPITOR in 1999 will comprise approximately
21% of the pro-forma estimated pharmaceutical sales of the combined 
   company. We believe the new products in the combined company's pipeline
      and a broader and more diversified product line will result in an enhanced
potential for sustainable revenue growth.                           

   - INCREASED SCALE.  Scale has importance in many areas, including financial
     strength, research and development of new products, increased presence in
      major international markets, a reduction in the need to partner with third
      parties for major product launches, an increased ability to attract better
licensing partners, improved penetration and higher market shares in
      certain key products, enhanced marketing and distribution capabilities, as
  well as enhancement of existing competencies. We believe the increased
  scale of the combined company, and the benefits in the areas mentioned
above, will result in an enhanced potential for revenue growth.     

While we expect that we will be able to realize enhanced revenues, no   
assurance can be given that we will actually be able to do so.                  

   SIGNIFICANT COST SAVINGS:  Based on our review of and assumptions about the
operations and infrastructure of the two companies, we expect that the combined 
company will realize approximately $1.2 billion in annual pre-tax cost savings  
within three years of the merger. We expect to realize the approximate          
$1.2 billion in annual cost savings within three years of the merger as follows:

   - $300 million by rationalizing corporate overhead and administration costs
    through the elimination of redundant corporate functions and facilities;

39

PREM14A
46th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 46th
  - $300 million by integrating and eliminating redundancies in sales forces
and functions of both companies to achieve sales efficiencies;      

- $250 million by integrating and eliminating redundancies in the two   
companies' research and development programs to achieve research and
development efficiencies;                                           

- $150 million by integrating and eliminating redundancies in the two   
    companies' manufacturing functions and facilities to achieve a reduction
in cost of goods sold;                                              

- $150 million by integrating and eliminating redundancies in the two   
 companies' marketing functions to achieve marketing efficiencies; and

- $50 million by integrating and eliminating redundancies in the        
distribution functions of both companies to achieve distribution    
efficiencies.                                                       

The estimated cost savings reflect the creation of cost reduction       
opportunities and efficiencies through the ability to consolidate separate      
stand-alone operations into a single entity. While we expect that we will be    
able to realize these cost savings, no assurance can be given that we will      
actually be able to do so.                                                      

COMBINATION OF COMPLEMENTARY TECHNOLOGY PLATFORMS.  We expect the       
combination of AHP's and Warner-Lambert's complementary technology platforms in 
small molecules, structure based drug design, combinational chemistry, protein  
therapeutics, vaccines and gene therapy will result in new opportunities for    
innovation in bringing new products to market. While we expect that the         
combination of our complementary technology platforms will result in new        
opportunities for innovation in bringing new products to market, no assurance   
can be given that we will be able to do so.                                     

   LEADERSHIP IN MAJOR THERAPEUTIC CATEGORIES.  The combined company will have
leading products in the following major therapeutic categories:                 

- Cardiovascular, with such major products as LIPITOR, ACCUPRIL and     
CORDARONE IV;                                                       

- Diabetes, with the major product REZULIN;                             

- Women's Health, with the major product PREMARIN;                      

 - Central Nervous System, with such major products as EFFEXOR, NEURONTIN,
DILANTIN and SONATA;                                                

- Virology, with the major product VIRACEPT;                            

- Pain and Arthritis, with the major product ENBREL; and                

- Vaccines, with such major products as PREVNAR and MENINGITEC.         

  STRONG MANAGEMENT TEAM. A strong management team drawn from both companies
will manage the combined company. John R. Stafford, currently chairman,         
president and chief executive officer of AHP, will be chairman of the combined  
company for 18 months after the merger and Lodewijk J.R. de Vink, currently     
chairman, president and chief executive officer of Warner-Lambert, will be chief
executive officer of the combined company will report to, and be a member of,   
the board, and will become chairman of the combined company upon the expiration 
of Mr. Stafford's 18-month term. Members of the remaining senior management of  
the combined company will include key AHP and Warner-Lambert executives drawn   
from both companies. Our immediate task, beginning prior to the completion of   
the merger, is to plan the integration of our businesses and then successfully  
and quickly complete the integration.                                           

40

PREM14A
47th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 47th
FACTORS CONSIDERED BY, AND RECOMMENDATION OF, THE BOARD OF DIRECTORS OF         
WARNER-LAMBERT                                                                  

 At its meeting on November 3, 1999, the Warner-Lambert board of directors
unanimously:                                                                    

    - determined that the merger agreement and the merger are advisable and fair
  to, and in the best interests of, Warner-Lambert and its stockholders;

  - directed that the proposed transaction be submitted for consideration by
the Warner-Lambert stockholders; and                                

- recommended that the Warner-Lambert stockholders vote FOR approval and
adoption of the merger and the merger agreement.                    

 In the course of reaching its decision to adopt the merger agreement, the
Warner-Lambert board of directors consulted with Warner-Lambert's management, as
well as its outside legal counsel and its financial advisors, and considered the
following material factors:                                                     

   (1) information concerning the financial performance and condition, results
of operations, asset quality, prospects and businesses of each of 
  Warner-Lambert and AHP as separate entities and on a combined basis,
including:                                                        

     - the revenues of the companies, their complementary businesses and the
potential for cost savings and revenue enhancement;           

   - the recent and historical stock price performance of Warner-Lambert
        common stock and AHP common stock (including the recent decline in the
trading price of the AHP shares as a result of the diet drug  
litigation); and                                              

    - the percentage of the combined company Warner-Lambert's stockholders
would own following the merger;                               

(2) the strategic nature of the transaction, which combines AHP's and   
      Warner-Lambert's complementary businesses, and creates a broader company
with global reach and greater resources, enhanced future operating
flexibility and increased opportunity for growth;                 

(3) the potential benefits to be derived from a combination of the two  
     companies as described under "--Our Reasons for the Merger" on pages 38
 to 40, including potential cost savings and efficiencies that would
result from the merger;                                           

(4) the current industry, economic and market conditions and trends,    
 including the likelihood of continuing consolidation and increasing
   competition in the pharmaceuticals and consumer healthcare industries
      (and the corresponding decrease in the number of attractive acquisitions
and suitable merger partners);                                    

(5) the nature and timing of new products of both companies in their    
    respective pipelines and the effect of combining such pipelines on the
growth and results of operations of the combined company;         

  (6) the nature of existing products to be sold by the combined company and
   the fact that the customer base to be served will be broader and more
diverse;                                                          

(7) the broader and more diverse product line of the combined company,  
including reduced dependence on LIPITOR;                          

(8) the merger will present the opportunity for the stockholders of     
       Warner-Lambert to participate in a larger company with a more diversified
     product line and, as stockholders of the combined company, benefit from
future growth of the combined company;                            

41

PREM14A
48th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 48th
(9) the exchange ratio will enable Warner-Lambert stockholders to own   
 approximately 50% of the outstanding stock of the combined company;

(10) the analyses and presentations prepared by Bear Stearns, and Bear  
      Stearns' written opinion to the effect that, as of November 3, 1999, and
   subject to the matters set out in its opinion, the exchange ratio was
   fair from a financial point of view to Warner-Lambert's stockholders;

  (11) the intended accounting of the merger as a pooling of interests which
     results in combined financial statements prepared on a basis consistent
      with the underlying view that stockholder interests in the two companies
have simply been combined;                                        

(12) the ability to complete the merger as a reorganization for United  
     States federal income tax purposes in which Warner-Lambert stockholders
   generally will not recognize any gain or loss, except for any gain or
       loss recognized in connection with cash received for fractional shares of
the combined company's common stock;                              

  (13) the ability to consummate the merger, including the conditions to the
      merger requiring receipt of necessary regulatory approvals in accordance
with the terms of the merger agreement;                           

(14) the potential impact on AHP and the combined company of certain of 
AHP's pending and threatened litigation, including the proposed   
       settlement of the diet drug litigation. The Warner-Lambert board received
    a detailed report from its special counsel on these matters. Among the
     risks and uncertainties considered by the Warner-Lambert board were the
following:                                                        

     - the class action settlement of the diet drug litigation is subject to
       court approval and appeal and it is difficult to predict the ultimate
outcome of such approval process;                             

 - the possibility that there would be substantial opt outs from the
     settlement, both during the initial opt out period and, thereafter,
  subject to the terms and conditions of the settlement agreement;

    - opt out claims and claims for primary pulmonary hypertension will be
         pursued as individual actions and may result in substantial settlements
or judgments against AHP; and                                 

   - although AHP believes that the $4.75 billion pre-tax ($3.29 billion
         after-tax) charge it took in the third quarter of 1999 is sufficient to
     cover anticipated payments under the class action settlement, other
   judgments and settlements involving opt out claims and claims for
       primary pulmonary hypertension, and costs associated with the defense
      of legal actions related to the diet drug litigation, such costs are
      inherently difficult to predict, and the actual cost associated with
    such litigation and claims may over the course of time exceed such
reserve.                                                      

       The board concluded that the economic terms of the merger and the other
terms of the merger agreement appropriately took into account, and
     adequately protected Warner-Lambert against, the risks described above.

(15) the terms of the merger and stock option agreement regarding third 
party proposals, including (a) the potential payment to AHP of a  
      termination fee, (b) the grant to AHP of an option to purchase shares of
       Warner-Lambert common stock, (c) that Warner-Lambert cannot terminate the
      merger agreement in order to enter into a transaction with a third party
       before the Warner-Lambert stockholders have had an opportunity to vote on
    the proposed merger with AHP and the timing of such vote, and (d) that
      the rights outstanding under the Warner-Lambert stockholder rights plans
 cannot be redeemed during the term of the merger agreement, and the
      potential effect of such provisions on possible efforts by other parties
to acquire or otherwise combine with Warner-Lambert;              

42

PREM14A
49th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 49th
    (16) the fact that the merger and stock option agreements contain reciprocal
    provisions to those listed in (a) through (d) in item (15) immediately
  above and that the Warner-Lambert board was aware of rumors that AHP
might be a target;                                                

(17) the grant to AHP of an option to purchase shares of Warner-Lambert 
   common stock described in clause (15) above would generally prevent a
       third party competing with AHP from using pooling-of-interests accounting
     for a combination with Warner-Lambert; however the Warner-Lambert board
     also took into account that non-U.S. companies generally do not utilize
pooling accounting, that pooling accounting would not likely be   
    available, even in the United States, after 2000 and that Pfizer would
     not be prevented from proceeding with a transaction with Warner-Lambert
that would be accounted for on a purchase basis. The board also   
    considered the reciprocal effect of the grant to Warner-Lambert of the
AHP option;                                                       

   (18) the importance of clarity of future leadership in ensuring achievement
  of stockholder value opportunities resulting from the merger and the
Warner-Lambert board of directors' confidence in the abilities of 
      Lodewijk J.R. de Vink and other members of the senior management team of
   Warner-Lambert, based on the board's familiarity with their record at
Warner-Lambert, and the facts that:                               

       - Mr. de Vink will be the chief executive officer of the combined company
      reporting to the board upon completion of the merger and will be the
  chairman of the board of the combined company upon expiration of
Mr. Stafford's 18-month term as chairman;                     

- Dr. Wild will have overall responsibility for the human global  
         pharmaceutical business, and that the two pharmaceutical research heads
      of the combined company--one of which will be drawn from each of AHP
and Warner-Lambert--will both report to him; and              

       - Mr. Larini will be the chief financial officer of the combined company;

  (19) the terms of the merger agreement, including composition of the board
    of directors, the management structure of the combined company and the
       intent to manage the combined company on a merger of equals basis, led by
an integrated senior management team drawn from both companies;   

  (20) the ability to successfully integrate the two companies and the risks
      associated therewith, including the impact of the merger on employees of
Warner-Lambert;                                                   

(21) the combined company will adopt the name "AmericanWarner, Inc.";   

(22) the headquarters of the combined company will be in Madison, New   
   Jersey, the headquarters for the over the counter business will be in
    Morris Plains, New Jersey and the headquarters for the pharmaceuticals
business will be in Radnor, Pennsylvania;                         

  (23) the two letters from Pfizer, the discussions between the two chairman
      of Warner-Lambert and Pfizer as well as other representatives of the two
companies;                                                        

  (24) that pursuit of a transaction with Pfizer would very likely result in
the loss for the stockholders of Warner-Lambert of what the board 
       believes to be the highly desirable fully-developed AHP transaction which
       Warner-Lambert had been working on for the prior four months, in favor of
      the possibility of a transaction with Pfizer whose terms and timing, and
      hence benefits to Warner-Lambert stockholders, had not been furnished to
       Warner-Lambert despite Pfizer's having had an opportunity to present them
and which might never be proposed or                              

43

PREM14A
50th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 50th
consummated. In reaching this conclusion the following additional 
factors, among others, relating to Pfizer and AHP were considered:

  - the board's continuing belief in the stockholder value opportunity
       represented by the strategic path the board had previously chosen and
   the unique implementation opportunity presented by the definitive
transactions terms with AHP;                                  

     - that the board of Warner-Lambert had determined to pursue a strategic
     path for Warner-Lambert that did not include it being acquired by a
     significantly larger company which would result in Warner-Lambert's
        strategy being replaced by the larger company's and the Warner-Lambert
    stockholders having a greatly diminished share of Warner-Lambert's
growth potential;                                             

     - that Pfizer stated that it was not certain that it could accomplish a
      transaction with Warner-Lambert in the near future given that it was
         pursuing a significant transaction involving the acquisition of another
         business and was not sure it could pursue the two transactions at once;

  - that no specific proposal or economic terms of a proposal had been
     offered by Pfizer, and the appearance that Pfizer had not given any
serious consideration to the terms of a transaction with      
Warner-Lambert;                                               

   - the timing and vagueness of the second letter from Pfizer which was
      sent to Warner-Lambert at a time when Warner-Lambert and AHP were on
the verge of executing the merger agreement; and              

      - AHP's positions, as stated to Warner-Lambert and reported at the board
       meeting that (1) AHP was not willing to delay execution of the merger
       agreement so as to permit Warner-Lambert to negotiate with Pfizer and
        (2) AHP was not willing to enter into the merger agreement without the
termination fees and stock options previously discussed;      

(25) the interests that certain executive officers and directors of     
     Warner-Lambert may have with respect to the merger in addition to their
      interests as stockholders of Warner-Lambert generally. See "Interests of
Certain Persons in the Merger" on pages 67 to 70; and             

    (26) the opportunity for Warner-Lambert stockholders to vote on the proposed
merger of equals with AHP.                                        

   In view of the variety of factors and the amount of information considered,
the Warner-Lambert board of directors did not find it practicable to and did not
quantify, rank or otherwise assign relative weights to the specific factors it  
considered in reaching its decision. The determination was made after           
consideration of all of the factors as a whole. In addition, individual members 
of the Warner-Lambert board of directors may have given different weights to    
different factors.                                                              

The Warner-Lambert board of directors considered all these factors in   
reaching the conclusions and recommendations described above. These factors     
generally figured positively, as advantages or opportunities, with the following
exceptions:                                                                     

  - the factor described in clause (14) above, which figured negatively as a
   risk, but which, as noted in such clause, the Warner-Lambert board felt
     was manageable and reflected in the exchange ratio and the other terms of
the merger agreement;                                               

- the factors described in clauses (15) and (17) above, which figured   
 negatively as a drawback, but which the Warner-Lambert board felt was
     outweighed by the other benefits of the transaction, including the factor
discussed in clause (16) above and the countervailing considerations
discussed within factor (17) above;                                 

44

PREM14A
51st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 51st
  - the factor described in clause (20) above, which figured negatively as a
   risk, although one which the Warner-Lambert board felt could be managed
successfully, particularly in light of the factor described in      
  clause (18) above and in the detailed management arrangements that had
already been agreed to between the parties;                         

  - the contacts from Pfizer discussed in clauses (23) and (24) above, which
    figured negatively, but which were not considered sufficient alone or in
     the aggregate with other negative factors--including by reason of factors
     discussed within clause (24)--to change the conclusion and recommendation
of the Warner-Lambert board of directors;                           

   - the factor described in clause (25) above, which the Warner-Lambert board
of directors considered to be neutral in its evaluation.            

For additional information concerning the matters discussed, and the    
conclusions reached, at various meetings of Warner-Lambert's board held between 
June 1998 and November 1999, see "Background of the Merger" on pages 23 to 38.  

FACTORS CONSIDERED BY, AND RECOMMENDATION OF, THE BOARD OF DIRECTORS OF AHP     

   At its meeting on November 3, 1999, the AHP board of directors unanimously:

 - determined that the merger agreement and the merger are fair to, and in
the best interests of, AHP and its stockholders;                    

   - directed that the AHP proposals be submitted for consideration by the AHP
stockholders; and                                                   

- recommended that the AHP stockholders vote FOR the approval of the AHP
proposals.                                                          

  In the course of reaching its decision to approve the merger agreement and
the AHP proposals, at its meetings of November 1 and November 3, the AHP board  
of directors consulted with AHP's management, as well as its outside legal      
counsel and its financial advisors, and considered the following material       
factors:                                                                        

    (1) information concerning the financial performance and condition, business
     operations, capital levels, asset quality and prospects of each company
as a separate entity and both companies on a combined basis;      

(2) the current industry, economic and market conditions and trends,    
 including the likelihood of continuing consolidation and increasing
competition in the pharmaceutical industry;                       

(3) the importance of market position, significant scale and scope and  
      financial resources to a company's ability to compete effectively in the
    changing environment in the global pharmaceutical market, and the fact
     that the strategic combination of AHP's and Warner-Lambert's businesses
 would create the world's largest pharmaceutical and consumer health
products company;                                                 

(4) the nature and timing of new products of both companies in their    
    respective pipelines and the effect of combining such pipelines on the
growth and results of operations of the combined company;         

(5) the potential benefits to be derived from the combination of the two
     companies as described under "--Our Reasons for the Merger" on pages 38
to 40, and the possibility that achieving cost savings, operating 
    efficiencies and synergies as a result of consummating the merger with
Warner-Lambert might not be available to AHP on its own;          

(6) the current and historical market prices of the common stock of each
company;                                                          

(7) the dilutive impact of the merger on AHP earnings in the near term; 

45

PREM14A
52nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 52nd
   (8) the analyses and presentation prepared by Chase and its written opinion
       to the effect that, as of November 3, 1999 and subject to the matters set
       out in the opinion, the exchange ratio was fair from a financial point of
view to AHP and its stockholders;                                 

 (9) the analyses and presentation prepared by Morgan Stanley and its oral
   opinion (subsequently confirmed in writing) to the effect that, as of
     November 3, 1999 and subject to the matters set out in the opinion, the
exchange ratio was fair from a financial point of view to AHP's   
stockholders;                                                     

  (10) that the merger would enable the AHP stockholders to participate in a
 larger company with a more diversified product line and benefit, as
stockholders, from future growth of the combined company;         

(11) that the exchange ratio would enable AHP stockholders to own       
 approximately 50% of the outstanding stock of the combined company;

(12) the composition of the AmericanWarner board of directors, the      
     management structure and the intent to manage the combined company on a
       merger of equals basis, led by an integrated senior management team drawn
from both companies;                                              

   (13) the structure of the transaction as a reorganization for United States
federal income tax purposes;                                      

  (14) the intended accounting of the merger as a pooling of interests which
      results in the combined company's financial statements being prepared on
       a basis consistent with the underlying view that stockholder interests in
the two companies have simply been combined;                      

  (15) the likelihood of obtaining regulatory approvals required to complete
the merger;                                                       

(16) the terms of the merger agreement and stock option agreements,     
    including (a) the potential payment to Warner-Lambert of a termination
     fee, (b) the grant to Warner-Lambert of an option to purchase shares of
     AHP common stock, (c) that AHP cannot terminate the merger agreement in
 order to enter into a transaction with a third party before the AHP
       stockholders have had an opportunity to vote on the AHP proposals and the
    timing of such vote, and (d) that the rights outstanding under the AHP
      stockholder rights plan cannot be redeemed during the term of the merger
agreement, and the potential effect of such provisions on possible
efforts by other parties to acquire or otherwise combine with AHP 
       (including the fact that the option grant would generally prevent a third
 party competing with Warner-Lambert from using pooling of interests
treatment in effecting a combination with AHP);                   

(17) that the merger and stock option agreements contain reciprocal     
    provisions to those listed in item 16 above and that the AHP board was
aware of the Pfizer contacts and letters;                         

    (18) contacts by Pfizer with Warner-Lambert and reports of the conversations
   between Messrs. Steere and de Vink in which Mr. Steere indicated that
       Pfizer was not inclined at that time to take any action if Warner-Lambert
were to announce a transaction with another party;                

 (19) the challenges of combining the businesses of two major corporations
       and the attendant risks of diverting management resources for an extended
period of time;                                                   

(20) the impact of the merger on the customers and employees of AHP;    

  (21) that the combined company will adopt the name "AmericanWarner, Inc.";

  (22) that the headquarters of the combined company will be in Madison, New
   Jersey, the headquarters for the over the counter business will be in
   Morris Plains, New Jersey and the headquarters for the pharmaceutical
business will be in Radnor, Pennsylvania;                         

46

PREM14A
53rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 53rd
   (23) the interests that certain executive officers and directors of AHP may
have with respect to the merger in addition to their interests as 
     stockholders of AHP generally. See "Interests of Certain Persons in the
Merger" on pages 67 to 70; and                                    

   (24) the opportunity for AHP stockholders to vote on the proposed merger of
equals with Warner-Lambert.                                       

   In reaching its decision to approve the merger and the AHP proposals and to
recommend the approval of the AHP proposals to the AHP stockholders, the AHP    
board did not assign any relative or specific weight to the various factors     
considered and individual directors may have given differing weights to         
different factors.                                                              

OPINION OF FINANCIAL ADVISOR TO WARNER-LAMBERT                                  

OPINIONS OF FINANCIAL ADVISORS TO AHP                                           

ACCOUNTING TREATMENT                                                            

It is a condition to the consummation of the merger that:               

    - AHP receives and delivers to Warner-Lambert letters from AHP's independent
public accountants dated as of the date of this joint proxy         
 statement/prospectus and as of the closing of the merger stating that
    accounting for the merger as a pooling of interests under Opinion No. 16
     of the Accounting Principles Board of the American Institute of Certified
Public Accountants and applicable SEC rules and regulations is      
appropriate; and                                                    

  - Warner-Lambert receives and delivers to AHP and AHP's independent public
     accountants letters from Warner-Lambert's independent public accountants,
   dated as of the date of this joint proxy statement/prospectus and as of
     the closing of the merger, stating that they concur with Warner-Lambert's
    conclusion that no conditions exist that would preclude Warner-Lambert's
    ability to be a party in a business combination to be accounted for as a
pooling of interests.                                               

Under the pooling of interests method of accounting, the assets and     
liabilities of AHP and Warner-Lambert will be carried forward to AmericanWarner 
at their historical recorded amounts. Results of operations of AmericanWarner   
will include the results of both AHP and Warner-Lambert for the entire fiscal   
year in which the merger occurs. The reported balance sheet amounts and results 
of operations of the separate corporations for prior periods will be combined,  
reclassified and conformed, as appropriate, to reflect the combined financial   
position and results of operations for AmericanWarner. See "Unaudited Pro Forma 
Combined Condensed Financial Statements" for these combined financial           
statements.                                                                     

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES                          

The following general discussion summarizes the material United States  
federal income tax consequences of the merger and is based on the Internal      
Revenue Code of 1986, the regulations promulgated under the Internal Revenue    
Code, existing administrative interpretations and court decisions, all as of the
date of this document. Future legislation, regulations, administrative          
interpretations or court decisions could significantly change these authorities 
either prospectively or retroactively. We do not address all aspects of United  
States federal income taxation that may be important to a stockholder in light  
of that stockholder's particular circumstances, or to stockholders subject to   
special rules, such as stockholders who are not citizens or residents of the    
United States, financial institutions, tax-exempt organizations, insurance      
companies, dealers in securities or                                             

47

PREM14A
54th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 54th
stockholders who acquired their shares of Warner-Lambert common stock through   
the exercise of options or similar derivative securities or otherwise as        
compensation. This discussion assumes that Warner-Lambert stockholders hold     
their respective shares of stock as capital assets within the meaning of        
Section 1221 of the Internal Revenue Code.                                      

It is a condition to the obligations of our companies under the merger  
agreement to consummate the merger that AHP receive an opinion from Simpson     
Thacher & Bartlett and Warner-Lambert receive an opinion from Skadden, Arps,    
Slate, Meagher & Flom LLP, on or before the date of this joint proxy            
statement/prospectus and, subsequently, on the closing date of the merger, to   
the effect that for United States federal income tax purposes the merger will   
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code and that each of AHP, Warner-Lambert and a wholly-owned subsidiary 
of AHP will be a party to the reorganization within the meaning of              
Section 368(b) of the Internal Revenue Code. These opinions of counsel will be  
based upon assumptions, representations and covenants, including those contained
in certificates of officers of AHP, Warner-Lambert and others, which counsel    
will assume to be true, correct and complete. Based upon these opinions, the    
merger will have the United States federal income tax consequences discussed    
below.                                                                          

 TAX IMPLICATIONS TO AHP STOCKHOLDERS.  No gain or loss will be recognized
for United States federal income tax purposes by holders of AHP common stock as 
a result of the merger.                                                         

TAX IMPLICATIONS TO WARNER-LAMBERT STOCKHOLDERS.                        

 - No gain or loss will be recognized for United States federal income tax
 purposes by holders of Warner-Lambert common stock who exchange their
Warner-Lambert common stock solely for AmericanWarner common stock  
    pursuant to the merger except to the extent of cash, if any, received by
      such Warner-Lambert stockholders in lieu of the fractional share interests
in AmericanWarner common stock deemed to have been received by such 
Warner-Lambert stockholders.                                        

- The adjusted tax basis of AmericanWarner common stock received in the 
    merger by a Warner-Lambert stockholder, including the adjusted tax basis
     of any fractional share interest in AmericanWarner common stock deemed to
    have been received by such stockholder, will be the same as the adjusted
tax basis of the shares of Warner-Lambert common stock exchanged for
shares of AmericanWarner common stock.                              

- The holding period of the AmericanWarner common stock received in the 
   merger by a Warner-Lambert stockholder, including the holding period of
any fractional share interest deemed to have been received by such  
 stockholder, will include the holding period of the shares of Warner-
  Lambert common stock surrendered by such Warner-Lambert stockholder in
  exchange for AmericanWarner common stock, provided that such shares of
Warner-Lambert common stock were held as a capital asset by such    
Warner-Lambert stockholder at the effective time of the merger.     

- Cash received by a holder of Warner-Lambert common stock in lieu of a 
   fractional share interest in AmericanWarner common stock will result in
the recognition of gain or loss for United States federal income tax
    purposes, measured by the difference between the amount of cash received
  and the portion of the tax basis of the share of Warner-Lambert common
     stock allocable to this fractional share interest. This gain or loss will
     be capital gain or loss and will be long-term capital gain or loss if the
     holding period for such share of Warner-Lambert common stock is more than
     one year at the effective time of the merger and such share was held as a
capital asset.                                                      

48

PREM14A
55th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 55th
TAX IMPLICATIONS TO AHP AND WARNER-LAMBERT.  No gain or loss will be    
recognized for United States federal income tax purposes by AHP and             
Warner-Lambert solely as a result of the merger.                                

    TAX MATTERS ARE VERY COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER FOR
EACH WARNER-LAMBERT STOCKHOLDER WILL DEPEND ON THE FACTS OF THAT STOCKHOLDER'S  
SITUATION. WE HAVE PRESENTED ABOVE ONLY A GENERAL SUMMARY OF TAX CONSEQUENCES.  
WARNER-LAMBERT STOCKHOLDERS ARE ENCOURAGED TO CONSULT WITH THEIR OWN TAX        
ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER.                 

REGULATORY APPROVALS                                                            

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,   
prohibits us from completing the merger until after we have filed the required  
notification and report forms and furnished additional information and materials
to the Antitrust Division of the United States Department of Justice and the    
United States Federal Trade Commission, if requested, and the required waiting  
period has expired or terminated. AHP and Warner-Lambert filed notification and 
report forms under the HSR Act with the FTC and the Antitrust Division on       
 . There can be no assurance that a challenge to the merger on
antitrust grounds will not be made or, if a challenge is made, that it would not
be successful. A challenge could be brought by governmental or private parties, 
and could seek to enjoin consummation of the merger or to compel the divestiture
of businesses conducted by Warner-Lambert or AHP.                               

Both Warner-Lambert and AHP conduct business in member states of the    
European Union. European Union Council Regulation No. 4064/89 and accompanying  
regulations require notification of and approval by the European Commission of  
specific mergers or acquisitions involving parties with worldwide sales and     
individual European Union sales exceeding specified thresholds before these     
mergers and acquisitions can be implemented. Warner-Lambert and AHP intend to   
formally notify the European Commission of the merger shortly. Completing the   
review and gaining approval under the European Commission merger regulation is a
condition to completing the merger.                                             

   AHP and Warner-Lambert each conducts business in foreign countries that are
not members of the European Union. The merger will require the review and       
approval of regulatory bodies in some of these countries.                       

NO APPRAISAL RIGHTS                                                             

Holders of Warner-Lambert common stock are not entitled to dissenters'  
appraisal rights under Delaware law that would give them the right to obtain the
payment of cash in exchange for their Warner-Lambert common stock as a result of
the merger. Holders of AHP common stock are also not entitled to dissenters'    
appraisal rights under Delaware law in connection with the merger.              

CERTAIN LITIGATION                                                              

  Following the announcement of the proposed merger, on November 4, 1999, an
action was filed by Pfizer Inc. in the Delaware Court of Chancery in and for New
Castle County against Warner-Lambert, the members of the Warner-Lambert board of
directors and AHP. The complaint was amended on November 15, 1999. The amended  
complaint, among other things, alleges that the provisions of the merger        
agreement which provide for a termination fee and the granting of the stock     
option to AHP under the Warner-Lambert stock option agreement are invalid, and  
seeks relief to enjoin the implementation of those provisions. The complaint    
further alleges that the provisions of the merger agreement which purportedly   
restrict Warner-Lambert's board of directors from amending its stockholder      
rights plan and from terminating the merger agreement under certain             
circumstances are also invalid, and seeks to enjoin those provisions as well.   
The complaint also alleges that the members of Warner-Lambert's board of        
directors have breached their fiduciary duties by entering into the             

49

PREM14A
56th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 56th
merger agreement and, in particular, the provisions referred to above, and that 
AHP has aided and abetted such breaches. Moreover, the complaint asserts that   
Warner-Lambert and its directors breached their fiduciary duties to             
Warner-Lambert stockholders by allegedly declining to waive the terms of a      
standstill agreement between Warner-Lambert and Pfizer. The complaint claims    
that Warner-Lambert's board of directors was motivated in these alleged breaches
by a desire to retain their positions. The complaint alleges that entering into 
the merger agreement constituted a breach of fiduciary duty by Warner-Lambert's 
directors in that it purportedly "chills" Pfizer's consent solicitation and     
seeks an injunction against any action to eliminate or hinder Pfizer's consent  
solicitation. The complaint seeks declaratory relief and incidental damages.    
Warner-Lambert, its board of directors and AHP believe that this Pfizer action  
is without merit and intend to vigorously defend against it. On November 17,    
1999, Pfizer moved to preliminarily enjoin the merger. The parties agreed to an 
expedited discovery and briefing schedule and the hearing on the motion for     
preliminary injunction has been set for January 31, 2000. On December 3, 1999,  
Warner-Lambert and AHP filed answers to the amended complaint denying its       
substantive allegations.                                                        

On November 23, 1999, Pfizer filed an additional complaint against      
Warner-Lambert and AHP alleging that Warner-Lambert breached the standstill     
agreement between Pfizer and Warner-Lambert. The complaint also alleges that AHP
wrongfully interfered with Pfizer's contractual relationship with Warner-Lambert
by inducing Warner-Lambert's alleged breach. The complaint seeks to enjoin the  
proposed merger between Warner-Lambert and AHP and to prevent AHP from receiving
any benefits from its actions. The complaint also seeks a declaratory judgment  
that Pfizer has not breached the terms of the standstill agreement or any of the
agreements between Warner-Lambert and Pfizer governing the co-promotion and     
marketing of Warner-Lambert's drug LIPITOR. Warner-Lambert and AHP believe that 
this Pfizer action is without merit and intend to vigorously defend against it. 

On November 29, 1999, Warner-Lambert filed an answer and counterclaims  
against Pfizer, asserting that Pfizer has itself breached the standstill        
agreement and the LIPITOR agreements. Warner-Lambert is seeking a declaratory   
judgment from the court that Warner-Lambert is entitled to terminate the LIPITOR
agreements. On December 8, 1999, AHP filed an answer to Pfizer's LIPITOR        
complaint denying all of its substantive allegations. Upon motion by            
Warner-Lambert, the Court has scheduled a trial on the allegations of the       
LIPITOR complaint and counterclaims for April 10, 2000.                         

In addition, approximately thirty-six lawsuits purporting to be class or
derivative actions have been filed in the Court of Chancery of the State of     
Delaware. The Delaware class actions have been consolidated by order of the     
Chancery Court. One lawsuit purporting to be a class action has been filed in   
the Superior Court of New Jersey, Morris County. Two lawsuits, one purporting to
be a class action and the other a derivative action, have been filed in the     
United States District Court for the District of New Jersey. The consolidated   
Delaware action and the New Jersey actions name as defendants Warner-Lambert,   
some of its officers and directors and AHP. These actions assert claims for     
breach of fiduciary duty based on allegations substantially identical to those  
in the lawsuit filed by Pfizer. These actions also assert claims against AHP for
aiding and abetting the purported breaches of fiduciary duty by Warner-Lambert  
and its officers and directors. The actions seek an injunction of               
Warner-Lambert's merger with AHP, an injunction of the termination fee and the  
option granted to AHP and rescission or rescissory damages. On December 9, 1999,
Warner-Lambert and AHP filed a motion to dismiss or stay the New Jersey state   
court action. Warner-Lambert, its officers and board of directors and AHP       
believe that these actions are without merit and intend to vigorously defend    
against them.                                                                   

50

PREM14A
57th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 57th
THE COMPANIES 

AMERICAN HOME PRODUCTS CORPORATION                                              

  AHP, a Delaware corporation founded in 1926, is one of the world's largest
research-based pharmaceutical and health care products companies. AHP is        
currently engaged in the discovery, development, manufacture, distribution and  
sale of a diversified line of products in three primary business segments:      
pharmaceuticals, consumer health care and agricultural products.                

PHARMACEUTICAL PRODUCTS.  AHP's pharmaceuticals segment manufactures,   
distributes and sells branded and generic ethical pharmaceuticals, biologicals, 
nutritionals and animal biologicals and pharmaceuticals. Principal products for 
human use include women's health care products including PREMARIN, PREMPRO,     
PREMPHASE, LO/OVRAL (marketed as MIN-OVRAL internationally), NORDETTE and       
TRIPHASIL (marketed as TRINORDIOL internationally); cardiovascular products     
including CORDARONE and ZIAC; neuroscience therapies including ATIVAN, EFFEXOR  
and EFFEXOR XR; anti-inflammatory and gastroenterology drugs including LODINE   
and ZOTON (international markets only); anti-infectives including MINOCIN and   
ZOSYN (marketed as TAZOCIN internationally); vaccines; biopharmaceuticals       
including BENEFIX Coagulation Factor IX (Recombinant) and recombinant Factor    
VIII and; oncology therapies and infant nutritionals. ENBREL, for the treatment 
of rheumatoid arthritis, is jointly marketed by AHP and Immunex Corporation, an 
AHP majority-owned subsidiary. Principal animal health products include         
vaccines, pharmaceuticals (including anthelmintics), endectocides including     
CYDECTIN, and growth implants.                                                  

CONSUMER HEALTH CARE PRODUCTS.  The consumer health care segment        
manufactures, distributes and sells over-the-counter products such as analgesics
including ADVIL; cough/cold/allergy remedies including ROBITUSSIN and DIMETAPP; 
nutritional supplements including CENTRUM, CENTRUM SILVER, CENTRUM herbals,     
CALTRATE and SOLGAR vitamins and herbal products; and hemorrhoidal, antacid and 
asthma relief products.                                                         

AGRICULTURAL PRODUCTS.  The agricultural products segment manufactures, 
distributes and sells crop protection and pest control products such as         
herbicides including PURSUIT (marketed as PIVOT internationally), PROWL         
(marketed as STOMP internationally) and RAPTOR; insecticides including COUNTER; 
fungicides and plant growth regulators.                                         

WARNER-LAMBERT COMPANY                                                          

   Warner-Lambert develops, manufactures and markets a widely diversified line
of pharmaceuticals, health care and consumer products. Its principal industry   
segments are pharmaceutical products, consumer health care products, and        
confectionery products, consisting principally of chewing gums and breath mints.

    PHARMACEUTICAL PRODUCTS.  Warner-Lambert markets its pharmaceutical products
throughout most of the world under the Parke-Davis name. Its products address a 
broad spectrum of medical needs and include the lipid regulators LIPITOR and    
LOPID; cardiovascular products such as ACCUPRIL and NITROSTAT; pain relievers   
such as VALORON-N and PONSTEL; NEURONTIN, DILANTIN and CEREBYX anticonvulsants; 
REZULIN for type-2 diabetes; the oral contraceptives ESTROSTEP and LOESTRIN; and
VIRACEPT for HIV infection.                                                     

    Warner-Lambert's pharmaceutical products segment also includes CAPSUGEL, the
world's largest producer of two-piece hard gelatin capsules for use in          
prescription and over-the-counter medication.                                   

CONSUMER HEALTH CARE PRODUCTS.  Warner-Lambert's consumer health care   
products segment produces and markets over-the-counter health care products,    
shaving products and pet care products. Its extensive line of over-the-counter  
pharmaceuticals and health care products include LUBRIDERM dermatological       
products; NEOSPORIN and POLYSPORIN topical antibiotic ointments; cold and sinus 
preparations such as SUDAFED, SINUTAB and ACTIFED; BENADRYL cold and allergy    
products; BENYLIN cough syrup; MYADEC vitamins; NIX headlice treatments;        
LISTERINE mouthwashes and EFFERDENT denture cleaning                            

51

PREM14A
58th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 58th
products; ANUSOL and TUCKS hemorrhoidal products; ZANTAC 75 heartburn treatment;
ROLAIDS antacids; QUANTERRA herbal supplements; and E.P.T. home pregnancy tests.

  Warner-Lambert markets its shaving products under the SCHICK and WILKINSON
SWORD and other trademarks. The consumer health care products segment also      
manufactures and sells products for fish, reptiles and other small pets under   
the TETRA, SECOND NATURE and WHISPER trademarks.                                

CONFECTIONERY PRODUCTS.  Warner-Lambert's confectionery products segment
manufactures, markets and sells chewing gums under such trademarks as TRIDENT,  
DENTYNE, CINN*A*BURST, MINT*A*BURST, CLORETS and CHICLETS; bubble gums under the
BUBBLICIOUS and BUBBALOO trademarks; breath mints under the CERTS and CLORETS   
trademarks; and cough tablets and throat lozenges under the HALLS trademarks.   

RECENT ACQUISITION BY WARNER-LAMBERT.  On May 17, 1999, Warner-Lambert  
consummated the acquisition of Agouron Pharmaceuticals, Inc., a California      
corporation. Under the terms of the merger agreement which governed the         
acquisition, each share of Agouron common stock was converted into 0.8934 shares
of Warner-Lambert common stock. The value of the Warner-Lambert shares issued at
the time of the consummation of the acquisition was approximately $2.1 billion. 
The Agouron transaction was accounted for using the pooling of interests method 
of accounting. Warner-Lambert has, consistent with this method of accounting and
in accordance with GAAP, filed restated historical consolidated financial       
statements as of and for the three years ended December 31, 1998 in a Current   
Report on Form 8-K dated December 17, 1999, reflecting the consummation of the  
Agouron transaction.                                                            

Except as described in this paragraph, all product names appearing in   
italics in this joint proxy statement/prospectus are trademarks of AHP,         
Warner-Lambert, their respective affiliates, related companies or licensors.    
ZANTAC 75 is a registered trademark of Glaxo Wellcome plc.                      

52

PREM14A
59th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 59th
THE SPECIAL MEETINGS

  We are furnishing this joint proxy statement/prospectus to stockholders of
AHP and Warner-Lambert in connection with the solicitation by the boards of     
directors of AHP and Warner-Lambert for use at the special meetings for their   
respective stockholders.                                                        

DATE, TIMES AND PLACES                                                          

   AHP.  AHP's special meeting will be held at       , at       local time, on
, 2000.                                                             

    WARNER-LAMBERT.  Warner-Lambert's special meeting will be held at       , at
, local time, on       , 2000.                                      

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETINGS                                

    See "The Proposed Merger--AHP Proposals" and "--Warner-Lambert Proposal" for
a discussion of the proposals to be voted upon at the special meetings.         

RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM; PLAN PARTICIPANTS                  

   AHP.  Owners of record of shares of AHP common stock or AHP preferred stock
at the close of business on       , 2000, the record date for AHP's special     
meeting, are entitled to receive notice of and to vote at AHP's special meeting.
AHP common stock and AHP preferred stock constitute the only outstanding classes
of voting securities of AHP. On the record date, approximately       shares of  
AHP common stock and        shares of AHP preferred stock were issued and       
outstanding and were held by approximately     and     holders of record,       
respectively.                                                                   

  Owners of record of shares of AHP common stock on the record date are each
entitled to one vote per share and owners of AHP preferred stock on the record  
date are each entitled to 36 votes per share, on each matter to be considered at
AHP's special meeting.                                                          

A quorum of AHP stockholders is necessary to have a valid meeting of    
stockholders. A majority of the shares of AHP stock issued and outstanding and  
entitled to vote on the record date must be represented in person or by proxy at
AHP's special meeting in order for a quorum to be established. Shares held by   
AHP in its treasury or held by any majority-owned subsidiary of AHP do not count
toward a quorum. Abstentions and broker "non-votes" count as present for        
establishing a quorum. A broker non-vote occurs on an item when a broker is not 
permitted to vote on that item without instruction from the beneficial owner of 
the shares and no instruction is given. In the event that a quorum is not       
present at AHP's special meeting, we expect that the meeting will be adjourned  
or postponed to solicit additional proxies.                                     

  WARNER-LAMBERT.  Owners of record of shares of Warner-Lambert common stock
at the close of business on       , 2000, the record date for Warner-Lambert's  
special meeting, are entitled to receive notice of and to vote at               
Warner-Lambert's special meeting. Warner-Lambert common stock is the only class 
of voting securities of Warner-Lambert. On the record date, approximately       
shares of Warner-Lambert common stock were issued and outstanding and were held 
by approximately       holders of record.                                       

    Owners of record of shares of Warner-Lambert common stock on the record date
are each entitled to one vote per share on the approval and adoption of the     
merger agreement and the merger.                                                

    A quorum of Warner-Lambert stockholders is necessary to have a valid meeting
of stockholders. A majority of the shares of Warner-Lambert common stock issued 
and outstanding and entitled to vote on the record date must be represented in  
person or by proxy at Warner-Lambert's special meeting in order for a quorum to 
be established. Shares held by Warner-Lambert in its treasury or held by any    
majority-owned subsidiary of Warner-Lambert do not count toward a quorum.       
Abstentions and broker                                                          

53

PREM14A
60th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 60th
"non-votes" count as present for establishing a quorum. A broker non-vote occurs
on an item when a broker is not permitted to vote on that item without          
instructions from the beneficial owner of the shares and no instruction is      
given. In the event that a quorum is not present at Warner-Lambert's special    
meeting, we expect that the meeting will be adjourned or postponed to solicit   
additional proxies.                                                             

 AHP PLAN PARTICIPANTS.  If you own AHP shares as a participant in the AHP
Master Investment Plan, a proxy to vote AHP shares registered in your name will 
serve as instructions on how to vote shares held in custody for you pursuant to 
the plan. No further action from you is required to vote the shares in the plan.
Accordingly, as transfer agent for AHP common stock, ChaseMellon Shareholder    
Services, L.L.C. will cause shares held in the name of its nominee for the      
account of plan participants to be voted in the same way as those stockholders  
vote shares registered in their name. If you do not submit a proxy to vote      
shares held in your name, the shares held for your account in the plan will not 
be voted.                                                                       

WARNER-LAMBERT PLAN PARTICIPANTS.  If you own Warner-Lambert shares as a
participant in the Warner-Lambert Savings and Stock Plan, you will receive a    
proxy card covering those shares. If you also own additional shares of          
Warner-Lambert common stock outside of those shares, you will receive two       
separate proxy cards: one proxy card that covers shares credited to your plan   
account and another proxy card relating to those shares of common stock that you
own of record. Proxies properly voted will serve as voting instructions to T.   
Rowe Price, the trustee for the plan. Under the terms of the plan, if you do not
submit a proxy for the shares held in custody for you under the plan, those     
shares will be voted by the trustee in accordance with the recommendation of    
Warner-Lambert's management.                                                    

VOTES REQUIRED                                                                  

AHP.  The approval of the proposed amendment to AHP's certificate of    
incorporation requires the affirmative vote of the holders of a majority of all 
of the outstanding shares of AHP common stock and AHP preferred stock, voting   
together as a single class, and the holders of a majority of the outstanding    
shares of AHP common stock, voting separately as a single class. An abstention  
or a broker "non-vote" will have the same effect as a vote against the proposal.

The approval of the issuance of shares of AHP common stock in connection
with the merger requires the affirmative vote of a majority of the votes cast by
the holders of outstanding shares of AHP common stock and AHP preferred stock,  
voting together as a single class. An abstention or a broker "non-vote" will    
have no effect on the vote.                                                     

The approval of the proposed amendment to AHP's by-laws requires the    
affirmative vote of at least 80% of the voting power of the outstanding shares  
of AHP common stock and AHP preferred stock, voting together as a single class. 
An abstention or a broker "non-vote" will have the same effect as a vote against
the proposal.                                                                   

  WARNER-LAMBERT.  The approval and adoption of the merger agreement and the
merger requires the affirmative vote of a majority of the outstanding shares of 
Warner-Lambert common stock. An abstention or a broker "non-vote" will have the 
same effect as a vote against the proposal.                                     

SHARE OWNERSHIP OF MANAGEMENT                                                   

  AHP.  At the close of business on the record date, directors and executive
officers of AHP and their affiliates beneficially owned and were entitled to    
vote approximately       shares of AHP common stock and no shares of AHP        
preferred stock, which represented approximately   % of the shares of AHP common
stock outstanding on that date. Each of those directors and executive officers  
has indicated his or her present intention to vote, or cause to be voted, the   
shares of AHP common stock owned by him or her FOR each of the AHP proposals.   

54

PREM14A
61st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 61st
   WARNER-LAMBERT.  At the close of business on the record date, directors and
executive officers of Warner-Lambert and their affiliates beneficially owned and
were entitled to vote approximately       shares of Warner-Lambert common stock,
which represented approximately   % of the shares of Warner-Lambert common stock
outstanding on that date. Each of those directors and executive officers has    
indicated his or her present intention to vote, or cause to be voted, the shares
of Warner-Lambert common stock owned by him or her FOR the approval and adoption
of the merger and the merger agreement.                                         

SHARES HELD IN STREET NAME; VOTING OF PROXIES                                   

SHARES HELD IN "STREET NAME."  Under the applicable rules of the NYSE,  
brokers who hold shares in street name for customers who are the beneficial     
owners of those shares are prohibited from giving a proxy to vote those         
customers' shares with respect to the proposals to be voted on at the special   
meetings other than AHP's by-law amendment in the absence of specific           
instructions from the customer. Brokers will have discretion to vote on the AHP 
by-law amendment in the absence of specific instruction from the customer.      
Broker "non-votes" are those shares held by a broker which are not voted because
the customer has not provided instructions to the broker.                       

SUBMITTING PROXIES.  AHP and Warner-Lambert stockholders may vote their 
shares by attending their respective special meeting and voting their shares in 
person at the meetings, or by completing the enclosed proxy card, signing,      
dating and mailing it in the enclosed postage pre-paid envelope. If a proxy card
is signed by a stockholder and returned without specific voting instructions,   
the shares represented by the proxy will be voted FOR each of the proposals     
presented at AHP's special meeting or FOR the proposal presented at             
Warner-Lambert's special meeting, as applicable.                                

Abstentions may be specified with respect to the approval of any of the 
proposals by properly marking the abstain box on the proxy for that proposal or,
for AHP stockholders, by so indicating in a telephone vote pursuant to the      
instructions on the card.                                                       

  AHP stockholders may also submit their proxies by telephone. The telephone
voting procedures are designed to authenticate stockholders' voting by use of a 
personal identification number. These procedures allow stockholders to appoint a
proxy to vote their shares and to confirm that their instructions have been     
properly recorded. Instructions for voting by telephone are printed on the proxy
card for stockholders of record of AHP.                                         

  AHP and Warner-Lambert stockholders whose shares are held in "street name"
(I.E., in the name of a broker, bank or other record holder) must either direct 
the record holder of their shares as to how to vote their shares or obtain a    
proxy from the record holder to vote at their respective special meeting.       

   REVOKING PROXIES.  AHP and Warner-Lambert stockholders of record may revoke
their proxies at any time prior to the time their proxies are voted at their    
special meeting. Proxies may be revoked by written notice, including by telegram
or telecopy, to the Corporate Secretary of AHP or Warner-Lambert, as applicable,
by a later-dated proxy signed and returned by mail or by attending the special  
meeting and voting in person. Attendance at the special meeting will not in and 
of itself constitute a revocation of a proxy. AHP stockholders of record may    
also revoke proxies by a later-dated proxy using the telephone voting           
procedures. Any written notice of a revocation of a proxy must be sent so as to 
be delivered before the taking of the vote at the applicable special meeting as 
follows:                                                                        

FOR AHP STOCKHOLDERS, TO:                                         
American Home Products Corporation                                
Five Giralda Farms                                                
Madison, NJ 07940                                                 
Telecopy: (973) 660-7156                                          
Attention: Corporate Secretary                                    

55

PREM14A
62nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 62nd
FOR WARNER-LAMBERT STOCKHOLDERS, TO:                              
Warner-Lambert Company                                            
201 Tabor Road                                                    
Morris Plains, NJ 07950                                           
Telecopy: (973) 385-3927                                          
Attention: Corporate Secretary                                    

AHP stockholders who require assistance in changing or revoking a proxy 
should call D. F. King & Co., Inc. at 1-800-628-8509 or MacKenzie               
Partners, Inc. at 1-800-322-2885 the agents retained by AHP to assist in its    
solicitation of proxies.                                                        

    Warner-Lambert stockholders who require assistance in changing or revoking a
proxy should call Georgeson Shareholder Communications Inc., the agent retained 
by Warner-Lambert to assist in its solicitation of proxies, at 1-800-223-2064.  

   OTHER BUSINESS; ADJOURNMENTS.  We are not aware of any other business to be
acted upon at either special meeting. If, however, other matters are properly   
brought before either meeting, or any adjourned meeting, your proxies will have 
discretion to act on those matters or to adjourn the meeting, according to their
best judgment.                                                                  

 Adjournments of the special meeting may be made for the purpose of, among
other things, soliciting additional proxies. Neither company currently intends  
to seek an adjournment of its special meeting.                                  

 PROXY SOLICITATION.  We have agreed to share equally the cost of printing
and mailing this joint proxy statement/prospectus. The cost of solicitation of  
proxies will be paid by AHP for solicitation of proxies from AHP stockholders   
and by Warner-Lambert for solicitation of proxies from Warner-Lambert           
stockholders. In addition to solicitation by mail, the directors, officers and  
employees of AHP and Warner-Lambert may also solicit proxies from stockholders  
by telephone, telecopy, telegram or other electronic means or in person. We will
also make arrangements with brokerage houses and other custodians, nominees and 
fiduciaries to send the proxy materials to beneficial owners. Upon request, we  
will reimburse those brokerage houses and custodians for their reasonable       
expenses in so doing.                                                           

   AHP has retained D. F. King & Co., Inc. and MacKenzie Partners, Inc. to aid
in the solicitation of proxies. As compensation for their services, D. F.       
King & Co., Inc. will receive a fee of $          and MacKenzie Partners, Inc.  
will receive a fee of $      . AHP has also agreed to reimburse D. F. King &    
Co., Inc. and MacKenzie Partners, Inc. for their out of pocket expenses and     
indemnify them against certain liabilities arising out of or in connection with 
their engagement.                                                               

    Warner-Lambert has retained Georgeson Shareholder Communications Inc. to aid
in the solicitation of proxies. Georgeson Shareholder Communications Inc. will  
receive a fee of $        as compensation for its services and reimbursement for
its related out-of-pocket expenses. Warner-Lambert has also agreed to indemnify 
Georgeson Shareholders Communications Inc. against certain liabilities arising  
out of or in connection with its engagement.                                    

 DO NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXY CARDS. THE EXCHANGE
AGENT WILL SEND TRANSMITTAL FORMS WITH INSTRUCTIONS FOR THE SURRENDER OF        
CERTIFICATES REPRESENTING SHARES OF WARNER-LAMBERT COMMON STOCK TO FORMER       
WARNER-LAMBERT STOCKHOLDERS SHORTLY AFTER THE MERGER IS COMPLETED.              

56

PREM14A
63rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 63rd
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS 

 The following unaudited pro forma combined condensed financial statements
give effect to the merger under the pooling of interests method of accounting,  
after giving effect to the pro forma adjustments described in the accompanying  
notes. Under this method of accounting, AHP and Warner-Lambert are treated as if
they had always been combined for accounting and financial reporting purposes.  

 We are providing the following information to aid in your analysis of the
financial aspects of the merger. We derived this information from:              

- the audited financial statements of AHP as of and for the years ended 
    December 31, 1996 through 1998 and the unaudited financial statements as
of and for the nine months ended September 30, 1998 and 1999; and   

- the audited statements of income of Warner-Lambert for the years ended
     December 31, 1996 through 1998, audited balance sheets as of December 31,
    1998 and 1997 and unaudited financial statements as of and for all other
     periods presented, all of which were restated to reflect the consummation
      of the acquisition of Agouron Pharmaceuticals, Inc. in May 1999, which was
accounted for under the pooling of interests method of accounting.  

The pro forma financial information presented below should be read in   
conjunction with the historical financial information referred to above, all of 
which is included in, or incorporated by reference into this joint proxy        
statement/prospectus. To obtain copies of this information, see "Where You Can  
Find More Information" on page 99. The unaudited pro forma combined condensed   
financial statements are presented for illustrative purposes only and are not   
necessarily indicative of the operating results or financial position that would
have occurred had the merger been consummated at the dates indicated, nor is it 
necessarily indicative of the future operating results or financial position of 
the combined company.                                                           

    The Unaudited Pro Forma Combined Condensed Balance Sheet gives effect to the
merger as if it had occurred on September 30, 1999, combining the balance sheets
of AHP and Warner-Lambert at September 30, 1999. The Unaudited Pro Forma        
Combined Condensed Statements of Income give effect to the merger as if it had  
occurred on January 1, 1996, combining the results of AHP and Warner-Lambert for
each year in the three-year period ended December 31, 1998 and for the          
nine-month periods ended September 30, 1999 and 1998.                           

  As a result of the merger, AHP and Warner-Lambert expect AmericanWarner to
incur pre-tax charges to operations, currently estimated to be between $1.5 and 
$2.1 billion. This estimate includes an anticipated one-time pre-tax charge of  
approximately $   million for direct incremental merger-related transaction     
costs which will be substantially recorded upon consummation of the merger. The 
pre-tax charges also include various transition costs, currently estimated to be
between $  and $  billion in connection with integrating the operations of AHP  
and Warner-Lambert. These transition costs include non-cash costs estimated to  
be between $    and $    million. The transition costs consist principally of   
costs associated with the elimination and consolidation of duplicate facilities,
employee severance and other costs resulting from the merger. The exact timing, 
nature and amount of these transition costs are subject to change; however, the 
companies expect that the majority of these transition costs will be recorded   
upon consummation of the merger. These transition costs have not been reflected 
in the unaudited pro forma combined condensed financial statements.             

57

PREM14A
64th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 64th
The unaudited pro forma combined condensed financial statements do not  
reflect any of the recurring cost savings and synergies, or future cost         
avoidance expected to result from the merger. Based on preliminary estimates by 
the managements of AHP and Warner-Lambert, AmericanWarner is expected to realize
approximately $1.2 billion in annual pre-tax cost synergy savings within three  
years from the closing of the merger through the elimination of duplicate       
corporate and administrative programs, the creation of greater efficiencies in  
research and development and business processes, improved use of existing       
marketing resources and the combination of two workforces. The estimated cost   
synergy savings reflect the creation of cost reduction or cost avoidance        
opportunities through the ability to consolidate operations into a single       
entity. There can, however, be no assurance that any specific levels of cost    
savings or other synergies will be achieved within the time periods contemplated
or will be achieved at all. For a discussion of the risks associated with our   
cost-savings assumptions, see "Risk Factors--We may be unable to successfully   
integrate our operations and realize the full cost savings we anticipate" on    
page 19.                                                                        

58

PREM14A
65th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 65th
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET

AS OF SEPTEMBER 30, 1999

                                                        [Enlarge/Download Table]

                                              HISTORICAL      HISTORICAL       PRO FORMA    PRO FORMA
                                               AHP (1)    WARNER-LAMBERT (1)  ADJUSTMENTS   COMBINED 
(IN MILLIONS)                                 ----------  ------------------  -----------   ---------
                                                                                                     
ASSETS                                                                                               
Cash.........................................   $ 2,146        $ 1,013           $  --       $ 3,159 
Short-term investments.......................       437            587              --         1,024 
Accounts receivable, less allowances.........     3,240          1,778              --         5,018 
Inventories..................................     2,236          1,023              --         3,259 
Prepaid expenses and other current assets                                                            
  including deferred taxes...................     1,537            648              --         2,185 
                                                -------        -------           -----       ------- 
  TOTAL CURRENT ASSETS.......................     9,596          5,049              --        14,645 
Property, plant and equipment................     6,960          4,922              --        11,882 
  Less accumulated depreciation..............     2,586          1,772              --         4,358 
                                                -------        -------           -----       ------- 
                                                  4,374          3,150              --         7,524 
Goodwill and other intangibles, net of                                                               
  accumulated amortization...................     7,806          1,628              --         9,434 
Investments and other assets including                                                               
  deferred taxes.............................     1,967            711              --         2,678 
                                                -------        -------           -----       ------- 
  TOTAL ASSETS...............................   $23,743        $10,538           $  --       $34,281 
                                                =======        =======           =====       ======= 

LIABILITIES                                                                                          
Short-term debt..............................   $ 1,951        $   233           $  --       $ 2,184 
Accounts payable, trade......................       972            501              --         1,473 
Other current liabilities....................     4,097          2,418              --         6,515 
Federal, state and foreign income taxes......       529            226              --           755 
                                                -------        -------           -----       ------- 
  TOTAL CURRENT LIABILITIES..................     7,549          3,378              --        10,927 
Long-term debt...............................     3,622          1,281              --         4,903 
Accrued postretirement benefit obligations                                                           
  other than pensions........................       890            160              --         1,050 
Other noncurrent liabilities.................     6,057          1,137              --         7,194 

STOCKHOLDERS' EQUITY                                                                                 
Preferred stock..............................        --             --              --            -- 
Common stock.................................       435            856            (430)(3b)      861 
Capital in excess of par value...............     3,266            708             430 (3b)    4,404 
Retained earnings............................     2,508          3,640              --         6,148 
Accumulated other comprehensive loss.........      (584)          (622)             --        (1,206)
                                                -------        -------           -----       ------- 
  TOTAL STOCKHOLDERS' EQUITY.................     5,625          4,582              --        10,207 
                                                -------        -------           -----       ------- 
  TOTAL LIABILITIES AND STOCKHOLDERS'                                                                
    EQUITY...................................   $23,743        $10,538           $  --       $34,281 
                                                =======        =======           =====       ======= 

See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements. 

59

PREM14A
66th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 66th
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (LOSS) 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999

                                                        [Enlarge/Download Table]

                                              HISTORICAL      HISTORICAL       PRO FORMA    PRO FORMA
                                               AHP (1)    WARNER-LAMBERT (1)  ADJUSTMENTS   COMBINED 
                                              ----------  ------------------  -----------   ---------
                                                                                                     
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)                                                          
NET SALES....................................   $10,083         $9,394           $  --       $19,477 
                                                -------         ------           -----       ------- 
Cost of goods sold...........................     2,832          2,243              --         5,075 
Selling, general and administrative                                                                  
  expenses...................................     3,738          4,351              --         8,089 
Research and development expenses............     1,293            902              --         2,195 
Interest expense, net........................       171             19              --           190 
Other (income) expense, net..................      (256)           124              --          (132)
Litigation settlement........................     4,750             --              --         4,750 
Special charges..............................       277             --              --           277 
                                                -------         ------           -----       ------- 
Income (loss) before income taxes............    (2,722)         1,755              --          (967)
Provision (benefit) for taxes................      (902)           509              --          (393)
                                                -------         ------           -----       ------- 
NET INCOME (LOSS)............................   $(1,820)        $1,246           $  --       $  (574)
                                                =======         ======           =====       ======= 
BASIC EARNINGS (LOSS) PER SHARE..............   $ (1.39)        $ 1.46           $  --       $ (0.22)
                                                =======         ======           =====       ======= 
DILUTED EARNINGS (LOSS) PER SHARE (2)........   $ (1.39)        $ 1.41           $  --       $ (0.22)
                                                =======         ======           =====       ======= 
Average number of common shares outstanding                                                          
  during the period--basic...................     1,310            853             419 (2)     2,582 
                                                =======         ======           =====       ======= 
Average number of common shares outstanding                                                          
  during the period--diluted (2).............     1,310            883             389 (2)     2,582 
                                                =======         ======           =====       ======= 

  See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.                                                                     

60

PREM14A
67th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 67th
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

                                                        [Enlarge/Download Table]

                                              HISTORICAL      HISTORICAL       PRO FORMA    PRO FORMA
                                               AHP (1)    WARNER-LAMBERT (1)  ADJUSTMENTS   COMBINED 
                                              ----------  ------------------  -----------   ---------
                                                                                                     
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)                                                          
NET SALES....................................   $10,232         $7,708           $  --       $17,940 
                                                -------         ------           -----       ------- 
Cost of goods sold...........................     2,778          2,064              --         4,842 
Selling, general and administrative                                                                  
  expenses...................................     3,710          3,474              --         7,184 
Research and development expenses............     1,245            725              --         1,970 
Interest expense, net........................       170             47              --           217 
Other (income) expense, net..................      (226)            70              --          (156)
Gains on sales of businesses.................      (592)           (67)             --          (659)
Restructuring charge.........................        --             93              --            93 
                                                -------         ------           -----       ------- 
Income before income taxes...................     3,147          1,302              --         4,449 
Provision for taxes..........................     1,022            377              --         1,399 
                                                -------         ------           -----       ------- 
NET INCOME...................................   $ 2,125         $  925           $  --       $ 3,050 
                                                =======         ======           =====       ======= 
BASIC EARNINGS PER SHARE.....................   $  1.62         $ 1.09           $  --       $  1.18 
                                                =======         ======           =====       ======= 
DILUTED EARNINGS PER SHARE...................   $  1.59         $ 1.05           $  --       $  1.15 
                                                =======         ======           =====       ======= 
Average number of common shares outstanding                                                          
  during the period--basic...................     1,314            847             416 (2)     2,577 
                                                =======         ======           =====       ======= 
Average number of common shares outstanding                                                          
  during the period--diluted.................     1,336            878             432 (2)     2,646 
                                                =======         ======           =====       ======= 

  See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.                                                                     

61

PREM14A
68th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 68th
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998

                                                        [Enlarge/Download Table]

                                              HISTORICAL      HISTORICAL       PRO FORMA    PRO FORMA
                                               AHP (1)    WARNER-LAMBERT (1)  ADJUSTMENTS   COMBINED 
                                              ----------  ------------------  -----------   ---------
                                                                                                     
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)                                                          
NET SALES....................................   $13,463        $10,744           $  --       $24,207 
                                                -------        -------           -----       ------- 
Cost of goods sold...........................     3,681          2,860              --         6,541 
Selling, general and administrative                                                                  
  expenses...................................     4,884          4,912              --         9,796 
Research and development expenses............     1,655          1,026              --         2,681 
Interest expense, net........................       207             58              --           265 
Other (income) expense, net..................      (342)            71              --          (271)
Gains on sales of businesses.................      (592)           (67)             --          (659)
Restructuring charges........................       344             93              --           437 
                                                -------        -------           -----       ------- 
Income before income taxes...................     3,626          1,791              --         5,417 
Provision for taxes..........................     1,152            518              --         1,670 
                                                -------        -------           -----       ------- 
NET INCOME...................................   $ 2,474        $ 1,273           $  --       $ 3,747 
                                                =======        =======           =====       ======= 
BASIC EARNINGS PER SHARE.....................   $  1.88        $  1.50           $  --       $  1.45 
                                                =======        =======           =====       ======= 
DILUTED EARNINGS PER SHARE...................   $  1.85        $  1.45           $  --       $  1.42 
                                                =======        =======           =====       ======= 
Average number of common shares outstanding                                                          
  during the period--basic...................     1,315            848             416 (2)     2,579 
                                                =======        =======           =====       ======= 
Average number of common shares outstanding                                                          
  during the period--diluted.................     1,337            879             432 (2)     2,648 
                                                =======        =======           =====       ======= 

  See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.                                                                     

62

PREM14A
69th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 69th
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997

                                                        [Enlarge/Download Table]

                                              HISTORICAL      HISTORICAL       PRO FORMA    PRO FORMA
                                               AHP (1)    WARNER-LAMBERT (1)  ADJUSTMENTS   COMBINED 
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)   ----------  ------------------  -----------   ---------
                                                                                                     
NET SALES....................................   $14,196         $8,408            $ --       $22,604 
                                                -------         ------            ----       ------- 
Cost of goods sold...........................     4,166          2,503              --         6,669 
Selling, general and administrative                                                                  
  expenses...................................     5,249          3,783              --         9,032 
Research and development expenses............     1,558            731              --         2,289 
Interest expense, net........................       371            120              --           491 
Other (income) expense, net..................      (186)            82              --          (104)
Special charges..............................       180             --              --           180 
                                                -------         ------            ----       ------- 
Income before income taxes...................     2,858          1,189              --         4,047 
Provision for taxes..........................       815            327              --         1,142 
                                                -------         ------            ----       ------- 
NET INCOME...................................   $ 2,043         $  862            $ --       $ 2,905 
                                                =======         ======            ====       ======= 
BASIC EARNINGS PER SHARE.....................   $  1.58         $ 1.03            $ --       $  1.14 
                                                =======         ======            ====       ======= 
DILUTED EARNINGS PER SHARE...................   $  1.56         $ 0.99            $ --       $  1.11 
                                                =======         ======            ====       ======= 
Average number of common shares outstanding                                                          
  during the period--basic...................     1,294            841             414 (2)     2,549 
                                                =======         ======            ====       ======= 
Average number of common shares outstanding                                                          
  during the period--diluted.................     1,313            868             427 (2)     2,608 
                                                =======         ======            ====       ======= 

See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements. 

63

PREM14A
70th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 70th
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 1996

                                                        [Enlarge/Download Table]

                                                  HISTORICAL      HISTORICAL       PRO FORMA    PRO FORMA
                                                   AHP (1)    WARNER-LAMBERT (1)  ADJUSTMENTS   COMBINED 
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)       ----------  ------------------  -----------   ---------
                                                                                                         
NET SALES........................................   $14,088        $ 7,231           $   --      $21,319 
                                                    -------        -------           ------      ------- 

Cost of goods sold...............................     4,489          2,347               --        6,836 
Selling, general and administrative expenses.....     5,185          3,163               --        8,348 
Research and development expenses................     1,429            599               --        2,028 
Interest expense, net............................       433             85               --          518 
Other (income) expense, net......................      (135)            43               --          (92)
Gains on sales of businesses.....................      (814)           (75)              --         (889)
Special charges..................................       698             --               --          698 
                                                    -------        -------           ------      ------- 
Income before income taxes.......................     2,803          1,069               --        3,872 
Provision for taxes..............................       920            322               --        1,242 
                                                    -------        -------           ------      ------- 
NET INCOME.......................................   $ 1,883        $   747           $   --      $ 2,630 
                                                    =======        =======           ======      ======= 
BASIC EARNINGS PER SHARE.........................   $  1.48        $  0.89           $   --      $  1.05 
                                                    =======        =======           ======      ======= 
DILUTED EARNINGS PER SHARE.......................   $  1.46        $  0.88           $   --      $  1.03 
                                                    =======        =======           ======      ======= 
Average number of common shares outstanding                                                              
  during the period--basic.......................     1,271            835              410 (2)    2,516 
                                                    =======        =======           ======      ======= 
Average number of common shares outstanding                                                              
  during the period--diluted.....................     1,288            850              418 (2)    2,556 
                                                    =======        =======           ======      ======= 

See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements. 

64

PREM14A
71st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 71st
NOTES TO UNAUDITED PRO FORMA COMBINED 
CONDENSED FINANCIAL STATEMENTS
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS) 

NOTE 1--RECLASSIFICATIONS                                                       

Various reclassifications have been made to the historical financial    
statements to conform to the presentation expected to be used by AmericanWarner 
following the merger. For the September 30, 1999 Unaudited Pro Forma Combined   
Condensed Balance Sheet, Warner-Lambert treasury stock was reclassified to      
common stock ($106) and retained earnings ($1,143); accrued postretirement      
benefit obligations other than pensions ($160) were reclassified from other     
noncurrent liabilities and shown separately; accrued compensation ($259) was    
reclassified to other current liabilities; and accrued rebates and selling      
expenses ($1,217) were reclassified from accounts payable to other current      
liabilities. In addition, AHP state income taxes payable ($7) were reclassified 
from other current liabilities to federal, state and foreign income taxes; and  
minority interests ($262) were reclassified to other noncurrent liabilities.    

   For the year ended December 31, 1998 Unaudited Pro Forma Combined Condensed
Statement of Income, Warner-Lambert amortization of intangible assets ($60) was 
reclassified from other (income) expense, net to selling, general and           
administrative expenses; interest expense, net ($58) was reclassified from other
(income) expense, net and shown separately; a gain on sale of business ($67) was
reclassified from other (income) expense, net and shown separately; and a       
restructuring charge ($93) was reclassified from other (income) expense, net and
shown separately. AHP state income taxes ($41) were reclassified from selling,  
general and administrative expenses to provision for taxes; royalty income ($66)
was reclassified from cost of goods sold to other (income) expense, net; and    
minority interest expense ($2) was reclassified from cost of goods sold to other
(income) expense, net. Comparable reclassifications, where applicable, were made
to the Unaudited Pro Forma Combined Condensed Statements of Income for the years
ended December 31, 1997 and 1996 and for the nine months ended September 30,    
1999 and 1998. In addition, Warner-Lambert minority interest expense ($69) was  
reclassified to other (income) expense, net for the year ended December 31,     
1996. There were no significant transactions between AHP and Warner-Lambert to  
eliminate.                                                                      

NOTE 2--EXCHANGE RATIO                                                          

   Under the merger agreement, each outstanding share of Warner-Lambert common
stock will be converted into 1.4919 shares of AmericanWarner common stock. The  
exchange ratio was used in computing share amounts in the accompanying unaudited
pro forma combined condensed financial statements.                              

  For the nine months ended September 30, 1999, the average number of common
shares outstanding used in calculating the diluted loss per share is the same as
the average number of common shares outstanding used in the calculation of the  
basic loss per share for both Historical AHP and Unaudited Pro Forma Combined   
since the inclusion of common stock equivalents in the diluted loss per share   
calculation would have an antidilutive effect.                                  

65

PREM14A
72nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 72nd
NOTE 3--PRO FORMA ADJUSTMENTS                                                   

Pro forma adjustments were made to the Unaudited Pro Forma Combined     
Condensed Balance Sheet to reflect the following:                               

       (a) A one-time charge for direct incremental merger-related transaction
   costs which will be substantially recorded upon consummation of the merger.
   The direct incremental merger-related transaction costs consist principally
of charges related to stock compensation arrangements and professional  
services, registration and other regulatory costs       . The charge for
stock compensation relates to the acceleration of the vesting terms of  
certain restricted stock awards of both AHP and Warner-Lambert upon     
consummation of the merger.                                             

     (b) To adjust the par value of Warner-Lambert common stock from $1.00
  per share to the par value of AmericanWarner common stock of $0.33 1/3 per
share ($570) offset by the issuance of incremental shares utilizing the 
exchange ratio of 1.4919 ($140).                                        

66

PREM14A
73rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 73rd
INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendations of the AHP board of directors and the
Warner-Lambert board of directors with respect to the merger, stockholders      
should be aware that some officers of AHP and Warner-Lambert, including some    
officers who are also directors, have some interests in the merger that may be  
different from, or in addition to, the interests of stockholders of AHP and     
Warner-Lambert. The boards of directors of AHP and Warner-Lambert were aware of 
these interests and considered them, among other matters, in making their       
recommendation.                                                                 

AHP'S ARRANGEMENTS WITH EXECUTIVE OFFICERS                                      

    CHANGE IN CONTROL SEVERANCE AGREEMENTS.  AHP has change in control severance
agreements with its executive officers. Each change in control severance        
agreement provides that if, after a "change in control," the executive's        
employment is terminated by AHP without "cause" or if the executive terminates  
his or her own employment for "good reason," each as defined in the agreement,  
the executive is entitled to a lump sum severance payment equal to              

- three times the sum of (1) his or her annual base salary and (2) the  
 highest bonus awarded to the executive in the prior three years, plus

  - the stock option value (defined as the value at the time of grant by AHP
  of stock options to the executives at any one time in any of the three
    years prior to the change in control) or, if greater, the highest value,
    on a Black-Scholes basis, of any stock option grant and restricted stock
     grant made to the executive in the year prior to the change in control or
thereafter.                                                         

  The executives are also entitled to receive enhanced pension benefits (the
calculation of which includes an additional three years for purposes of benefit 
accrual), as well as three years of additional welfare benefit continuation and 
retiree medical and life insurance benefits. In addition, each of these         
executives is entitled to receive the foregoing severance benefits if he or she 
voluntarily terminates his or her own employment for any reason during the      
90-day period beginning on the first anniversary of any change in control.      
Finally, the executives are entitled to an additional payment, if necessary, to 
make them whole as a result of any excise tax imposed by the Internal Revenue   
Code on certain payments made in connection with a change in control. For       
purposes of the change in control severance agreements, consummation of the     
merger will constitute a "change in control."                                   

If the employment of the executive officers who are parties to change in
control severance agreements and are named as the five most highly compensated  
executive officers of AHP in its 1999 annual meeting proxy statement is         
terminated following the merger under circumstances entitling them to benefits  
under the change in control severance agreements, the approximate total cash    
amount that would be paid under such agreements (not including payments that may
be made with respect to any excise tax) would be as follows:                    

                                                                [Download Table]

AHP NAMED OFFICER                                               AMOUNT   
-----------------                                             -----------
                                                                         
John R. Stafford............................................  $34,920,000
Robert G. Blount............................................  $16,522,800
Robert Essner...............................................  $12,727,500
Robert I. Levy..............................................  $11,350,500
David M. Olivier............................................  $ 7,425,000
All other AHP executive officers as a group (7 persons).....  $40,150,680

EQUITY-BASED AWARDS.  Pursuant to the terms of AHP's equity-based       
compensation plans, almost all of the unvested stock options held by AHP        
executive officers and directors outstanding will become vested and exercisable 
at the effective time of the merger. In addition, restrictions will lapse on    
almost all units representing restricted AHP common stock held by AHP executive 
officers and directors and                                                      

67

PREM14A
74th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 74th
such units will convert to fully vested shares and no longer be subject to      
forfeiture. The number of unvested options and shares of restricted stock held  
by executive officers of AHP that will become vested in this manner is as       
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                                                           NUMBER  
                                                                                         OF SHARES 
                                                                          WEIGHTED AVG.      OF    
                                                           NUMBER OF        EXERCISE     RESTRICTED
AHP NAMED OFFICER                                       UNVESTED OPTIONS      PRICE        STOCK   
-----------------                                       ----------------  -------------  ----------
                                                                                                   
John R. Stafford.......................................      999,641        $54.5011       46,900  
Robert G. Blount.......................................      503,802        $53.6020       24,500  
Robert Essner..........................................      355,535        $54.3315       16,700  
Robert I. Levy.........................................      314,002        $54.1002       15,050  
David M. Olivier.......................................      177,068        $55.2633        8,000  
All other AHP executive officers as a group (7                                                     
  persons).............................................    1,033,743        $53.5516       66,700  

WARNER-LAMBERT'S ARRANGEMENTS WITH EXECUTIVE OFFICERS                           

Of the Warner-Lambert executive officers named in this joint proxy      
statement/prospectus, Mr. Goodes has retired and is thus not eligible for the   
benefits described below.                                                       

EXECUTIVE SEVERANCE PLAN.  Messrs. de Vink, Larini, Wild and other key  
executives are participants in Warner-Lambert's Executive Severance Plan, which 
provides certain benefits in the event of a change in control of Warner-Lambert.
Stockholder approval of the merger will constitute a "change in control" under  
the Executive Severance Plan.                                                   

Under the terms of the Executive Severance Plan, if after a change in   
control an executive's employment terminates for any reason other than death or 
for cause by Warner-Lambert during the three-year period following a change in  
control, the executive will receive severance benefits of 36 months of salary   
and bonus. The executive must be provided with six months notice of such        
termination of employment. The executive will also be eligible to receive       
36 months of welfare benefit continuation, certain outplacement services, and   
will receive credit for 36 additional months of service under Warner-Lambert's  
pension plan and savings and stock plan. The Executive Severance Plan also      
provides special payments to participants to reimburse them, if necessary, for  
any federal excise tax or similar state or local tax that may be imposed on     
payments following a change in control.                                         

The approximate value of the cash payments due under the plan to each   
executive upon a qualifying termination of employment following a change in     
control, not including any payments that may be made with respect to any excise 
tax, would be as follows:                                                       

                                                                [Download Table]

WARNER-LAMBERT NAMED OFFICER                                    AMOUNT   
----------------------------                                  -----------
                                                                         
Lodewijk J. R. de Vink......................................  $ 5,859,000
Anthony H. Wild.............................................  $ 2,769,300
Ernest J. Larini............................................  $ 2,782,500
All other Warner-Lambert executive officers as a group                   
  (14 persons)..............................................  $25,151,547

    EQUITY-BASED AWARDS.  Pursuant to the terms of Warner-Lambert's equity-based
compensation plans, all unvested options to purchase Warner-Lambert stock held  
by Warner-Lambert's executive officers and directors will become vested and     
exercisable upon completion of the merger, and restrictions will lapse on that  
date with respect to shares of restricted stock issued under those plans.       

68

PREM14A
75th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 75th
The number of unvested options and shares of restricted stock held by executive 
officers and directors of Warner-Lambert that will become vested in this manner 
is as follows:                                                                  

                                                        [Enlarge/Download Table]

                                                                                          NUMBER OF 
                                                                                          SHARES OF 
                                                           NUMBER OF      WEIGHTED AVG.   RESTRICTED
WARNER-LAMBERT NAMED OFFICER                            UNVESTED OPTIONS  EXERCISE PRICE    STOCK   
----------------------------                            ----------------  --------------  ----------
                                                                                                    
Lodewijk J. R. de Vink.................................      633,750         $43.6571        --     
Anthony H. Wild........................................      318,089         $45.8667        --     
Ernest J. Larini.......................................      277,814         $42.4104        --     
All other Warner-Lambert executive officers                                                         
  as a group (14 persons)..............................    1,929,332         $44.1888       42,600  
Warner-Lambert outside directors as a group............      --               --           108,000  

EXCESS SAVINGS PLAN.  Upon a "change in control," each participant in   
Warner-Lambert's Excess Savings Plan will become fully vested in such           
participant's account and will receive full payment of such account upon        
termination of employment. The unvested balance in such plan for each executive 
officer as of October 31, 1999 is as follows:                                   

                                                                [Download Table]

                                                              UNVESTED
WARNER-LAMBERT NAMED OFFICER                                  BALANCE 
----------------------------                                  --------
                                                                      
Anthony H. Wild.............................................  $21,689 
All other Warner-Lambert executive officers as a group (2             
  persons)..................................................  $15,712 

BOARD OF DIRECTORS                                                              

The AmericanWarner board of directors will consist of either 14 or 20   
members, half selected by AHP and half selected by Warner-Lambert. Whether the  
AmericanWarner board of directors will consist of 14 or 20 members will be      
determined prior to the effective time of the merger and will depend upon       
whether the AHP stockholders approve the AHP by-law amendment at the AHP special
meeting which would allow AHP to increase the size of the AHP board of directors
beyond the current maximum size of 15 directors. If the AHP stockholders approve
the by-law amendment, AmericanWarner's board of directors will consist of 20    
members. If the by-law amendment is not approved, the AmericanWarner board of   
directors will consist of 14 members. Regardless of its size, the AmericanWarner
board of directors will consist of individuals who are directors of AHP and     
individuals who are directors or officers of Warner-Lambert.                    

OWNERSHIP OF COMMON STOCK; STOCK OPTIONS                                        

    As of October 31, 1999, directors and executive officers of AHP beneficially
owned an aggregate of 6,289,807 shares of AHP common stock, including options to
purchase 5,025,569 shares of AHP common stock exercisable within 60 days, and no
shares of AHP preferred stock.                                                  

  As of October 31, 1999, directors and executive officers of Warner-Lambert
beneficially owned an aggregate of 14,943,874 shares of Warner-Lambert common   
stock, including options to purchase 14,234,777 shares of Warner-Lambert common 
stock exercisable within 60 days.                                               

INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE                             

The merger agreement requires the combined company to indemnify, to the 
fullest extent permitted by law, each individual who is or was an officer,      
director or employee of Warner-Lambert or any of its subsidiaries for all       
actions taken by them in their capacities as such prior to the completion of the
merger and to honor all indemnification obligations of Warner-Lambert to those  
persons,                                                                        

69

PREM14A
76th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 76th
whether pursuant to Warner-Lambert's certificate of incorporation, by-laws or an
indemnification agreement.                                                      

  For six years after the completion of the merger, AmericanWarner will also
provide officers' and directors' liability insurance in respect of acts or      
omissions prior to the completion of the merger for each individual covered     
under the comparable Warner-Lambert policy as of the date of the merger         
agreement. AmericanWarner will not be required to pay, in total, an annual      
premium for the insurance described in this paragraph in excess of 200% of the  
current annual premium paid by Warner-Lambert for its existing coverage prior to
the merger. However, if the annual premiums of that insurance coverage exceed   
that amount, AmericanWarner will be obligated to provide the greatest coverage  
available at a cost equal to 200% of the current annual premium.                

70

PREM14A
77th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 77th
THE MERGER AGREEMENT

    THE FOLLOWING IS A DESCRIPTION OF THE MATERIAL TERMS OF THE MERGER AGREEMENT
BUT DOES NOT PURPORT TO DESCRIBE ALL THE TERMS OF THE MERGER AGREEMENT. THE     
FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE     
MERGER AGREEMENT WHICH IS ATTACHED AS APPENDIX A TO THIS JOINT PROXY STATEMENT/ 
PROSPECTUS AND INCORPORATED HEREIN BY REFERENCE. ALL STOCKHOLDERS OF AHP AND    
WARNER-LAMBERT ARE URGED TO READ THE MERGER AGREEMENT IN ITS ENTIRETY.          

GENERAL                                                                         

    Under the merger agreement, a wholly-owned subsidiary of AHP will merge with
and into Warner-Lambert, with Warner-Lambert continuing as the surviving        
corporation. In connection with the merger, AHP will change its name to         
AmericanWarner, Inc. Following the merger, AmericanWarner will operate as one   
company, led by an integrated management team drawn from AHP and Warner-        
Lambert.                                                                        

CLOSING MATTERS                                                                 

    CLOSING.  Unless the parties agree otherwise, the closing of the merger will
take place on the first business day after all closing conditions have been     
satisfied or waived, unless the merger agreement has been terminated or another 
time or date is agreed to in writing by the parties. See "--Conditions" below   
for a more complete description of the conditions that must be satisfied prior  
to closing.                                                                     

EFFECTIVE TIME.  As soon as practicable after the satisfaction of the   
conditions to the merger, AHP and Warner-Lambert will file a certificate of     
merger with the Delaware Secretary of State in accordance with the relevant     
provisions of the Delaware General Corporation Law and make all other filings or
recordings required thereunder. The merger will become effective when the       
certificate of merger is duly filed or at such later time as AHP and            
Warner-Lambert agree and specify in the certificate of merger.                  

CONSIDERATION TO BE RECEIVED IN THE MERGER; TREATMENT OF STOCK OPTIONS          

The merger agreement provides that, at the effective time of the merger:

- each share of Warner-Lambert stock issued and outstanding immediately 
   prior to the effective time of the merger, together with the associated
   rights issued under the Warner-Lambert stockholder rights plan, will be
      converted into 1.4919 shares of AmericanWarner common stock and associated
rights;                                                             

- each outstanding and unexercised option or right to purchase shares of
    Warner-Lambert common stock granted under the Warner-Lambert stock plans
     will be assumed by AmericanWarner and converted into an option or a right
      to purchase shares of AmericanWarner common stock under the same terms and
conditions as were applicable to the options as granted under the   
    Warner-Lambert stock plans, taking into account provisions providing for
full vesting under those stock plans. The number of shares of       
      AmericanWarner common stock that the converted options will be exercisable
      for, and the exercise price of the option, will be adjusted to reflect the
exchange ratio;                                                     

- each restricted share of Warner-Lambert stock granted under the       
    Warner-Lambert stock plans that are outstanding immediately prior to the
effective time of the merger will become fully vested and free of   
    restrictions, and will be converted into shares of AmericanWarner common
stock at the exchange ratio; and                                    

- all Warner-Lambert stock credits in accounts governed by the          
Warner-Lambert 1996 Stock Plan will be converted into a number of   
AmericanWarner stock credits at the exchange ratio, but will        

71

PREM14A
78th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 78th
     otherwise continue to be subject to the same terms and conditions as were
     applicable to the stock credits under the Warner-Lambert 1996 Stock Plan.

    In addition, any shares of Warner-Lambert common stock owned by AHP, held by
Warner-Lambert as treasury stock or owned by any of their respective            
subsidiaries will be automatically canceled, and we will not exchange those     
shares for any shares of AmericanWarner common stock or other consideration.    

   Each share of AHP common stock will remain outstanding following the merger
and will automatically represent one share of AmericanWarner common stock.      

As soon as practicable after the effective time of the merger,          
AmericanWarner will deliver notices to the holders of Warner-Lambert stock      
options. Those notices will set forth each holder's rights under the            
Warner-Lambert stock plans, including that, in connection with the merger and   
pursuant to the terms of the Warner-Lambert stock plans, the agreements         
evidencing the grants of the Warner-Lambert stock options will continue in      
effect on the same terms and conditions, taking into account provisions         
providing for full vesting of those options. To the extent permitted by law,    
AmericanWarner will comply with the terms of the Warner-Lambert stock plans and 
will take reasonable steps to ensure that the stock options which qualified as  
incentive stock options prior to the effective time of the merger continue to   
qualify as incentive stock options of AmericanWarner after the merger.          

 For a further discussion of the treatment of Warner-Lambert stock options
and other employee benefit plans under the merger agreement, see                
"--Covenants--Employee Matters" on page 77 and "Interests of Certain Persons in 
the Merger" on page 67.                                                         

EXCHANGE OF CERTIFICATES IN THE MERGER                                          

Before the closing of the merger, we will appoint an exchange agent to  
handle the exchange of Warner-Lambert stock certificates for stock certificates 
of AmericanWarner and the payment of cash for fractional shares. Soon after the 
closing of the merger, the exchange agent will send a letter of transmittal,    
which is to be used to exchange Warner-Lambert stock certificates for stock     
certificates of AmericanWarner, to each former Warner-Lambert stockholder. The  
letter of transmittal will contain instructions explaining the procedure for    
surrendering Warner-Lambert stock certificates. You should not return           
certificates with the enclosed proxy card.                                      

    Warner-Lambert stockholders who surrender their stock certificates, together
with a properly completed letter of transmittal, will receive stock certificates
representing the shares of AmericanWarner common stock into which the shares of 
Warner-Lambert common stock were converted in the merger.                       

After the merger, each certificate that previously represented shares of
Warner-Lambert stock will only represent the right to receive the shares of     
AmericanWarner common stock into which those shares of Warner-Lambert common    
stock have been converted.                                                      

    AmericanWarner will not pay dividends to holders of any Warner-Lambert stock
certificates until the Warner-Lambert stock certificates are surrendered to the 
exchange agent. However, once those certificates are surrendered, AmericanWarner
will pay to the holder, without interest, any dividends that have been declared 
after the effective date of the merger on the shares into which those Warner-   
Lambert shares have been converted.                                             

    After the effective time of the merger, Warner-Lambert will not register any
transfers of the shares of Warner-Lambert common stock.                         

    Stockholders of AHP will not be required to exchange their AHP certificates.
After the merger, these certificates will automatically represent shares in     
AmericanWarner.                                                                 

72

PREM14A
79th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 79th
FRACTIONAL SHARES                                                               

 No fractional shares of AmericanWarner common stock will be issued in the
merger. Instead, the exchange agent will pay each of those stockholders who     
would have otherwise been entitled to a fractional share of AmericanWarner      
common stock an amount in cash determined by multiplying the fractional share   
interest by the closing price for a share of AHP stock on the NYSE Composite    
Transaction Tape on the date of the effective time of the merger or, if such    
date is not a business day, on the business day immediately following the date  
on which the effective time of the merger occurs.                               

LISTING OF AMERICANWARNER STOCK                                                 

  AHP has agreed to use its reasonable best efforts to prepare and submit to
the NYSE a listing application covering the shares of AmericanWarner common     
stock to be issued in the merger and it will use its reasonable best efforts to 
cause such shares to be approved for listing on the NYSE, subject to official   
notice of issuance, prior to the effective time of the merger. The symbol "AWI" 
has been reserved for AmericanWarner and will be used assuming the listing      
application is approved. Approval for listing on the NYSE of the shares of      
AmericanWarner common stock issuable to the Warner-Lambert stockholders in the  
merger, subject only to official notice of issuance, is a condition to the      
obligations of AHP, Wolverine Sub and Warner-Lambert to complete the merger.    

NAME CHANGE; BOARD OF DIRECTORS; EXECUTIVE OFFICERS; AND COMPANY HEADQUARTERS   

    AHP NAME CHANGE.  Immediately prior to the effective time of the merger, AHP
will change its name so that the name of the combined company will be           
AmericanWarner, Inc.                                                            

    AMERICANWARNER BOARD OF DIRECTORS.  At the effective time of the merger, the
board of directors of AmericanWarner will consist of an equal number of         
directors from AHP and Warner-Lambert prior to the merger. The board of         
directors will consist of either 14 or 20 members as follows:                   

    - If the AHP stockholders approve the amendment to the by-laws, the board of
directors of AmericanWarner will consist of 20 members.             

  - If the AHP stockholders do not approve the amendment to the by-laws, the
board of directors of AmericanWarner will consist of 14 members.    

CHIEF EXECUTIVE OFFICER; CHAIRMAN OF THE BOARD OF DIRECTORS.  The merger
agreement provides that, as of the effective time of the merger, Lodewijk J.R.  
de Vink, Chairman, President and Chief Executive Officer of Warner-Lambert, will
serve as the Chief Executive Officer of AmericanWarner and report to the board  
of directors. John R. Stafford, Chairman, President and Chief Executive Officer 
of AHP, will serve as Chairman of the Board of Directors of AmericanWarner. Mr. 
Stafford will serve as Chairman for 18 months following the effective time of   
the merger, when he will be succeeded by Mr. de Vink.                           

EXECUTIVE OFFICERS.  The merger agreement also provides that, as of the 
effective time of the merger, the other executive officers for AmericanWarner   
will be chosen from the current management of AHP and Warner-Lambert, selecting 
the best person for each position to be filled, with a balancing so that both   
AHP and Warner-Lambert will be fairly represented in the management of the      
combined company.                                                               

AMERICANWARNER HEADQUARTERS.  After the completion of the merger, the   
headquarters of AmericanWarner will be located in Madison, New Jersey, AHP's    
current headquarters. The headquarters of the over-the-counter division of      
AmericanWarner will be in Morris Plains, New Jersey, the current location of    
Warner-Lambert's headquarters. The headquarters of the pharmaceutical division  
of AmericanWarner will be in Radnor, Pennsylvania, the current location of AHP's
pharmaceutical division operations.                                             

73

PREM14A
80th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 80th
COVENANTS                                                                       

We have each undertaken certain covenants in the merger agreement. The  
following summarizes the more significant of these covenants:                   

  NO SOLICITATION.  We have each agreed that we, or any of our subsidiaries,
officers or directors, will not, and will use reasonable best efforts to ensure 
that our respective employees, agents or representatives do not:                

      (1) initiate, solicit, encourage or knowingly facilitate, including by
  way of furnishing information, any inquiries or the making of any proposal
 or offer with respect to a third party "acquisition proposal" of the type
described below;                                                        

       (2) have any discussion with or provide any confidential information or
data to any person relating to an acquisition proposal;                 

(3) engage in negotiations concerning an acquisition proposal;  

      (4) knowingly facilitate any effort or attempt to make or implement an
acquisition proposal; or                                                

(5) accept an acquisition proposal.                             

However, each of us is permitted, as is contemplated under the federal  
securities laws, to take and disclose to our stockholders our position with     
respect to any acquisition proposal.                                            

In addition, each of AHP and Warner-Lambert is permitted to engage in   
discussions and negotiations with, and provide information to, any person in    
response to an unsolicited acquisition proposal, if:                            

(1) its special meeting of stockholders shall not have occurred;

  (2) its board of directors concludes in good faith that there is a
reasonable likelihood that the acquisition proposal could result in a   
"superior proposal" of the type described below;                        

(3) prior to providing any information or data to any person in 
  connection with an acquisition proposal, the proposing party first signs a
 confidentiality agreement with terms, including standstill provisions, at
  least as stringent as the terms contained in the confidentiality agreement
entered into between AHP and Warner-Lambert before we signed the merger 
agreement; and                                                          

    (4) it keeps the other party informed of the status and terms of the
acquisition proposal and any discussions or negotiations relating to the
acquisition proposal.                                                   

However, unless the merger agreement is terminated, neither company may 
present to its stockholders for consideration any other transaction relating to 
another acquisition proposal, superior or otherwise. See "--Termination of the  
Merger Agreement" for a discussion of each party's ability to terminate the     
merger agreement.                                                               

  An "ACQUISITION PROPOSAL" for AHP or Warner-Lambert, as applicable, is any
proposal or offer with respect to:                                              

     (1) a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar      
transaction involving the party;                                        

        (2) any purchase or sale of the consolidated assets of the party and its
 subsidiaries, taken as a whole, having an aggregate value equal to 10% or
more of the market capitalization of that party; or                     

       (3) any purchase or sale of, or tender offer or exchange offer for, 10%
or more of the equity securities of such party.                         

74

PREM14A
81st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 81st
    A "SUPERIOR PROPOSAL" for AHP or Warner-Lambert, as applicable, is a written
proposal made by a person other than either such party for:                     

     (1) a merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar      
    transaction involving AHP or Warner-Lambert, as the case may be, as a result
of which either:                                                        

        (A) such party's stockholders before the transaction, by virtue of
      their ownership of such party's shares, in the aggregate cease to own at
     least 60% of the voting securities of the entity surviving or resulting
   from such transaction, or the ultimate parent entity of the surviving
entity; or                                                        

         (B) the individuals comprising the board of directors of such party
 before the transaction do not constitute a majority of the board of
directors of the ultimate parent entity;                          

      (2) a sale, lease, exchange, transfer or other disposition of at least
  40% of the assets of either AHP or Warner-Lambert, as the case may be, and
  its subsidiaries, taken as a whole, in a single transaction or a series of
related transactions; or                                                

      (3) the acquisition, directly or indirectly, by a person of beneficial
ownership of 40% or more of the common stock of either AHP or           
   Warner-Lambert, as the case may be, whether by merger, consolidation, share
    exchange, business combination, tender or exchange offer or otherwise, other
  than a merger, consolidation, share exchange, business combination, tender
  or exchange offer or other transaction upon the consummation of which such
 party's stockholders would in the aggregate beneficially own greater than
60% of the voting securities of such person;                            

which in any case is otherwise on terms which the board of directors of such    
party in good faith concludes:                                                  

(1) is reasonably capable of being completed; and               

       (2) after consultation with its financial advisors and outside counsel,
and taking into account, among other things, all legal, financial,      
regulatory and other aspects of the proposal and the person making the  
  proposal, that the proposal would, if consummated, result in a transaction
  that is more favorable to its stockholders, from a financial point of view
than the merger between AHP and Warner-Lambert.                         

BOARD OF DIRECTORS' COVENANT TO RECOMMEND.  Our respective boards of    
directors have agreed to recommend the approval of the merger to their          
respective stockholders. However, each board is not permitted to make or to     
withdraw or to modify in a manner adverse to the other company this             
recommendation, including by endorsing an alternative transaction to the merger 
between AHP and Warner-Lambert, before its special meeting if either:           

      (1) it acquires knowledge of facts or circumstances that it determines
   in good faith, after taking into account information contained in the other
party's filings with the SEC, would constitute a material adverse       
  development with respect to the other party, and, based upon the advice of
  its legal counsel, there would be a substantial probability that the board
 would be breaching its fiduciary duties to its stockholders if it did not
change its recommendation; or                                           

       (2) it has received an acquisition proposal that its board concludes in
good faith is a superior proposal.                                      

Even if the board of either company changes, withholds or modifies its  
recommendation of the merger, that company is still required to present the     
merger and related proposals to its stockholders for consideration at the       
special meeting, unless the merger agreement is otherwise terminated. See       
"--Termination of the Merger Agreement" for a discussion of each party's ability
to terminate the merger agreement.                                              

75

PREM14A
82nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 82nd
OPERATIONS OF AHP AND WARNER-LAMBERT PENDING CLOSING.  We have each     
undertaken a separate covenant that places restrictions on ourselves and our    
respective subsidiaries until either the effective time of the merger or the    
termination of the merger agreement. In general, we and our respective          
subsidiaries are required to conduct our business in the usual, regular and     
ordinary course in all material respects substantially in the same manner as    
previously conducted and to use our reasonable efforts to preserve intact our   
present lines of business and relationships with third parties. Each of us has  
agreed to some specific restrictions that prohibit us and our respective        
subsidiaries from:                                                              

- entering into any new material lines of business or incurring or      
   committing to any capital expenditures or obligations or liabilities in
connection with such capital expenditures beyond specified amounts; 

- declaring or paying dividends in excess of specified limits or making 
other distributions in respect of our capital stock;                

   - making changes in our share capital, including, among other things, stock
splits, combinations, or reclassifications;                         

- repurchasing or redeeming our capital stock;                          

 - issuing, delivering or selling any shares of our capital stock or other
   equity interests, other than in connection with our benefit plans or in
  connection with the exercise of options or other stock awards or stock
option agreements;                                                  

- amending our certificate of incorporation, by-laws or other governing 
documents;                                                          

    - making acquisitions of, or investments in, other entities beyond specified
amounts (other than pursuant to the stock option agreements);       

- disposing of assets, other than inventory, beyond specified amounts;  

- incurring debt, other than in the ordinary course consistent with past
practice;                                                           

   - making loans, advances, capital contributions or investments in any other
person other than in the ordinary course and consistent with past   
practice;                                                           

   - taking actions that would prevent or impede the merger from qualifying as
      a pooling of interests for accounting purposes and as a reorganization for
tax purposes;                                                       

- increasing the compensation of directors and executive officers or    
increasing employee benefits other than in the ordinary course and  
consistent with past practice;                                      

- changing our accounting methods or fiscal year;                       

    - amending our respective stockholder rights plans to make them inapplicable
    to any transaction other than the merger, or redeeming the rights issued
under those plans;                                                  

- making any material tax election other than in the ordinary course    
consistent with past practice; and                                  

    - entering into any agreement or arrangement that would limit or restrict us
  or AmericanWarner from competing in any line of business or geographic
      area if that resulting restriction would have a material adverse effect on
the combined company after the merger.                              

REASONABLE BEST EFFORTS COVENANT.  We have agreed to cooperate with each
other and to use our reasonable best efforts to take all actions and do all     
things advisable or necessary under the merger agreement and applicable laws to 
complete the merger and the other transactions contemplated by the merger       
agreement. This cooperation may include selling, holding separate or disposing  
of assets in response to the requirements imposed by antitrust authorities.     
Neither of us will be required for any                                          

76

PREM14A
83rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 83rd
reason to sell, hold separate or otherwise dispose of assets, or to conduct our 
business in a specified manner, if such action is not a condition to closing or 
would reasonably be expected to have a material adverse effect on the combined  
company.                                                                        

  EMPLOYEE MATTERS.  In the merger agreement, we have agreed that, following
the merger, AmericanWarner will:                                                

    - honor all Warner-Lambert benefit plans and related funding arrangements in
      accordance with their terms. For at least one year after the completion of
      the merger, AmericanWarner will provide compensation and employee benefits
  under benefit plans to the employees of AmericanWarner that are in the
     aggregate no less favorable in any material respects to those provided to
such persons under existing benefit plans at AHP or Warner-Lambert; 

- with certain exceptions, grant to AHP or Warner-Lambert employees who 
continue employment with AmericanWarner full credit for eligibility,
      benefit accrual and determination of their level of benefits for their AHP
or Warner-Lambert service under the employee benefit plans of       
AmericanWarner in which they participate following the merger to the
    extent AHP or Warner-Lambert recognized their service for these purposes
before the merger; and                                              

- create a task force comprised of key executives from AHP and          
    Warner-Lambert to review the benefit plans of each company and recommend
appropriate plans for the combined entity.                          

PAYMENT OF DIVIDENDS PENDING THE MERGER.  We have agreed to coordinate  
declaring dividends and the related record dates and payment dates so that AHP  
and Warner-Lambert stockholders do not receive two dividends, or fail to receive
one dividend, for any single calendar quarter.                                  

OTHER COVENANTS AND AGREEMENTS                                                  

  SPECIAL MEETING OF STOCKHOLDERS.  The merger agreement contains a covenant
that we will each convene a special meeting of our stockholders to consider and 
vote upon the merger and related transactions. AHP and Warner-Lambert have      
agreed that the special meetings will not be held until the later of May 15,    
2000 and the date which is ten days after the date on which AHP commits not to  
exercise its "walkaway" rights under the settlement agreement relating to its   
diet drug litigation.                                                           

  INSURANCE AND INDEMNIFICATION.  AmericanWarner is obligated, for six years
after the merger, to maintain in effect Warner-Lambert's current directors' and 
officers' liability insurance covering acts or omissions occurring prior to the 
effective time of the merger. AmericanWarner will not be required to pay, in    
total, an annual premium for the insurance described in this paragraph in excess
of 200% of the current annual premium paid by Warner-Lambert for its existing   
coverage prior to the merger. However, if the annual premiums of that insurance 
coverage exceed that amount, AmericanWarner will be required to provide the     
greatest coverage available for a cost equal to 200% of the current annual      
premium.                                                                        

AmericanWarner is obligated, to the fullest extent permitted by law, to 
indemnify and hold harmless, and provide advancement of expenses to, each person
who is or has been an officer or director of Warner-Lambert or any of its       
subsidiaries with respect to acts or omissions by them in their capacities as   
officers, directors or employees of Warner-Lambert or any of its subsidiaries or
taken at the request of Warner-Lambert or any of its subsidiaries at any time on
or prior to the effective time of the merger, including for acts and omissions  
occurring in connection with the approval of the merger and the merger          
agreement. AmericanWarner will also cause the surviving corporation in the      
merger to maintain in its certificate of incorporation or by-laws the current   
provisions regarding indemnification of officers, directors and employees.      

77

PREM14A
84th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 84th
    EXPENSES.  We have each agreed to pay our own costs and expenses incurred in
connection with the merger and the merger agreement. We will, however, share    
equally the expenses incurred in connection with the filing with the SEC of this
joint proxy statement/prospectus and the related registration statement and the 
costs associated with the printing and mailing of this joint proxy              
statement/prospectus.                                                           

NEW YORK STOCK EXCHANGE LISTING.  AHP is obligated to use its reasonable
best efforts to cause the shares of its common stock to be issued in the merger 
to be approved for listing on the NYSE, subject to official notice of issuance. 

ACCOUNTANTS' LETTERS.  We have each agreed to use our reasonable best   
efforts to deliver to each other copies of comfort letters from our independent 
public accountants in form reasonably satisfactory to the other party and       
customary in scope for comfort letters delivered by independent accountants.    

   AHP has also agreed to use its reasonable best efforts to deliver a copy of
a letter from its independent public accountant to Warner-Lambert stating that  
the merger should qualify as a "pooling of interests" for accounting purposes.  

    Warner-Lambert has also agreed to use its reasonable best efforts to deliver
a copy of a letter from its independent public accountant to AHP and AHP's      
independent public accountants stating that they concur with Warner-Lambert's   
conclusion that, as of the date of their report, no conditions exist which would
preclude Warner-Lambert's ability to be a party to a business combination to be 
accounted for as a "pooling of interests."                                      

REPORTS ON LITIGATION MATTERS.  We have each agreed to advise the other 
party of any material developments known to us that might be relevant to the    
other party in assessing potential liability exposure under certain specified   
litigation matters.                                                             

 OTHER COVENANTS.  The merger agreement contains covenants relating to the
cooperation between AHP and Warner-Lambert in the preparation of this joint     
proxy statement/prospectus and other governmental filings. The merger agreement 
also contains additional agreements relating to, among other things, public     
announcements, mutual notice of certain matters and access to information.      

REPRESENTATIONS AND WARRANTIES                                                  

  The merger agreement contains substantially reciprocal representations and
warranties made by each of us to the other. The representations and warranties  
relate to:                                                                      

- corporate existence, qualification to conduct business and corporate  
standing and power;                                                 

- ownership of subsidiaries;                                            

- capital structure;                                                    

 - corporate authority to enter into, and carry out the obligations under,
the merger agreement and enforceability of the merger agreement;    

  - absence of a breach of the certificate of incorporation, by-laws, law or
material agreements as a result of the merger;                      

- filings with the SEC;                                                 

- financial statements;                                                 

- information supplied for use in this joint proxy statement/prospectus;

- board of directors approval;                                          

- votes required for approval;                                          

78

PREM14A
85th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 85th
- litigation;                                                           

- compliance with laws;                                                 

- absence of certain changes or events;                                 

- environmental matters;                                                

- intellectual property matters;                                        

- payment of fees to finders or brokers in connection with the merger   
agreement;                                                          

- opinions of financial advisors;                                       

- accounting matters;                                                   

- tax matters; and                                                      

- restrictive contracts.                                                

In addition, the parties also represent to one another that their       
stockholder rights plans are not applicable to the merger, the merger agreement 
and the stock option agreements granted by each party.                          

    The merger agreement also contains certain representations and warranties of
AHP and Wolverine Sub with respect to Wolverine Sub, including due organization,
corporate authorization, non-contravention and no prior business activities.    

   The representations and warranties contained in the merger agreement do not
survive the effective time of the merger.                                       

CONDITIONS                                                                      

Our respective obligations to complete the merger are subject to the    
satisfaction or, to the extent legally permissible, the waiver of various       
conditions which include, in addition to other customary closing conditions:    

 - the adoption and approval of the merger agreement and the merger by the
   Warner-Lambert stockholders, and the approval of the share issuance and
      amendment to the AHP certificate of incorporation by the AHP stockholders;

   - the absence of any law, order or injunction prohibiting completion of the
merger;                                                             

   - the expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act;                       

- the approval of the merger by the European Commission;                

- the approval for listing by the NYSE of the AmericanWarner stock to be
issued in the merger, subject to official notice of issuance;       

  - the receipt of all other governmental and regulatory consents, approvals
   and authorizations necessary for the merger, unless not obtaining those
     consents or approvals would not reasonably be expected to have a material
    adverse effect on AmericanWarner and its subsidiaries, taken as a whole;

    - the SEC having declared effective the AHP registration statement, of which
this joint proxy statement/prospectus forms a part; and             

   - the receipt of letters from the independent accountants of AHP, one dated
    as of the date of this joint proxy statement/prospectus and one dated as
of the closing date, confirming that they                           

79

PREM14A
86th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 86th
concur with AHP's management that pooling of interests accounting   
treatment is appropriate, and letters from the independent public   
 accountants of Warner-Lambert, one dated as of the date of this joint
proxy statement/prospectus and one dated as of the closing date,    
confirming that they concur with Warner-Lambert's management that   
      Warner-Lambert is eligible to participate in a transaction to be accounted
for as a pooling of interests.                                      

  In addition, individually, our respective obligations to effect the merger
are subject to the satisfaction or, to the extent legally permissible, the      
waiver of the following additional conditions:                                  

  - the representations and warranties of the other company contained in the
   merger agreement being true and correct in all material respects on the
     closing date of the merger as if they were made on that date, unless they
   were by their express provisions made as of another particular date, in
      which case the statement must be true and correct in all material respects
as of that date;                                                    

    - the other party having performed or complied in all material respects with
its obligations and covenants contained in the merger agreement;    

    - the receipt of an opinion of each company's counsel to the effect that the
   merger will qualify as a reorganization under the Internal Revenue Code
     and that each of AHP, Warner-Lambert and a wholly-owned subsidiary of AHP
will be a party to the reorganization; and                          

- no event having occurred which would trigger a distribution under the 
other company's stockholder rights plan.                            

    Additionally, Warner-Lambert's obligation to effect the merger and the other
transactions contemplated by the merger agreement is conditioned upon:          

- AHP having taken all actions necessary to amend its certificate of    
      incorporation and by-laws not later than the effective time of the merger,
in accordance with the merger agreement; and                        

   - AHP having entered into the settlement agreement with respect to its diet
drug litigation, and having committed not to exercise its "walkaway"
rights under that settlement agreement.                             

TERMINATION OF THE MERGER AGREEMENT                                             

RIGHT TO TERMINATE.  The merger agreement may be terminated at any time 
prior to the effective time in any of the following ways:                       

(1) by our mutual written consent;                              

(2) by either one of us:                                        

           (a) if the merger has not been completed by November 15, 2000, except
     that a party may not terminate the agreement if the cause of the merger
     not being completed by that date is that party's failure to fulfill its
obligations under this agreement;                                 

  (b) if a governmental authority or a court order permanently
prohibits the completion of the merger;                           

          (c) if either the AHP stockholders fail to approve both the issuance
   of shares of stock in connection with the merger and the amendment to
    AHP's certificate of incorporation, or the Warner-Lambert stockholders
fail to adopt and approve the merger agreement and the merger; or 

      (d) a third party acquires 15% or more of the stock of the other
party.                                                            

80

PREM14A
87th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 87th
  (3) By AHP, if Warner-Lambert's board of directors either fails to
recommend the merger to its stockholders, changes its recommendation, or
fails to call the Warner-Lambert special meeting to vote on the merger; 

(4) By Warner-Lambert:                                          

          (a) if AHP's board of directors either fails to recommend the merger
       to its stockholders, changes its recommendation, or fails to call the AHP
 special meeting to vote on the share issuance and amendments to its
certificate of incorporation and by-laws;                         

      (b) during the ten day period following the earlier to occur of:

          - June 30, 2000, if on or before that date AHP has not satisfied its
             closing conditions relating to the diet drug litigation settlement;
or                                                    

      - the date on which it becomes impossible for AHP to satisfy its
            closing conditions relating to the diet drug litigation settlement
on or before June 30, 2000;                           

  (c) during the ten day period following AHP's signing of the
  definitive settlement agreement relating to the diet drug litigation
settlement, if                                                    

    - the settlement is not on substantially the same terms as the
        memorandum of understanding delivered to Warner-Lambert before
execution of the merger agreement; and                

           - Warner-Lambert's board of directors determines that those differing
 terms are, in the aggregate, materially adverse to AHP.

TERMINATION FEES PAYABLE BY AHP.  AHP has agreed to pay Warner-Lambert a
termination fee of:                                                             

   - $1.8 billion, if Warner-Lambert terminates the merger agreement because a
third party has acquired 15% or more of AHP's stock;                

 - $1.8 billion, if Warner-Lambert terminates the merger agreement because
     AHP's board of directors has changed its recommendation of the merger and
either:                                                             

 - the recommendation change was by reason of a superior proposal or

   - at any time at or before the recommendation change a more favorable
   business combination proposal that is reasonably capable of being
        completed has been publicly announced or communicated to the AHP board
  of directors and has not been irrevocably withdrawn prior to the
recommendation change;                                        

 - $900 million, if Warner-Lambert terminates the merger agreement because
    AHP's board of directors has changed its recommendation of the merger in
      circumstances where the immediately preceding paragraph does not apply. An
   additional $1.0 billion is payable in this case if, within 12 months of
      the termination of the merger agreement, AHP enters into another agreement
regarding a more favorable business combination or completes a more 
    favorable business combination, provided the $1.0 billion fee is reduced
to $900 million if the stock option agreement becomes exercisable;  

   - $1.8 billion, if the merger is not completed by November 15, 2000 and all
of the following conditions are satisfied:                          

    - on or before that date, a business combination proposal from a third
       party with respect to AHP has been publicly announced or communicated
to the AHP board of directors;                                

81

PREM14A
88th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 88th
       - following the existence of that business combination proposal and prior
         to the termination of the merger agreement, AHP has breached any of its
      covenants, and AHP's breach materially contributed to the failure of
the merger being completed by that date; and                  

       - within 12 months of the termination of the merger agreement, AHP enters
      into another agreement regarding a business combination or completes
another business combination;                                 

- $900 million, if either party terminates the merger agreement because 
     AHP's stockholders failed to approve the share issuance and the amendment
   to AHP's certificate of incorporation, and at or before the time of the
   stockholder vote there was another business combination proposal from a
third party publicly announced or communicated to the AHP board of  
     directors. An additional $900 million fee is payable if, within 12 months
of the termination of the merger agreement, AHP enters into another 
    agreement regarding a business combination or completes another business
combination; or                                                     

  - $180 million, if the merger is not completed by November 15, 2000 and at
   or before that date, a business combination proposal from a third party
      with respect to AHP has been publicly announced or communicated to the AHP
      board of directors, AHP has not breached any of its covenants prior to the
termination of the merger agreement and, within 12 months of the    
  termination of the merger agreement, AHP enters into another agreement
regarding a business combination or completes another business      
combination.                                                        

 TERMINATION FEES PAYABLE BY WARNER-LAMBERT.  Warner-Lambert has agreed to
pay AHP a termination fee of:                                                   

    - $1.8 billion, if AHP terminates the merger agreement because a third party
has acquired 15% or more of Warner-Lambert's stock;                 

- $1.8 billion, if AHP terminates the merger agreement because          
     Warner-Lambert's board of directors has changed its recommendation of the
merger and either:                                                  

 - the recommendation change was by reason of a superior proposal or

   - at any time at or before the recommendation change a more favorable
   business combination proposal that is reasonably capable of being
completed has been publicly announced or communicated to the  
Warner-Lambert board of directors and has not been irrevocably
withdrawn prior to the recommendation change;                 

- $900 million, if AHP terminates the merger agreement because          
     Warner-Lambert's board of directors has changed its recommendation of the
      merger in circumstances where the immediately preceding paragraph does not
   apply. An additional $1.0 billion is payable in this case if, within 12
    months of the termination of the merger agreement, Warner-Lambert enters
     into another agreement regarding a more favorable business combination or
      completes a more favorable business combination, provided the $1.0 billion
fee is reduced to $900 million if the stock option agreement becomes
exercisable;                                                        

   - $1.8 billion, if the merger is not completed by November 15, 2000 and all
of the following conditions are satisfied:                          

    - on or before that date, a business combination proposal from a third
     party with respect to Warner-Lambert has been publicly announced or
communicated to the Warner-Lambert board of directors;        

       - following the existence of that business combination proposal and prior
         to the termination of the merger agreement, Warner-Lambert has breached
     any of its covenants, and that breach materially contributed to the
failure of the merger being completed by that date; and       

82

PREM14A
89th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 89th
- within 12 months of the termination of the merger agreement,    
   Warner-Lambert enters into another agreement regarding a business
combination or completes another business combination;        

- $900 million, if either party terminates the merger agreement because 
 Warner-Lambert's stockholders failed to approve the merger, and at or
before the time of the stockholder vote there was another business  
      combination proposal from a third party publicly announced or communicated
    to the Warner-Lambert board of directors. An additional $900 million fee
is payable if, within 12 months of the termination of the merger    
agreement, Warner-Lambert enters into another agreement regarding a 
business combination or completes another business combination; or  

  - $180 million, if the merger is not completed by November 15, 2000 and at
   or before that date, a business combination proposal from a third party
      with respect to Warner-Lambert has been publicly announced or communicated
     to the Warner-Lambert board of directors. Warner-Lambert has not breached
      any of its covenants prior to the termination of the merger agreement and,
within 12 months of the termination of the merger agreement,        
Warner-Lambert enters into another agreement regarding a business   
combination or completes another business combination.              

AMENDMENTS, EXTENSIONS AND WAIVERS                                              

   The merger agreement may be amended by the parties at any time prior to the
special meetings. All amendments to the merger agreement must be in a writing   
signed by each party.                                                           

At any time prior to the effective time of the merger, any party to the 
merger agreement may, to the extent legally allowed:                            

- extend the time for the performance of any of the obligations or other
acts of the other parties to the merger agreement;                  

   - waive any inaccuracies in the representations and warranties of the other
parties contained in the merger agreement; and                      

- waive compliance by the other parties with any of the agreements or   
conditions contained in the merger agreement.                       

All extensions and waivers must be in writing and signed by the party against   
whom the waiver is to be effective.                                             

83

PREM14A
90th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 90th
STOCK OPTION AGREEMENTS 

THE FOLLOWING SUMMARY OF THE STOCK OPTION AGREEMENTS IS QUALIFIED BY    
REFERENCE TO THE COMPLETE TEXT OF THE STOCK OPTION AGREEMENTS, WHICH ARE        
INCORPORATED BY REFERENCE AND ATTACHED AS APPENDICES B AND C TO THIS DOCUMENT.  
WE URGE YOU TO READ THE FULL TEXT OF THE STOCK OPTION AGREEMENTS.               

THE STOCK OPTIONS                                                               

   At the same time we entered into the merger agreement, we also entered into
reciprocal stock option agreements. Under the terms of the stock option granted 
by AHP to Warner-Lambert, Warner-Lambert may purchase up to 194,551,963 shares  
of AHP common stock (representing approximately 14.9% of the outstanding AHP    
common stock as of the date of the AHP stock option agreement) at an exercise   
price of $56.00 per share. Under the terms of the stock option granted by       
Warner-Lambert to AHP, AHP may purchase up to 127,940,538 shares of             
Warner-Lambert common stock (representing approximately 14.9% of the outstanding
Warner-Lambert common stock as of the date of the Warner-Lambert stock option   
agreement) at an exercise price of $83.81 per share. These exercise prices      
represent our closing stock prices on November 3, 1999, the last trading day    
prior to the execution of the merger agreement and the stock option agreements. 
The terms of these stock option agreements are substantially identical and are  
summarized below.                                                               

WHEN THE STOCK OPTIONS MAY BE EXERCISED                                         

 Each of us can exercise the option granted to it, in whole or in part, at
any time after the occurrence of the events which would entitle it to receive a 
full termination fee of at least $1.8 billion under the merger agreement and    
prior to termination of the option. See "The Merger Agreement--Termination of   
the Merger Agreement."                                                          

  The right to exercise the option terminates if we complete the merger. The
right to exercise the option also terminates upon the earliest to occur of the  
following four other circumstances:                                             

- six months after the option first becomes exercisable;                

- termination of the merger agreement under circumstances which cannot  
     result in the grantee party becoming entitled to receive termination fees
of $1.8 billion or more from the issuing party;                     

 - 12 months after termination of the merger agreement under circumstances
  which would result in the grantee party becoming entitled to receive a
    termination fee of less than $1.8 billion on termination and which could
entitle the grantee to receive thereafter an additional fee upon the
    occurrence of a subsequent event which, when added to the fee originally
received, would be at least $1.8 billion; and                       

- 90 days after termination of the merger agreement under circumstances 
where:                                                              

       - at termination, the grantee party has the right to terminate the merger
        agreement due to the issuing party's board changing its recommendation
of the merger;                                                

 - at termination, a more favorable alternative business combination
proposal has not been made to the issuing party; and          

- the issuing party does not enter into a more favorable business 
combination during the 90 day period.                         

CASH ELECTION                                                                   

   If a stock option becomes exercisable, the party holding the option may, as
to all or part of the option shares subject to the option, elect to receive a   
cash payment. This cash payment would                                           

84

PREM14A
91st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 91st
terminate the electing party's right to purchase those option shares upon the   
exercise of the option of common stock. The cash to be paid per share would be  
equal to the difference between the exercise price of the option and the higher 
of:                                                                             

- the highest price per share proposed to be paid by any other person in
connection with an acquisition proposal; or                         

- the average closing price of the stock for the ten days preceding the 
election to receive cash.                                           

   If a stock option becomes exercisable, the party issuing the option may, as
to up to two-thirds of the shares subject to the option, elect to repurchase up 
to that portion of the option for a cash payment. This cash payment would       
terminate the grantee party's right to purchase those option shares upon the    
exercise of the option of common stock. The cash to be paid per share would be  
equal to the difference between the exercise price of the option and the higher 
of:                                                                             

- the highest price per share proposed to be paid by any other person in
connection with an acquisition proposal; or                         

- the average closing price of the stock for the ten days preceding the 
election to repurchase.                                             

LIMITATION ON TOTAL PROFIT                                                      

    Each of the stock option agreements provides that, notwithstanding the other
provisions of that agreement or the merger agreement, the total profit, as      
defined below, that a party is permitted to receive cannot exceed $2 billion in 
the aggregate.                                                                  

Total profit, as used in the option agreements, means the total amount, 
before taxes, of the following:                                                 

- any termination fee received by the grantee party under the merger    
agreement; plus                                                     

    - the net cash amounts received by the grantee party from the sale of option
shares, less the purchase price for those option shares; plus       

- any amounts received by the grantee party from the repurchase of the  
  option by the issuing party or by the cashless exercise of the option.

  If the total profit of either of us would otherwise exceed $2 billion, the
party whose total profit would exceed that amount may, at its discretion, do any
one or combination of the following so that the actual realized total profit    
does not exceed that amount:                                                    

- reduce the number of shares subject to the option;                    

- deliver to the other party for cancellation option shares previously  
acquired; and                                                       

- pay cash to the other party.                                          

OTHER PROVISIONS                                                                

    LISTING AND REGISTRATION RIGHTS.  We have each agreed that if either party's
option becomes exercisable, the party which granted the exercisable option will 
apply to list the option shares subject to that option on the NYSE and will use 
reasonable best efforts to have those shares listed as soon as practicable.     

We also granted each other customary rights to require registration of  
option shares purchased under an option to permit the resale of those shares    
under the securities laws.                                                      

85

PREM14A
92nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 92nd
ADJUSTMENTS.  The type and number of option shares will be adjusted     
appropriately for any changes in the issuing party's stock, including changes   
that may occur because of reclassifications, recapitalizations, stock dividends 
or splits, combinations, exchanges or similar events.                           

RESTRICTION ON TRANSFER.  We have each agreed the option may not be     
transferred without the issuing party's consent.                                

EFFECT OF STOCK OPTION AGREEMENTS                                               

   The option agreements may have the effect of making an acquisition or other
business combination of either company by or with a third party more costly     
because of the need in any transaction to acquire the shares held pursuant to   
the option agreement. Moreover, following consultation with our respective      
independent public accountants, we believe that, if the option granted by AHP or
Warner-Lambert becomes exercisable, it is likely to hinder other parties from   
attaining the pooling-of-interests accounting treatment in any merger or        
business combination transaction with that company for the following two years. 
Non-U.S. companies do not utilize pooling-of-interests accounting. In addition, 
pooling-of-interests accounting is unlikely to be available in the United States
after the year 2000.                                                            

 The option agreements may therefore discourage certain third parties from
proposing another transaction, including one that might be more favorable from a
financial point of view to the stockholders of AHP or Warner-Lambert, as the    
case may be, than the merger.                                                   

    The boards of directors of the companies considered the impact of the option
agreements on potential third party-acquirors in their approval of the merger   
agreement and the option agreements; see "Background of the Merger" on page 23  
and "Our Reasons for the Merger" on page 38, for a more complete description of 
the factors considered by each board.                                           

86

PREM14A
93rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 93rd
BOARD OF DIRECTORS AND MANAGEMENT OF AMERICANWARNER 
FOLLOWING THE MERGER

DIRECTORS                                                                       

The merger agreement provides that the number of members on the         
AmericanWarner board will be either 14 or 20, depending on the outcome of the   
vote of the AHP stockholders to approve the adoption of an amendment to AHP's   
by-laws to increase the maximum size of its board to 24 members.                

- If the AHP by-law amendment is adopted by the AHP stockholders,       
      immediately following the completion of the merger, the board of directors
 of AmericanWarner will consist of 20 individuals, ten of whom will be
   designated by AHP and ten of whom will be designated by Warner-Lambert.

   - If the AHP by-law amendment is not adopted by AHP stockholders, the board
   of directors of AmericanWarner will consist of 14 individuals, seven of
  whom will be designated by AHP and seven of whom will be designated by
Warner-Lambert.                                                     

COMMITTEES OF THE BOARD OF DIRECTORS                                            

  Pursuant to the merger agreement, each committee of the board of directors
of AmericanWarner will have a chairperson who previously served as a director of
either AHP or Warner-Lambert, and a vice-chairperson from the other company.    

  AHP and Warner-Lambert have agreed to use their reasonable best efforts to
appoint the following individuals as Chairman or Vice-Chairman, as the case may 
be, to the committees indicated below:                                          

- Audit Committee                                                       

                                                                [Download Table]
                                                                   
William R. Howell...................................  Chairman     
John D. Feerick.....................................  Vice-Chairman

- Compensation Committee                                                

                                                                [Download Table]
                                                                   
Frank A. Bennack, Jr.  .............................  Chairman     
Alex J. Mandl.......................................  Vice-Chairman

- Nominating and Governance Committee                                   

                                                                [Download Table]
                                                                   
Michael I. Sovern...................................  Chairman     
Ivan G. Seidenberg..................................  Vice-Chairman

- Public Policy Committee                                               

                                                                [Download Table]
                                                                   
Clifford L. Alexander, Jr.  ........................  Chairman     
LaSalle D. Leffall, Jr., M.D.  .....................  Vice-Chairman

COMPENSATION OF DIRECTORS                                                       

Directors who are employees of AmericanWarner will not receive any      
compensation for service on the AmericanWarner board of directors. The specific 
terms of the compensation to be paid to non-employee directors of AmericanWarner
have not yet been determined.                                                   

87

PREM14A
94th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 94th
OFFICERS                                                                        

The merger agreement provides that the senior management team for       
AmericanWarner following the merger will include the following individuals from 
Warner-Lambert and AHP:                                                         

CHIEF EXECUTIVE OFFICER AND CHAIRMAN                                            

                                                                [Download Table]
                                                            
Lodewijk J.R. de Vink  President and Chief Executive Officer

John R. Stafford       Chairman of the Board of Directors   

  The merger agreement provides that Mr. de Vink will serve as President and
Chief Executive Officer and report to the board of directors following          
completion of the merger and, until December 31, 2002, may only be removed by a 
vote of 75% of the entire board.                                                

    Mr. Stafford will serve as Chairman until 18 months following the completion
of the merger, unless he is removed prior to such time by a vote of 75% of the  
entire board of AmericanWarner. Mr. de Vink will succeed Mr. Stafford as        
Chairman following such 18-month period and, until December 31, 2002, may only  
be removed by a vote of 75% of the entire board of AmericanWarner.              

OTHER SENIOR MANAGEMENT                                                         

                                                                [Download Table]

                        POSITION IN AMERICANWARNER         PRE-MERGER POSITION     
                       -----------------------------  -----------------------------
                                                                                   
Ernest J. Larini       Chief Financial Officer        Chief Financial Officer and  
                                                      Executive Vice President,    
                                                      Administration of Warner-    
                                                      Lambert                      

Anthony H. Wild, Ph.D. [Title--Human Global           Executive Vice President of  
                       Pharmaceuticals]               Warner-Lambert and President,
                                                      Pharmaceutical Sector of     
                                                      Warner-Lambert               

Robert Essner          [Title]                        Executive Vice President of  
                                                      AHP                          

Bernard Poussot        [Title--Human Global           President--Wyeth-Ayerst      
                       Pharmaceuticals]               Global Pharmaceuticals       
                                                      Division of AHP              

Robert I. Levy, M.D.   Chief Science and Technology   Senior Vice                  
                       Officer                        President--Science and       
                                                      Technology of AHP            

Louis L. Hoynes, Jr.   General Counsel                Senior Vice President and    
                                                      General Counsel of AHP       

Rene R. Lewin          [Title--Human Resources]       Vice President--Human        
                                                      Resources of AHP             

David M. Olivier       [Title--OTC]                   Senior Vice President of AHP 

J. Frank Lazo          [Title--Confectionery          Senior Vice President of     
                       business]                      Warner-Lambert and President,
                                                      Adams division of Warner-    
                                                      Lambert                      

William J. Murray      [Title--Agricultural           Senior Vice President of AHP 
                       business]                                                   

EXECUTIVE COMPENSATION                                                          

   The AmericanWarner board will rely on a compensation committee, composed of
non-employee directors to recommend the form and amount of compensation to be   
paid to AmericanWarner executive officers.                                      

88

PREM14A
95th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 95th
COMPARISON OF STOCKHOLDERS' RIGHTS

The rights of AHP stockholders are currently governed by the Delaware   
General Corporation Law and the certificate of incorporation and by-laws of AHP.
The rights of Warner-Lambert stockholders are currently governed by the Delaware
General Corporation Law and the certificate of incorporation and by-laws of     
Warner-Lambert. Upon consummation of the merger, the rights of AmericanWarner   
stockholders will be governed by the Delaware General Corporation Law and the   
AmericanWarner certificate of incorporation and the by-laws of AmericanWarner.  
The following are summaries of the material differences between the current     
rights of AHP and Warner-Lambert stockholders and those of AmericanWarner       
stockholders following the merger.                                              

 The following comparison of stockholders' rights is necessarily a summary
thereof, is not intended to be complete or to identify all differences that may,
under given situations, be material to stockholders and is subject in all       
respects, and is qualified by reference, to the Delaware General Corporation    
Law, the AHP certificate of incorporation, the AHP by-laws, the Warner-Lambert  
certificate of incorporation, the Warner-Lambert by-laws, the AmericanWarner    
certificate of incorporation and the AmericanWarner by-laws. Copies of the AHP  
certificate of incorporation, the AHP by-laws, the Warner-Lambert certificate of
incorporation and the Warner-Lambert by-laws are incorporated by reference      
herein and will be sent to holders of shares of AHP common stock, AHP preferred 
stock and Warner-Lambert common stock upon request.                             

AUTHORIZED CAPITAL                                                              

  WARNER-LAMBERT.  The total number of authorized shares of capital stock of
Warner-Lambert is 1,200,000,000 shares of Warner-Lambert common stock, par value
$1.00 per share, and 5,000,000 shares of preferred stock, par value $1.00 per   
share. No shares of preferred stock are outstanding and the holders of          
Warner-Lambert common stock do not have any preemptive rights.                  

AHP.  The total number of authorized shares of capital stock of AHP is  
2,400,000,000 shares of AHP common stock, par value $0.33 1/3, and 5,000,000    
shares of AHP preferred stock, par value $2.50 per share. The holders of        
outstanding shares of AHP common stock and the holders of outstanding shares of 
AHP preferred stock do not have any preemptive rights.                          

    AMERICANWARNER.  If the AHP certificate amendment is approved, following the
merger, the total number of authorized shares of capital stock will be    shares
of AmericanWarner common stock and 5,000,000 shares of AmericanWarner preferred 
stock. The holders of outstanding shares of AmericanWarner common stock and the 
holders of outstanding shares of AmericanWarner preferred stock will not have   
preemptive rights.                                                              

BOARD OF DIRECTORS                                                              

WARNER-LAMBERT.  Pursuant to the Warner-Lambert by-laws, the number of  
directors of Warner-Lambert shall not be less than 10 nor more than 15, with the
exact number determined by a majority of the Warner-Lambert board.              
Warner-Lambert's board currently consists of 10 directors. Under the            
Warner-Lambert by-laws, the presence of one-third of the total number of        
directors (but not less than two) is necessary to constitute a quorum at any    
meeting.                                                                        

AHP.  Pursuant to the AHP certificate of incorporation, the number of   
directors of AHP shall be fixed and may be altered from time to time as provided
in the AHP by-laws. The AHP by-laws provide that the AHP board shall consist of 
not less than eight nor more than 15 directors, with the precise number         
determined by the AHP board. AHP's board currently consists of 10 directors. A  
quorum at any meeting of the AHP board consists of a majority of the total      
number of directors or half, if the total number of directors is an even number.

89

PREM14A
96th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 96th
    AMERICANWARNER.  If the AHP by-law amendment is approved, the maximum number
of directors shall be 24 directors, and the AmericanWarner board will consist of
20 directors. If the by-law amendment is not approved, the AmericanWarner board 
will consist of 14 directors. Each AmericanWarner director will stand for       
election annually. Pursuant to the AmericanWarner by-laws, until December 31,   
2002, the number of directors designated by AHP and the number of directors     
designated by Warner-Lambert must be equal after giving effect to any increase  
or decrease in the total number of directors on the AmericanWarner board. Under 
the AmericanWarner by-laws, the presence of a majority of the entire            
AmericanWarner board will constitute a quorum. Until December 31, 2002, the     
unanimous affirmative vote of the entire AmericanWarner board will be required  
to amend any of the foregoing provisions of the AmericanWarner by-laws. For     
purposes of the AmericanWarner by-laws, the term "entire AmericanWarner board"  
means the total number of directors which AmericanWarner would have if there    
were no vacancies.                                                              

COMMITTEE OF DIRECTORS                                                          

    WARNER-LAMBERT.  Pursuant to the Warner-Lambert certificate of incorporation
and the Warner-Lambert by-laws, the Warner-Lambert board, may, by a resolution  
passed by a majority of the whole board, designate an executive committee and   
one or more additional committees, each committee to consist of two or more     
directors.                                                                      

AHP.  Pursuant to the AHP by-laws, there shall be an audit committee    
consisting of not less than three directors appointed by the AHP board. In      
addition, pursuant to the AHP certificate of incorporation and AHP by-laws, the 
AHP board may by vote of a majority of all the directors to appoint three or    
more directors to constitute an executive committee and three or more directors,
officers or employees of AHP to constitute a finance committee and the AHP board
may, from time to time, appoint one or more other standing or special           
committees.                                                                     

 AMERICANWARNER.  Upon completion of the merger, the provisions of the AHP
certificate of incorporation and AHP by-laws described above will be the        
provisions of the AmericanWarner certificate of incorporation and the           
AmericanWarner by-laws.                                                         

NEWLY CREATED DIRECTORSHIPS AND VACANCIES                                       

    WARNER-LAMBERT.  Pursuant to the Warner-Lambert by-laws, vacancies occurring
in any Warner-Lambert directorship and newly created directorships shall be     
filled by the affirmative vote of a majority of the remaining directors.        

  AHP.  Pursuant to the AHP by-laws, subject to rights granted to holders of
preferred stock under the AHP certificate of incorporation, vacancies occurring 
in any AHP directorship and newly created directorships shall be filled by the  
affirmative vote of a majority of the remaining directors even if less than a   
quorum.                                                                         

 AMERICANWARNER.  Upon completion of the merger, the provisions of the AHP
by-laws described above will be the provisions of the AmericanWarner by-laws,   
except that no reduction in the number of directors comprising the entire board 
shall affect the term of any existing director, and until December 31, 2002 the 
AmericanWarner board may be increased or decreased only by the vote of 75% of   
the entire board. Until December 31, 2002, the unanimous affirmative vote of the
entire AmericanWarner board will be required to amend any of the foregoing      
provisions of the AmericanWarner by-laws.                                       

90

PREM14A
97th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 97th
REMOVAL OF DIRECTORS                                                            

    WARNER-LAMBERT.  Under the Warner-Lambert by-laws, a director can be removed
by the affirmative vote of the holders of a majority of the voting power of the 
then outstanding Warner-Lambert common stock.                                   

  AHP.  Under the AHP certificate of incorporation, a director, other than a
director elected separately by the holders of AHP preferred stock, may be       
removed either by a majority vote of the entire AHP board for any cause deemed  
by them sufficient or by the affirmative vote of the holders of 80% of the      
combined voting power of the then outstanding shares of capital stock entitled  
to vote generally in the election of directors, voting together as a single     
class.                                                                          

AMERICANWARNER.  The above provisions of the AHP certificate of         
incorporation will be the provisions of the AmericanWarner certificate of       
incorporation upon completion of the merger.                                    

CLASSIFIED BOARD                                                                

  WARNER-LAMBERT.  Under the Warner-Lambert certificate of incorporation and
Warner-Lambert by-laws, the Warner-Lambert board is not divided into separate   
classes and all directors are elected at each annual meeting of stockholders and
serve until the next annual meeting of stockholders.                            

 AHP.  Under the AHP certificate of incorporation and AHP by-laws, the AHP
board is not divided into separate classes and all directors are elected at each
annual meeting of stockholders and serve only until the next succeeding annual  
meeting of stockholders.                                                        

 AMERICANWARNER.  Upon completion of the merger, the provisions of the AHP
certificate of incorporation and AHP by-laws described above will be the        
provisions of the AmericanWarner certificate of incorporation and AmericanWarner
by-laws.                                                                        

OFFICERS                                                                        

WARNER-LAMBERT.  Pursuant to the Warner-Lambert by-laws, officers may be
elected by the board at any regular or special meeting of the board, provided   
that the removal of an officer requires the affirmative vote of a majority of   
the board.                                                                      

    AHP.  Pursuant to the AHP by-laws, principal officers are chosen annually by
the board and the AHP board may appoint other officers for such terms as        
determined by the AHP board, provided that the removal of a principal officer   
requires the affirmative vote of a majority of the entire AHP board.            

AMERICANWARNER.  Pursuant to the AmericanWarner by-laws, the officers of
AmericanWarner will include a Chairman and a Chief Executive Officer. The       
Chairman will have the power to chair and conduct all meetings of the           
AmericanWarner board. The Chief Executive Officer will supervise, coordinate and
manage all aspects of AmericanWarner's business and activities, will coordinate 
and manage the operating expenses and capital allocation of AmericanWarner,     
shall have general and active supervision of AmericanWarner's property and      
business, will have general authority to exercise all the powers necessary for a
Chief Executive Officer and will have the power to perform such other duties and
have such other powers as may be prescribed by the AmericanWarner board or the  
AmericanWarner by-laws, all in accordance with the basic policies established   
by, and subject to, the oversight of the AmericanWarner board. Mr. Stafford will
be the Chairman following completion of the merger until 18 months after the    
consummation of the merger, unless removed prior to such time by the affirmative
vote of 75% of the entire AmericanWarner board. From that date, Mr. de Vink will
become Chairman, unless his appointment is opposed by the affirmative vote of   
75% of the entire AmericanWarner board. After that appointment and until        
December 31, 2002, Mr. de Vink may only be removed as chairman by the           
affirmative vote of 75% of the entire AmericanWarner board.                     

91

PREM14A
98th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 98th
Following completion of the merger, Mr. de Vink will be the Chief Executive     
Officer of AmericanWarner and report to the board of directors. Until December  
31, 2002, Mr. de Vink may only be removed as Chief Executive Officer by the     
affirmative vote of 75% of the entire AmericanWarner board.                     

ADVANCE NOTICE OF STOCKHOLDER-PROPOSED BUSINESS AT ANNUAL MEETINGS              

   WARNER-LAMBERT.  The Warner-Lambert by-laws provide that for business to be
brought before an annual meeting by a stockholder, written notice must be       
delivered or mailed to the Secretary of Warner-Lambert and received at least 120
days prior to the first anniversary of the preceding year's annual meeting or   
not later than ten days after notice or public disclosure of the date of the    
annual meeting shall be given or made to stockholders, whichever date shall be  
earlier. The Warner-Lambert by-laws provide that the stockholder's notice must  
set forth as to each matter the stockholder proposes to bring before the annual 
meeting the following:                                                          

   - a description of the business to be brought before the annual meeting and
the reasons for conducting such business at such meeting;           

- the name and address of the stockholder proposing such business;      

    - the class and number of shares of Warner-Lambert's stock which are held of
      record, held beneficially and represented by proxy by that stockholder and
   a representation that the stockholder intends to appear in person or by
proxy at the meeting to make the proposal; and                      

- any material interest of the stockholder in such business.            

 In addition, the Warner-Lambert by-laws provide that for a stockholder to
properly nominate a director at a meeting of stockholders, the stockholder must 
give notice in writing, delivered or mailed to the Secretary of Warner-Lambert  
and received:                                                                   

   - in the case of an annual meeting, 120 days prior to the first anniversary
of the preceding year's annual meeting; or                          

    - in the case of a special meeting at which directors are to be elected, the
      close of business on the seventh day following the date on which notice of
the meeting is first made.                                          

The stockholder's notice must set forth:                                        

- as to the stockholder giving the notice, the name and address of such 
   stockholder and the class and number of shares of Warner-Lambert common
      stock which are held by record, held beneficially and represented by proxy
    by that stockholder and a representation that the stockholder intends to
appear in person or by proxy at the meeting to make the proposal;   

- a description of all arrangements or understandings between the       
     stockholder and each nominee and any other person or persons (naming that
     person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder;                                         

 - other information regarding each nominee proposed by the stockholder as
would have been required to be included in a proxy statement filed  
      pursuant to the proxy rules of the SEC had each nominee been nominated, or
intended to be nominated, by the board of directors; and            

- the consent in writing of each nominee to serve as a director if so   
elected.                                                            

AHP.  The AHP certificate of incorporation and the AHP by-laws do not   
include a provision which requires that advance notice be given to AHP of       
stockholder-proposed business to be conducted at annual meetings. The AHP       
by-laws do, however, require that any stockholder entitled to vote in the       
election of directors generally may nominate one or more individuals for        
election as directors only if written notice of such stockholder's intent to    
make such nomination or nominations has been given,                             

92

PREM14A
99th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 99th
either by personal delivery or by United States mail, postage prepaid, to the   
Secretary of AHP not later than:                                                

- with respect to an election to be held at an annual meeting of        
  stockholders, 90 days prior to the anniversary date of the immediately
preceding annual meeting; and                                       

- with respect to an election to be held at a special meeting of        
    stockholders for the election of directors, the close of business on the
 tenth day following the date on which notice of that meeting is first
given to stockholders.                                              

Each notice shall set forth:                                                    

    - the name and address of the stockholder who intends to make the nomination
and of the individual or individuals to be nominated;               

 - a representation that the stockholder is a holder of record of stock of
     AHP entitled to vote at the meeting and intends to appear in person or by
    proxy at the meeting to nominate the individual or individuals specified
in the notice;                                                      

- a description of all arrangements or understandings between the       
stockholder and each nominee and any other individual or individuals
    (naming such individual or individuals) pursuant to which the nomination
or nominations are to be made by the stockholder;                   

 - other information regarding each nominee proposed by the stockholder as
would have been required to be included in a proxy statement filed  
pursuant to the proxy rules of the SEC; and                         

  - the consent of each nominee to serve as a director of AHP if so elected.

AMERICANWARNER.  Upon completion of the merger, the provisions of the   
AmericanWarner certificate of incorporation and the AmericanWarner by-laws      
regarding advance notice of stockholder proposals will be the same as the       
provisions of the AHP certificate of incorporation and the AHP by-laws described
above.                                                                          

AMENDMENTS TO GOVERNING DOCUMENTS                                               

WARNER-LAMBERT.  Pursuant to the Delaware General Corporation Law, the  
Warner-Lambert certificate of incorporation may generally be amended by the     
affirmative vote of the holders of a majority of the voting power of the        
outstanding stock. The Warner-Lambert certificate of incorporation and the      
Warner-Lambert by-laws further provide that the Warner-Lambert board may, by the
affirmative vote of a majority of the entire Warner-Lambert board, amend the    
Warner-Lambert by-laws, subject to the power of the stockholders to amend the   
Warner-Lambert by-laws.                                                         

   AHP.  Pursuant to the Delaware General Corporation Law, the AHP certificate
of incorporation may generally be amended by the affirmative vote of the holders
of a majority of the voting power of the outstanding stock, provided that the   
affirmative vote of the holders of at least 80% of the combined voting power of 
the then outstanding shares of stock entitled to vote generally in the election 
of directors, voting together as a single class, is required to amend the       
provisions of the AHP certificate of incorporation and the AHP by-laws relating 
to special meetings, the power, number, election, term and vacancies of the AHP 
board and the ability of stockholders to remove directors. Subject to the       
supermajority voting requirements listed above, the AHP by-laws may be amended  
by the affirmative vote of the holders of a majority of the voting power of the 
outstanding stock of AHP. All of the provisions of the AHP by-laws, other than  
those requiring supermajority stockholder approval listed above, may also be    
amended by the AHP board by vote of a majority of all the directors, subject to 
the right of the stockholders to alter or repeal such amendments of the AHP     
by-laws adopted by the AHP board as described above.                            

93

PREM14A
100th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 100th
AMERICANWARNER.  Upon completion of the merger, the provisions of the   
AmericanWarner certificate of incorporation regarding amendments to the         
governing documents will be the same as those provisions in the AHP certificate 
of incorporation. Pursuant to the AmericanWarner by-laws, the unanimous         
affirmative vote of the entire AmericanWarner board will be required, until     
December 31, 2002, to amend the provisions pertaining to the composition and the
powers of the Chairman and Chief Executive Officer, the removal of the Chairman 
and Chief Executive Officer, the necessary quorum for meetings of the           
AmericanWarner board, and representation of AHP and Warner-Lambert designees on 
the AmericanWarner board. Otherwise, except as required pursuant to the Delaware
General Corporation Law or the AmericanWarner certificate of incorporation, the 
AmericanWarner by-laws may generally be amended by the affirmative vote of the  
holders of a majority of the voting power of the outstanding AmericanWarner     
stock or by the AmericanWarner board by a vote of a majority of all of the      
directors.                                                                      

RIGHTS PLANS                                                                    

  WARNER-LAMBERT.  Warner-Lambert has adopted a stockholder rights plan that
provides that, after a person or group acquires 15% or more of the outstanding  
Warner-Lambert common stock, the holder of a share of Warner-Lambert common     
stock, other than the acquiring person, is entitled to purchase, at the exercise
price of $400, additional Warner-Lambert shares having a current market value of
two times the exercise price. In addition, if Warner-Lambert is acquired in a   
merger or other business combination, each right will entitle the holder to     
purchase, at the exercise price, common stock of the acquiror having a current  
market value of two times the exercise price. Prior to there being an acquiring 
person, the Warner-Lambert board may redeem the rights issued under the rights  
agreement for $0.003 per right or amend the rights agreement in any manner      
without the consent of the holders of the rights. In connection with the merger 
agreement and as approved by the Warner-Lambert board of directors,             
Warner-Lambert amended its rights agreement to provide that none of AHP or any  
of its affiliates will become an acquiring person by reason of the approval,    
execution or delivery of the merger agreement or the consummation of the        
transactions contemplated by the merger agreement.                              

   AHP.  AHP has adopted a stockholder rights plan that provides that, after a
person or group acquires 15% or more of the outstanding AHP common stock, the   
holder of a share of AHP common stock, other than the acquiring person, is      
entitled to purchase, at the exercise price of $225, additional AHP shares      
having a current market value of two times the exercise price. In addition, if  
AHP is acquired in a merger or other business combination, each right will      
entitle the holder to purchase, at the exercise price, common stock of the      
acquiror having a current market value of two times the exercise price. Prior to
there being an acquiring person, the AHP board may redeem the rights issued     
under the rights agreement for $0.01 per right or amend the rights agreement in 
any manner without the consent of the holders of the rights. In connection with 
the merger agreement and as approved by the AHP board of directors, AHP amended 
its rights agreement to provide that none of Warner-Lambert or any of its       
affiliates will become an acquiring person and that no shares acquisition date  
or distribution date will occur by reason of the approval, execution or delivery
of the merger agreement or the consummation of the transactions contemplated by 
the merger agreement.                                                           

    AMERICANWARNER.  Upon the completion of the merger, AHP's stockholder rights
plan will become AmericanWarner's stockholder rights plan.                      

94

PREM14A
101st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 101st
DESCRIPTION OF AMERICANWARNER CAPITAL STOCK 

THE FOLLOWING DESCRIPTION OF CERTAIN TERMS OF THE CAPITAL STOCK OF      
AMERICANWARNER DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY 
BY REFERENCE TO THE AHP CERTIFICATE OF INCORPORATION AND THE PROPOSED AMENDMENTS
TO THE AHP CERTIFICATE OF INCORPORATION. FOR MORE INFORMATION AS TO HOW YOU CAN 
OBTAIN THE AHP CERTIFICATE OF INCORPORATION, WHICH WILL BECOME THE              
AMERICANWARNER CERTIFICATE OF INCORPORATION UPON THE MERGER, SEE "WHERE YOU CAN 
FIND MORE INFORMATION."                                                         

AMERICANWARNER COMMON STOCK                                                     

The AmericanWarner certificate of incorporation will authorize          
AmericanWarner to issue up to       shares of AmericanWarner common stock, par  
value $0.33 1/3 per share. Each share of AmericanWarner common stock will be    
entitled to one vote, in person or by proxy, at any and all meetings of the     
holders of common stock on all proposals before such meetings and on all        
elections of directors by holders of common stock. The AmericanWarner           
certificate of incorporation will not provide for cumulative voting in the      
election of directors. Subject to any preferential rights of any outstanding    
series of AmericanWarner preferred stock created by the board from time to time,
the holders of AmericanWarner common stock will be entitled to dividends only   
if, when and as declared by the AmericanWarner board and as may be permitted by 
law and, upon liquidation, will be entitled to receive PRO RATA all assets of   
AmericanWarner available for distribution to such holders. For a description of 
voting requirements and change of control restrictions, see "Comparison of      
Stockholders' Rights."                                                          

AMERICANWARNER PREFERRED STOCK                                                  

As a result of the name change, each share of AHP's preferred stock     
outstanding at the effective time of the merger will become an outstanding share
of AmericanWarner preferred stock. Holders of outstanding AmericanWarner        
preferred stock will be entitled to receive dividends in cash at the rate of    
$0.50 per share per calendar quarter. The AmericanWarner preferred stock will be
convertible at the option of the holder into thirty-six shares of AmericanWarner
common stock. If the average price of the AmericanWarner common stock over a    
five consecutive business day period is at least $80 per share, the             
AmericanWarner preferred stock will be redeemable at a price of $60 per share   
plus an amount equal to all accrued but unpaid dividends thereon to the         
redemption date. The AmericanWarner preferred stock will have a preference of   
$60 per share in the event of voluntary liquidation, dissolution or winding up  
of AmericanWarner and $52.50 per share in the event of involuntary liquidation, 
dissolution or winding up of AmericanWarner, plus, in either case, an amount    
equal to all accrued but unpaid dividends to the date of such liquidation,      
dissolution or winding up of AmericanWarner. The holders of the AmericanWarner  
preferred stock will be entitled to thirty-six votes per share when voting with 
the shares of common stock at any annual or special meeting of stockholders for 
the election of directors and upon any other matter coming before such meeting. 

   In connection with its stockholder rights plan, AmericanWarner will also be
authorized to issue up to 2,500,000 shares of Series A junior participating     
preferred stock.                                                                

 AmericanWarner will also be authorized to issue up to          additional
shares of preferred stock, par value $2.50 per share, from time to time in one  
or more additional series and with such designation for each such series as     
determined by the AmericanWarner board. The AmericanWarner board may, without   
further action by the AmericanWarner stockholders, issue additional series of   
AmericanWarner preferred stock and state and fix the rights and preferences of  
those shares, including:                                                        

- the voting powers, if any, of the shares of stock of such series;     

- the number of shares to constitute each series and the distinctive    
description of each series;                                         

95

PREM14A
102nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 102nd
   - the rate per annum and the times at and conditions upon which the holders
      of stock of such series will be entitled to receive dividends, and whether
      such dividends will be cumulative or noncumulative and, if cumulative, the
terms upon which such dividends will be cumulative;                 

  - whether or not the shares will be redeemable and the price or prices and
      the time or times and the manner in which the stock of such series will be
redeemable;                                                         

  - the right and preferences, if any, to which the holders of the shares of
    stock of such series shall be entitled upon any voluntary or involuntary
dissolution of or distribution of assets of AmericanWarner;         

- whether or not the shares of such series shall be subject to the      
      operations of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement and, if such retirement or 
     sinking funds are established, the annual amount and terms and provisions
relating to the operation of such retirement or sinking fund;       

- the terms, if any, upon which shares of stock of such series shall be 
     convertible into, or exchangeable for, shares of stock of any other class
or classes or of any other series of the same or any other class or 
     classes, including the price or prices or the rate or rates of conversion
or exchange and the terms of adjustment, if any; and                

  - any other special rights and protective provisions as the AmericanWarner
board may deem advisable;                                           

AMERICANWARNER RIGHTS PLAN                                                      

On October 7, 1999, the AHP board authorized the issuance of, and on    
October 13, 1999 declared, a dividend distributing one preferred share purchase 
right for each outstanding share of AHP common stock, pursuant to a rights      
agreement between AHP and ChaseMellon Shareholder Services, L.L.C., as Rights   
Agent. As of the effective time of the merger, the AHP rights plan will become  
the AmericanWarner rights plan. Each right entitles the registered holder to    
purchase one one-thousandth of a share of series A junior participating         
preferred stock at an exercise price of $225 per one one-thousandth of a share  
of series A junior participating preferred stock, subject to adjustment. The    
rights become exercisable on the earlier of:                                    

- the tenth day after a public announcement that a person or group of   
  affiliated or associated persons has acquired or obtained the right to
  acquire 15% or more of the outstanding shares of common stock (thereby
becoming an "acquiring person"); and                                

- the tenth business day after the commencement, or announcement of an  
   intention to commence, a tender offer or exchange offer by a person who
would, upon completion of the offer, become an acquiring person.    

   The rights expire on October 7, 2009 unless earlier redeemed or extended by
the AmericanWarner board of directors as described below.                       

If a person or group becomes an acquiring person, each holder of a right
(except those held by the acquiring person and its affiliates and associates)   
will have the right to purchase, upon exercise, shares of AmericanWarner common 
stock having a market value equal to two times the exercise price of the right. 
In addition, in the event that, at any time after a person becomes an acquiring 
person, AmericanWarner is involved in a merger or other business combination or 
50% or more of AmericanWarner's consolidated assets or earning power are sold,  
provisions will be made so that each right--other than rights that are or were  
owned by the acquiring person and its affiliates and associates, which will     
thereafter be void--will thereafter have the right to receive, upon exercise,   
the number of shares of common stock of the acquiring company having a market   
value of two times the exercise price of the right. In addition, at any time    
after any person or group becomes an acquiring person and                       

96

PREM14A
103rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 103rd
before any person or group acquires 50% or more of the outstanding shares of    
AmericanWarner common stock, the AmericanWarner board of directors may exchange 
the rights (other than rights owned by the acquiring person which will have     
become void), in whole or in part, at an exchange ratio of one share of         
AmericanWarner common stock per right (subject to adjustment).                  

  The AmericanWarner board of directors may redeem all but not less than all
rights at a redemption price of $.01 per right at any time prior to the time    
that a person or group has become an acquiring person. Immediately upon         
redemption, the right to exercise will terminate, and the only right of holders 
will be to receive the redemption price. As long as the rights are redeemable,  
the terms of the rights may be amended by the AmericanWarner board of directors 
in its discretion without the consent of the rights holders. After a person     
becomes an acquiring person, no amendment may adversely affect the interests of 
the rights holder (other than the acquiring person).                            

The rights will not prevent a takeover of AmericanWarner. The rights,   
however, may have certain anti-takeover effects. The rights may cause           
substantial dilution to a person or group that attempts to acquire              
AmericanWarner on terms not approved by the AmericanWarner board of directors or
make the acquisition of AmericanWarner substantially more costly, unless the    
AmericanWarner board of directors redeems the rights prior to the person        
becoming an acquiring person. The rights should not interfere with any merger or
other business combination approved by the AmericanWarner board because of the  
board's ability to redeem the rights or amend the AmericanWarner rights plan. A 
description of the rights plan specifying the terms of the rights and the series
A junior participating preferred stock has been included in reports filed by AHP
with the SEC. See "Where You Can Find More Information." This summary           
description is qualified in its entirety by reference to the rights plan.       

  Each share of AmericanWarner common stock issued in the merger will have a
corresponding right attached to it.                                             

TRANSFER AGENT AND REGISTRAR                                                    

ChaseMellon Shareholder Services, L.L.C. will be the transfer agent and 
registrar for the AmericanWarner common stock.                                  

97

PREM14A
104th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 104th
LEGAL MATTERS 

  The validity of the AmericanWarner common stock to be issued in connection
with the merger will be passed on by Louis L. Hoynes, Jr., Esq., Senior Vice    
President and General Counsel of AHP. In addition, Simpson Thacher & Bartlett,  
counsel for AHP, and Skadden, Arps, Slate, Meagher & Flom LLP, counsel for      
Warner-Lambert, have delivered opinions to their respective clients concerning  
certain federal income tax consequences of the merger. See "The Proposed        
Merger--Material United States Federal Income Tax Consequences."                

EXPERTS 

The audited consolidated financial statements and schedule of AHP at    
December 31, 1998 and 1997 and for each of the three years in the period ended  
December 31, 1998 incorporated by reference in this joint proxy                 
statement/prospectus from AHP's Annual Report on Form 10-K for the year ended   
December 31, 1998, have been audited by Arthur Andersen LLP, independent public 
accountants, as indicated in their reports with respect thereto and are         
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of said firm given upon the authority of said firm as experts in    
accounting and auditing.                                                        

   The financial statements of Warner-Lambert incorporated in this joint proxy
statement/prospectus by reference to the Annual Report on Form 10-K, as amended,
of Warner-Lambert for the year ended December 31, 1998 (such financial          
statements have not been restated to give effect to the pooling of interests    
business combination consummated with Agouron Pharmaceuticals, Inc. on May 17,  
1999) and the audited historical financial statements included in               
Warner-Lambert's Form 8-K dated December 17, 1999 have been so incorporated in  
reliance on the reports of PricewaterhouseCoopers LLP, independent public       
accountants, given on the authority of said firm as experts in accounting and   
auditing.                                                                       

   Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Warner-Lambert special meeting and representatives of Arthur Andersen LLP   
are expected to be present at the AHP special meeting, where they will have the 
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.                                               

FUTURE STOCKHOLDER PROPOSALS

   SEC rules set forth standards as to what stockholder proposals are required
to be included in a proxy statement. The deadline for submission of stockholder 
proposals for inclusion in the proxy materials for the 2000 annual meeting of   
AHP (or, if the merger closes prior to that date, the 2000 annual meeting of    
AmericanWarner) as disclosed in the AHP proxy statement for the 1999 annual     
meeting of stockholders was November 19, 1999. In addition, the AHP by-laws     
provide that any stockholder wishing to make a nomination for director at the   
2000 annual meeting of AHP must give notice by January 23, 2000, subject to     
certain exceptions, and that notice must meet certain other requirements set    
forth in the AHP by-laws. A copy of the AHP by-laws may be obtained from the    
Secretary of AHP. See "Comparison of Stockholders' Rights--Advance Notice of    
Stockholder-Proposed Business at Annual Meetings." Under rules adopted by the   
SEC, if a stockholder notifies AHP of such stockholder's intent to present a    
proposal for consideration at AHP's 2000 annual meeting after February 2, 2000, 
AHP, acting through the persons named as proxies in the proxy materials for such
meeting, may exercise discretionary voting authority with respect to such       
proposal without including information regarding such proposal in its proxy     
materials.                                                                      

Warner-Lambert expects to hold an annual meeting of stockholders in the 
second quarter of 2000 unless the merger is completed prior to that meeting. Any
Warner-Lambert stockholder who intended to present a proposal at such meeting   
and sought to have the proposal included in the proxy materials for the 2000    
meeting, pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, must    
have                                                                            

98

PREM14A
105th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 105th
submitted the proposal to the Secretary of Warner-Lambert no later than the     
close of business on November 9, 1999. Warner-Lambert's by-laws provide that,   
subject to certain exceptions, if a stockholder wishes to make a nomination for 
director at the 2000 annual meeting or present any other matter that is outside 
of the processes of Rule 14a-8, notice must be given to Warner-Lambert by       
December 29, 1999. Such notice must meet certain other requirements set forth in
the Warner-Lambert by-laws. After that date, the proposal will be considered    
untimely and Warner-Lambert's proxies will have discretionary voting authority  
with respect to such matter. Any proposals, as well as any related questions,   
should be directed to the Secretary of Warner-Lambert.                          

WHERE YOU CAN FIND MORE INFORMATION 

AHP and Warner-Lambert file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any        
reports, statements or other information we file at the SEC's public reference  
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from commercial document       
retrieval services and at the world wide web site maintained by the SEC at      
"http://www.sec.gov."                                                           

   AHP has filed a Form S-4 to register with the SEC the AmericanWarner common
stock to be issued to Warner-Lambert stockholders in the merger. This document  
is a part of the Form S-4 and constitutes a prospectus of AHP in addition to    
being a proxy statement of AHP and Warner-Lambert for the AHP special meeting   
and the Warner-Lambert special meeting, respectively. As allowed by SEC rules,  
this document does not contain all the information you can find in the Form S-4 
or the exhibits to the Form S-4.                                                

The SEC allows us to "incorporate by reference" information into this   
document, which means that we can disclose important information to you by      
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this document, except for any 
information superseded by information in this document. This document           
incorporates by reference the documents set forth below that we have previously 
filed with the SEC. These documents contain important information about our     
companies and their finances.                                                   

                                                                [Download Table]

AHP SEC FILINGS (FILE NO. 1-1225)                       PERIOD                    
---------------------------------    ---------------------------------------------
                                                                                  
Annual Report on Form 10-K           Year ended December 31, 1998                 

Quarterly Reports on Form 10-Q       Quarters ended March 31, 1999, June 30, 1999 
                                     and September 30, 1999                       

Current Reports on Form 8-K          Filed on June 2, 1999, October 8, 1999,      
                                     October 14, 1999, November 8, 1999, November 
                                     9, 1999, November 18, 1999, November 19,     
                                     1999, November 22, 1999 and November 24, 1999

Registration Statements on Form 8-A  Filed on August 27, 1992 and October 14, 1999
                                     (as amended on November 18, 1999)            

99

PREM14A
106th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 106th
                                                        [Enlarge/Download Table]

WARNER-LAMBERT SEC FILINGS (FILE NO. 1-3608)                     PERIOD                    
--------------------------------------------  ---------------------------------------------
                                                                                           
Annual Report on Form 10-K/A                  Year ended December 31, 1998                 

Quarterly Reports on Form 10-Q                Quarters ended March 31, 1999, June 30, 1999,
                                              and September 30, 1999                       

Current Reports on Form 8-K                   Filed on January 28, 1999, May 18, 1999,     
                                              November 8, 1999, November 9, 1999, November 
                                              12, 1999, November 16, 1999, November 22,    
                                              1999, November 30, 1999, December 2, 1999 and
                                              December 17, 1999, which restates Warner-    
                                              Lambert's historical financial statements to 
                                              reflect the acquisition of Agouron           
                                              Pharmaceuticals, Inc.                        

Registration Statement on Form 8-A            March 27, 1997 (as amended on November 12,   
                                              1999)                                        

We are also incorporating by reference additional documents that we file
with the SEC after the date of this document and prior to the termination of the
offering of AmericanWarner common stock to which this document relates.         

  AHP has supplied all information contained or incorporated by reference in
this document about AHP and all information about Warner-Lambert has been       
supplied by Warner-Lambert.                                                     

If you are a stockholder, we may have sent you some of the documents    
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge,       
excluding all exhibits unless we have specifically incorporated by reference an 
exhibit in this document. Stockholders of AHP and Warner-Lambert may obtain     
documents incorporated by reference in this document by requesting them in      
writing or by telephone from the appropriate party at the following addresses:  

                                                                [Download Table]
                                                                              
AMERICAN HOME PRODUCTS CORPORATION             WARNER-LAMBERT COMPANY         
Five Giralda Farms                             201 Tabor Road                 
Madison, New Jersey 07940                      Morris Plains, New Jersey 07950
Attention: Eileen M. Lach,                     Attention: Rae G. Paltiel,     
Corporate Secretary                            Corporate Secretary            
(973) 660-6073                                 (973) 385-4593                 

  If you would like to request documents from us, please do so by          ,
2000 to receive them prior to the special meetings.                             

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY    
REFERENCE IN THIS DOCUMENT TO VOTE ON THE PROPOSALS INCLUDED IN THIS DOCUMENT.  
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT 
FROM WHAT IS CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS DATED          , 2000.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS DOCUMENT IS        
ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THIS   
DOCUMENT TO STOCKHOLDERS OF AHP AND WARNER-LAMBERT NOR THE ISSUANCE OF          
AMERICANWARNER COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE   
CONTRARY.                                                                       

100 

PREM14A
107th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 107th
                                                                      APPENDIX A

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 3, 1999
AMONG 
AMERICAN HOME PRODUCTS CORPORATION, 
WOLVERINE SUB CORP. 
AND 
WARNER-LAMBERT COMPANY

---------------------------------------------------------                       
---------------------------------------------------------                       

A-1 

PREM14A
108th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 108th
TABLE OF CONTENTS 

                                                                [Download Table]

                                            PAGE  
                                          --------
                                                  
ARTICLE I                                         

                                                                [Download Table]
                                                                    
THE MERGER; CERTAIN RELATED MATTERS.........................     A-6

                                                                [Download Table]
                                                                              
1.1  THE MERGER.......................................................     A-6
1.2  CLOSING..........................................................     A-7
1.3  EFFECTIVE TIME...................................................     A-7
1.4  EFFECTS OF THE MERGER............................................     A-7
1.5  CERTIFICATE OF INCORPORATION.....................................     A-7
1.6  BYLAWS...........................................................     A-7
1.7  OFFICERS AND DIRECTORS OF SURVIVING CORPORATION AND NEWCO........     A-7
1.8  EFFECT ON CAPITAL STOCK..........................................     A-8
1.9  WARNER-LAMBERT STOCK OPTIONS AND OTHER EQUITY-BASED AWARDS.......     A-8
1.10 CERTAIN ADJUSTMENTS..............................................     A-9
1.11 ASSOCIATED RIGHTS................................................    A-10

                             ARTICLE II                                       

                                                                [Download Table]
                                                                    
EXCHANGE OF CERTIFICATES....................................    A-10

                                                                [Download Table]
                                                                              
2.1  EXCHANGE FUND....................................................    A-10
2.2  EXCHANGE PROCEDURES..............................................    A-10
2.3  DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.................    A-11
2.4  NO FURTHER OWNERSHIP RIGHTS IN WARNER-LAMBERT COMMON STOCK.......    A-11
2.5  NO FRACTIONAL SHARES OF AHP COMMON STOCK.........................    A-11
2.6  TERMINATION OF EXCHANGE FUND.....................................    A-11
2.7  NO LIABILITY.....................................................    A-12
2.8  INVESTMENT OF THE EXCHANGE FUND..................................    A-12
2.9  LOST CERTIFICATES................................................    A-12
2.10 WITHHOLDING RIGHTS...............................................    A-12
2.11 FURTHER ASSURANCES...............................................    A-12
2.12 STOCK TRANSFER BOOKS.............................................    A-12
2.13 AFFILIATES.......................................................    A-12

                             ARTICLE III                                      

                                                                [Download Table]
                                                                    
REPRESENTATIONS AND WARRANTIES..............................    A-13

                                                                [Download Table]
                                                                              
3.1  REPRESENTATIONS AND WARRANTIES OF AHP............................    A-13
                                                                          A-13
     (a)  ORGANIZATION, STANDING AND POWER; SUBSIDIARIES..............        
                                                                          A-13
     (b)  CAPITAL STRUCTURE...........................................        
                                                                          A-14
     (c)  AUTHORITY; NO CONFLICTS.....................................        
                                                                          A-15
     (d)  REPORTS AND FINANCIAL STATEMENTS............................        
                                                                          A-16
     (e)  INFORMATION SUPPLIED........................................        
                                                                          A-16
     (f)  BOARD APPROVAL..............................................        
                                                                          A-17
     (g)  VOTE REQUIRED...............................................        
                                                                          A-17
     (h)  LITIGATION; COMPLIANCE WITH LAWS............................        
                                                                          A-17
     (i)  ABSENCE OF CERTAIN CHANGES OR EVENTS........................        
                                                                          A-18
     (j)  ENVIRONMENTAL MATTERS.......................................        
                                                                          A-19
     (k)  INTELLECTUAL PROPERTY.......................................        
                                                                          A-19
     (l)  BROKERS OR FINDERS..........................................        
                                                                          A-19
     (m)  OPINIONS OF AHP FINANCIAL ADVISORS..........................        
                                                                          A-19
     (n)  ACCOUNTING MATTERS..........................................        

A-2 

PREM14A
109th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 109th
                                                                [Download Table]

                                                                          PAGE  
                                                                        --------
                                                                                
                                                                          A-19  
     (o)  TAXES.......................................................          
                                                                          A-20  
     (p)  CERTAIN CONTRACTS...........................................          
                                                                          A-20  
     (q)  AHP STOCKHOLDER RIGHTS PLAN.................................          
3.2  REPRESENTATIONS AND WARRANTIES OF WARNER-LAMBERT.................    A-20  
                                                                          A-20  
     (a)  ORGANIZATION, STANDING AND POWER; SUBSIDIARIES..............          
                                                                          A-21  
     (b)  CAPITAL STRUCTURE...........................................          
                                                                          A-22  
     (c)  AUTHORITY; NO CONFLICTS.....................................          
                                                                          A-23  
     (d)  REPORTS AND FINANCIAL STATEMENTS............................          
                                                                          A-23  
     (e)  INFORMATION SUPPLIED........................................          
                                                                          A-23  
     (f)  BOARD APPROVAL..............................................          
                                                                          A-24  
     (g)  VOTE REQUIRED...............................................          
                                                                          A-24  
     (h)  LITIGATION; COMPLIANCE WITH LAWS............................          
                                                                          A-24  
     (i)  ABSENCE OF CERTAIN CHANGES OR EVENTS........................          
                                                                          A-25  
     (j)  ENVIRONMENTAL MATTERS.......................................          
                                                                          A-25  
     (k)  INTELLECTUAL PROPERTY.......................................          
                                                                          A-25  
     (l)  BROKERS OR FINDERS..........................................          
                                                                          A-26  
     (m)  OPINION OF WARNER-LAMBERT FINANCIAL ADVISOR.................          
                                                                          A-26  
     (n)  ACCOUNTING MATTERS..........................................          
                                                                          A-26  
     (o)  TAXES.......................................................          
                                                                          A-26  
     (p)  CERTAIN CONTRACTS...........................................          
                                                                          A-26  
     (q)  WARNER-LAMBERT STOCKHOLDER RIGHTS PLAN......................          
3.3  REPRESENTATIONS AND WARRANTIES OF AHP AND MERGER SUB.............    A-26  
                                                                          A-26  
     (a)  ORGANIZATION................................................          
                                                                          A-26  
     (b)  CORPORATE AUTHORIZATION.....................................          
                                                                          A-27  
     (c)  NON-CONTRAVENTION...........................................          
                                                                          A-27  
     (d)  NO BUSINESS ACTIVITIES......................................          

                             ARTICLE IV                                         

                                                                [Download Table]
                                                                    
COVENANTS RELATING TO CONDUCT OF BUSINESS...................    A-27

                                                                [Download Table]
                                                                              
4.1  COVENANTS OF AHP.................................................    A-27
                                                                          A-27
     (a)  ORDINARY COURSE.............................................        
                                                                          A-27
     (b)  DIVIDENDS; CHANGES IN SHARE CAPITAL.........................        
                                                                          A-28
     (c)  ISSUANCE OF SECURITIES......................................        
                                                                          A-28
     (d)  GOVERNING DOCUMENTS.........................................        
                                                                          A-28
     (e)  NO ACQUISITIONS.............................................        
                                                                          A-28
     (f)  NO DISPOSITIONS.............................................        
                                                                          A-28
     (g)  INVESTMENTS; INDEBTEDNESS...................................        
                                                                          A-29
     (h)  POOLING; TAX-FREE QUALIFICATION.............................        
                                                                          A-29
     (i)  COMPENSATION................................................        
                                                                          A-29
     (j)  ACCOUNTING METHODS; INCOME TAX ELECTIONS....................        
                                                                          A-29
     (k)  CERTAIN AGREEMENTS..........................................        
                                                                          A-29
     (l)  NO CHANGE OR AMENDMENT TO RIGHTS AGREEMENT..................        
                                                                          A-29
     (m)  NO RELATED ACTIONS..........................................        
4.2  COVENANTS OF WARNER-LAMBERT......................................    A-29
                                                                          A-30
     (a)  ORDINARY COURSE.............................................        
                                                                          A-30
     (b)  DIVIDENDS; CHANGES IN SHARE CAPITAL.........................        
                                                                          A-30
     (c)  ISSUANCE OF SECURITIES......................................        
                                                                          A-31
     (d)  GOVERNING DOCUMENTS.........................................        
                                                                          A-31
     (e)  NO ACQUISITIONS.............................................        
                                                                          A-31
     (f)  NO DISPOSITIONS.............................................        

A-3 

PREM14A
110th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 110th
                                                                [Download Table]

                                                                          PAGE  
                                                                        --------
                                                                                
                                                                          A-31  
     (g)  INVESTMENTS; INDEBTEDNESS...................................          
                                                                          A-32  
     (h)  POOLING; TAX-FREE QUALIFICATION.............................          
                                                                          A-32  
     (i)  COMPENSATION................................................          
                                                                          A-32  
     (j)  ACCOUNTING METHODS; INCOME TAX ELECTIONS....................          
                                                                          A-32  
     (k)  CERTAIN AGREEMENTS..........................................          
                                                                          A-32  
     (l)  NO CHANGE OR AMENDMENT TO RIGHTS AGREEMENT..................          
                                                                          A-32  
     (m)  NO RELATED ACTIONS..........................................          
4.3  GOVERNMENTAL FILINGS.............................................    A-32  
4.4  CONTROL OF OTHER PARTY'S BUSINESS................................    A-32  

                              ARTICLE V                                         

                                                                [Download Table]
                                                                    
ADDITIONAL AGREEMENTS.......................................    A-33

                                                                [Download Table]
                                                                              
5.1  PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETINGS............    A-33
5.2  NEWCO BOARD OF DIRECTORS; EXECUTIVE OFFICERS; NAME;                  A-35
     HEADQUARTERS.....................................................        
5.3  ACCESS TO INFORMATION............................................    A-36
5.4  REASONABLE BEST EFFORTS..........................................    A-36
5.5  ACQUISITION PROPOSALS............................................    A-38
5.6  EMPLOYEE BENEFITS MATTERS........................................    A-39
5.7  FEES AND EXPENSES................................................    A-40
5.8  DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE...........    A-40
5.9  PUBLIC ANNOUNCEMENTS.............................................    A-40
5.10 ACCOUNTANT'S LETTERS.............................................    A-41
5.11 LISTING OF SHARES OF AHP COMMON STOCK............................    A-41
5.12 DIVIDENDS........................................................    A-41
5.13 AFFILIATES.......................................................    A-42
5.14 SECTION 16 MATTERS...............................................    A-42
5.15 SPECIFIED LITIGATION.............................................    A-42

                             ARTICLE VI                                       

                                                                [Download Table]
                                                                    
CONDITIONS PRECEDENT........................................    A-43

                                                                [Download Table]
                                                                              
6.1  CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.......    A-43
                                                                          A-43
     (a)  STOCKHOLDER APPROVAL........................................        
                                                                          A-43
     (b)  NO INJUNCTIONS OR RESTRAINTS, ILLEGALITY....................        
                                                                          A-43
     (c)  HSR ACT; EC MERGER REGULATION...............................        
                                                                          A-43
     (d)  GOVERNMENTAL AND REGULATORY APPROVALS.......................        
                                                                          A-43
     (e)  NYSE LISTING................................................        
                                                                          A-43
     (f)  EFFECTIVENESS OF THE FORM S-4...............................        
                                                                          A-43
     (g)  POOLING.....................................................        
6.2  ADDITIONAL CONDITIONS TO OBLIGATIONS OF AHP AND MERGER SUB.......    A-44
                                                                          A-44
     (a)  REPRESENTATIONS AND WARRANTIES..............................        
                                                                          A-44
     (b)  PERFORMANCE OF OBLIGATIONS OF WARNER-LAMBERT................        
                                                                          A-44
     (c)  TAX OPINION.................................................        
                                                                          A-44
     (d)  WARNER-LAMBERT RIGHTS AGREEMENT.............................        
6.3  ADDITIONAL CONDITIONS TO OBLIGATIONS OF WARNER-LAMBERT...........    A-44
                                                                          A-44
     (a)  REPRESENTATIONS AND WARRANTIES..............................        
                                                                          A-44
     (b)  PERFORMANCE OF OBLIGATIONS OF AHP...........................        
                                                                          A-45
     (c)  TAX OPINION.................................................        
                                                                          A-45
     (d)  AHP RIGHTS AGREEMENT........................................        
                                                                          A-45
     (e)  AMENDMENTS..................................................        
                                                                          A-45
     (f)  SETTLEMENT AGREEMENT........................................        

A-4 

PREM14A
111th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 111th
                                                                [Download Table]

                                             PAGE  
                                           --------
                                                   
ARTICLE VII                                        

                                                                [Download Table]
                                                                    
TERMINATION AND AMENDMENT...................................    A-45

                                                                [Download Table]
                                                                              
7.1  TERMINATION......................................................    A-45
7.2  EFFECT OF TERMINATION............................................    A-47
7.3  AMENDMENT........................................................    A-51
7.4  EXTENSION; WAIVER................................................    A-51

                            ARTICLE VIII                                      

                                                                [Download Table]
                                                                    
GENERAL PROVISIONS..........................................    A-51

                                                                [Download Table]
                                                                              
8.1  NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.......    A-51
8.2  NOTICES..........................................................    A-51
8.3  INTERPRETATION...................................................    A-52
8.4  COUNTERPARTS.....................................................    A-52
8.5  ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES...................    A-52
8.6  GOVERNING LAW....................................................    A-52
8.7  SEVERABILITY.....................................................    A-52
8.8  ASSIGNMENT.......................................................    A-53
8.9  SUBMISSION TO JURISDICTION; WAIVERS..............................    A-53
8.10 ENFORCEMENT......................................................    A-53
8.11 DEFINITIONS......................................................    A-53

A-5 

PREM14A
112th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 112th
AGREEMENT AND PLAN OF MERGER, dated as of November 3, 1999 (this        
"AGREEMENT"), among AMERICAN HOME PRODUCTS CORPORATION, a Delaware corporation  
("AHP"), Wolverine Sub Corp., a Delaware corporation and a direct wholly-owned  
subsidiary of AHP ("MERGER SUB"), and WARNER-LAMBERT COMPANY, a Delaware        
corporation ("WARNER-LAMBERT").                                                 

WITNESSETH: 

    WHEREAS, the Boards of Directors of Warner-Lambert and AHP deem it advisable
and in the best interests of each corporation and its respective stockholders   
that Warner-Lambert and AHP engage in a business combination as peer firms in a 
merger of equals in order to advance the long-term strategic business interests 
of Warner-Lambert and AHP;                                                      

   WHEREAS, the combination of Warner-Lambert and AHP shall be effected by the
terms of this Agreement through a merger as outlined below (the "MERGER");      

WHEREAS, in furtherance thereof, the respective Boards of Directors of  
Warner-Lambert and AHP have approved the Merger, upon the terms and subject to  
the conditions set forth in this Agreement, pursuant to which each share of     
common stock, par value $1.00 per share, of Warner-Lambert ("WARNER-LAMBERT     
COMMON STOCK") issued and outstanding immediately prior to the Effective Time   
(as defined in Section 1.3), other than shares owned or held directly or        
indirectly by AHP or directly or indirectly by Warner-Lambert, will be converted
into the right to receive shares of common stock, par value $0.33 1/3 per share,
of AHP ("AHP COMMON STOCK") as set forth in Section 1.8;                        

WHEREAS, contemporaneously with the execution and delivery of this      
Agreement, (i) as a condition and inducement to AHP's willingness to enter into 
this Agreement and the AHP Stock Option Agreement referred to below, AHP and    
Warner-Lambert are entering into a Stock Option Agreement dated as of the date  
hereof in the form of Exhibit A (the "WARNER-LAMBERT STOCK OPTION AGREEMENT")   
pursuant to which Warner-Lambert is granting to AHP an option to purchase shares
of Warner-Lambert Common Stock and (ii) as a condition and inducement to        
Warner-Lambert's willingness to enter into this Agreement and the Warner-Lambert
Stock Option Agreement, Warner-Lambert and AHP are entering into a Stock Option 
Agreement dated as of the date hereof in the form of Exhibit B (the "AHP STOCK  
OPTION AGREEMENT", and together with the Warner-Lambert Stock Option Agreement, 
the "STOCK OPTION AGREEMENTS"), pursuant to which AHP is granting to            
Warner-Lambert an option to purchase shares of AHP Common Stock;                

WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the   
Internal Revenue Code of 1986, as amended (the "CODE"), and the regulations     
promulgated thereunder; and                                                     

 WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests transaction under United States         
generally accepted accounting principles ("GAAP").                              

NOW, THEREFORE, in consideration of the foregoing and the respective    
representations, warranties, covenants and agreements set forth in this         
Agreement and in the Stock Option Agreements, and intending to be legally bound 
hereby and thereby, the parties hereto agree as follows:                        

ARTICLE I 
THE MERGER; CERTAIN RELATED MATTERS 

   1.1  THE MERGER.  Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), Merger Sub shall be merged with and into Warner-Lambert at the         
Effective Time. Following the Merger, the separate                              

A-6 

PREM14A
113th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 113th
corporate existence of Merger Sub shall cease and Warner-Lambert shall continue 
as the surviving corporation (the "SURVIVING CORPORATION").                     

1.2  CLOSING.  Upon the terms and subject to the conditions set forth in
Article VI and the termination rights set forth in Article VII, the closing of  
the Merger (the "CLOSING") will take place on the first Business Day after the  
satisfaction or waiver (subject to applicable law) of the conditions (excluding 
conditions that, by their nature, cannot be satisfied until the Closing Date)   
set forth in Article VI, unless this Agreement has been theretofore terminated  
pursuant to its terms or unless another time or date is agreed to in writing by 
the parties hereto (the actual time and date of the Closing being referred to   
herein as the "CLOSING DATE"). The Closing shall be held at the offices of      
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, 10017,    
unless another place is agreed to in writing by the parties hereto.             

  1.3  EFFECTIVE TIME.  As soon as practicable following the satisfaction or
waiver (subject to applicable law) of the conditions set forth in Article VI, at
the Closing the parties shall (i) file a certificate of merger (the "CERTIFICATE
OF MERGER") in such form as is required by and executed in accordance with the  
relevant provisions of the DGCL and (ii) make all other filings or recordings   
required under the DGCL. The Merger shall become effective at such time as the  
Certificate of Merger is duly filed with the Delaware Secretary of State or at  
such subsequent time as AHP and Warner-Lambert shall agree and as shall be      
specified in the Certificate of Merger (the date and time the Merger becomes    
effective being the "EFFECTIVE TIME").                                          

1.4  EFFECTS OF THE MERGER.  At and after the Effective Time, the Merger
will have the effects set forth in the DGCL. Without limiting the generality of 
the foregoing, and subject thereto, at the Effective Time all the property,     
rights, privileges, powers and franchises of Warner-Lambert and Merger Sub shall
be vested in the Surviving Corporation, and all debts, liabilities and duties of
Warner-Lambert and Merger Sub shall become the debts, liabilities and duties of 
the Surviving Corporation.                                                      

   1.5  CERTIFICATE OF INCORPORATION.  (a) The certificate of incorporation of
Warner-Lambert, as in effect immediately prior to the Effective Time, shall be  
amended and restated so as to read in its entirety in the form set forth as     
Exhibit 1.5 and, as so amended and restated, shall be the certificate of        
incorporation of the Surviving Corporation, until thereafter changed or amended 
as provided therein or by applicable law.                                       

    (b) The certificate of incorporation of AHP shall be amended effective as of
the Effective Time as set forth on Exhibit 1.5(b) hereto. Such amendment is     
referred to herein as the "CERTIFICATE AMENDMENT."                              

    1.6  BYLAWS.  (a) The bylaws in the form attached as Exhibit 1.6(a) shall be
the bylaws of the Surviving Corporation until thereafter changed or amended as  
provided therein or by applicable law.                                          

    (b) The bylaws of AHP shall be amended effective as of the Effective Time to
the effect provided in Exhibit 1.6(b), with such changes therein as the parties 
may mutually agree. The amendment to the bylaws of AHP if the Bylaw Amendment   
Vote is obtained is referred to in this Agreement as the "AHP BYLAW AMENDMENT." 
For purposes of this agreement, the term "BYLAW AMENDMENT VOTE" means the       
affirmative vote of the holders of at least 80% of the combined voting power of 
the then outstanding shares of AHP stock entitled to vote generally in the      
election of directors, voting together as a single class.                       

1.7  OFFICERS AND DIRECTORS OF SURVIVING CORPORATION AND NEWCO.  The    
officers of Warner-Lambert as of the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or     
otherwise ceasing to be an officer or until their respective successors are duly
elected and qualified, as the case may be. The directors of the Surviving       
Corporation as of the Effective Time shall be as provided in Exhibit 1.7, which 
individuals will serve as directors of the Surviving Corporation until the      
earlier of their resignation or removal or otherwise ceasing to be a            

A-7 

PREM14A
114th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 114th
director or until their respective successors are duly elected and qualified.   
The officers and directors of AHP, as of the Effective Time, will be as provided
in Section 5.2. AHP as of and after the Effective Time is sometimes referred to 
herein as "NEWCO."                                                              

1.8  EFFECT ON CAPITAL STOCK.                                           

    (a) At the Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, each share of Warner-Lambert Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares of   
Warner-Lambert Common Stock owned by AHP or Merger Sub or held by               
Warner-Lambert, all of which shall be canceled as provided in Section 1.8(c)),  
together with the associated Warner-Lambert Rights, shall be converted into     
1.4919 validly issued, fully paid and non-assessable shares (the "EXCHANGE      
RATIO") of AHP Common Stock and the associated AHP Rights (as hereinafter       
defined) (together with any cash in lieu of fractional shares of AHP Common     
Stock to be paid pursuant to Section 2.5, the "MERGER CONSIDERATION").          

(b) As a result of the Merger and without any action on the part of the 
holders thereof, at the Effective Time, all shares of Warner-Lambert Common     
Stock (together with the associated Warner-Lambert Rights) shall cease to be    
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate which immediately prior to the Effective Time           
represented any such shares of Warner-Lambert Common Stock (a "CERTIFICATE")    
shall thereafter cease to have any rights with respect to such shares of        
Warner-Lambert Common Stock, except as provided herein or by law.               

(c) Each share of Warner-Lambert Common Stock issued and owned by AHP or
Merger Sub or held by Warner-Lambert at the Effective Time shall, by virtue of  
the Merger, cease to be outstanding and shall be canceled and retired and no    
stock of AHP or other consideration shall be delivered in exchange therefor.    

    (d) At the Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, each share of common stock, par value $0.01 per 
share, of Merger Sub issued and outstanding immediately prior to the Effective  
Time, shall be converted into one validly issued, fully paid and nonassessable  
share of common stock, par value $0.01 per share, of the Surviving Corporation. 

1.9  WARNER-LAMBERT STOCK OPTIONS AND OTHER EQUITY-BASED AWARDS.        

    (a) Each Warner-Lambert Stock Option (as defined in Section 3.2(b)) that was
granted pursuant to the Warner-Lambert Stock Option Plans (as defined in        
Section 3.2(b)) prior to the Effective Time and which remains outstanding       
immediately prior to the Effective Time shall cease to represent a right to     
acquire shares of Warner-Lambert Common Stock and shall be converted, at the    
Effective Time, into an option to acquire, on the same terms and conditions as  
were applicable under the Warner-Lambert Stock Option (but taking into account  
any changes thereto, including the acceleration thereof, provided for in the    
Warner-Lambert Stock Option Plans or in such option by reason of this Agreement 
or the transactions contemplated hereby), that number of shares of AHP Common   
Stock determined by multiplying the number of shares of Warner-Lambert Common   
Stock subject to such Warner-Lambert Stock Option by the Exchange Ratio,        
rounded, if necessary, to the nearest whole share of AHP Common Stock, at a     
price per share (rounded to the nearest one-hundredth of a cent) equal to the   
per share exercise price specified in such Warner-Lambert Stock Option divided  
by the Exchange Ratio; PROVIDED, HOWEVER, that in the case of any Warner-Lambert
Stock Option to which Section 421 of the Code applies by reason of its          
qualification under Section 422 of the Code, the option price, the number of    
shares subject to such option and the terms and conditions of exercise of such  
option shall be determined in a manner consistent with the requirements of      
Section 424(a) of the Code.                                                     

   (b) Pursuant to the Warner-Lambert Stock Option Plans, restricted shares of
Warner-Lambert Common Stock granted pursuant thereto which are outstanding      
immediately prior to the Effective                                              

A-8 

PREM14A
115th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 115th
Time shall become fully vested and free of restrictions as of the Effective Time
in accordance with the terms thereof. Each such award shall be converted, as of 
the Effective Time, into a number of shares of AHP Common Stock equal to the    
product of (1) the number of shares subject to the award and (2) the Exchange   
Ratio; and the number of shares of AHP Common Stock as so determined shall be   
delivered to the holder of each such award as soon as practicable following the 
Effective Time. On or prior to the Effective Time, Warner-Lambert will take all 
actions necessary such that awards of restricted shares are treated in          
accordance with the immediately preceding sentences, including, but not limited 
to, precluding each holder from receiving any cash payments in respect of such  
awards in connection with the Merger.                                           

 (c) All Warner-Lambert stock credits (including any fractions thereof) in
each stock account which is governed by the terms of Warner-Lambert's 1996 Stock
Plan ("WARNER-LAMBERT STOCK CREDITS") shall, as of the Effective Time, be       
converted into a number of AHP stock credits equal to the product of (1) the    
number of Warner-Lambert Stock Credits in such stock account immediately prior  
to the Effective Time and (2) the Exchange Ratio, and shall otherwise remain    
subject to the terms and conditions applicable to such Warner-Lambert Stock     
Credits. On or prior to the Effective Time, Warner-Lambert shall take all       
actions necessary to ensure that such Warner-Lambert Stock Credits are converted
in accordance with the immediately preceding sentence, including, but not       
limited to, precluding each holder from receiving any cash payments in respect  
of such stock account in connection with the Merger.                            

   (d) As soon as practicable after the Effective Time, Newco shall deliver to
the holders of Warner-Lambert Stock Options appropriate notices setting forth   
such holders' rights pursuant to the Warner-Lambert Stock Option Plans          
(including that, in connection with the Merger and pursuant to the terms of the 
Warner-Lambert Stock Option Plans, the Warner-Lambert Stock Options have become 
fully vested and exercisable) and the agreements evidencing the grants of such  
Warner-Lambert Stock Options shall continue in effect on the same terms and     
conditions (subject to the adjustments required by this Section 1.9 after giving
effect to the Merger and the terms of the Warner-Lambert Stock Option Plans). To
the extent permitted by law, Newco shall comply with the terms of the           
Warner-Lambert Stock Option Plans and shall take such reasonable steps as are   
necessary or required by, and subject to the provisions of, such Warner-Lambert 
Stock Option Plans, to have the Warner-Lambert Stock Options which qualified as 
incentive stock options prior to the Effective Time continue to qualify as      
incentive stock options of Newco after the Effective Time.                      

   (e) Newco shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of AHP Common Stock for delivery upon exercise of 
Warner-Lambert Stock Options or in connection with restricted shares or in      
connection with the settlement of stock accounts in accordance with this        
Section 1.9. Promptly after the Effective Time, Newco shall file a registration 
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of AHP Common Stock subject to   
such options or restricted shares or stock accounts and shall use commercially  
reasonable efforts to maintain the effectiveness of such registration statement 
or registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options, restricted shares  
or stock accounts remain outstanding. With respect to those individuals who     
subsequent to the Merger will be subject to the reporting requirements under    
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE 
ACT"), where applicable, Newco shall administer the Warner-Lambert Stock Option 
Plans in a manner consistent with the exemptions provided by Rule 16b-3         
promulgated under the Exchange Act.                                             

  1.10  CERTAIN ADJUSTMENTS.  If, between the date of this Agreement and the
Effective Time, the outstanding AHP Common Stock or Warner-Lambert Common Stock 
shall have been changed into a different number of shares or different class by 
reason of any reclassification, recapitalization, stock split, split-up,        
combination or exchange of shares or a stock dividend or dividend payable in any
other securities shall be declared with a record date within such period, or any
similar event shall have                                                        

A-9 

PREM14A
116th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 116th
occurred, the Exchange Ratio shall be appropriately adjusted to provide to the  
holders of Warner-Lambert Common Stock the same economic effect as contemplated 
by this Agreement prior to such event.                                          

1.11  ASSOCIATED RIGHTS.  References in Article I and Article II of this
Agreement to Warner-Lambert Common Stock shall include, unless the context      
requires otherwise, the associated Warner-Lambert Rights and references in      
Article I and Article II of this Agreement to AHP Common Stock shall include,   
unless the context requires otherwise, the associated AHP Rights.               

ARTICLE II
EXCHANGE OF CERTIFICATES

2.1  EXCHANGE FUND.  Prior to the Effective Time, AHP shall appoint a   
commercial bank or trust company reasonably acceptable to Warner-Lambert having 
net capital of not less than $300,000,000, or a subsidiary thereof, to act as   
exchange agent hereunder for the purpose of exchanging Certificates for the     
Merger Consideration (the "EXCHANGE AGENT"). At or prior to the Effective Time, 
AHP shall deposit with the Exchange Agent, in trust for the benefit of holders  
of shares of Warner-Lambert Common Stock, certificates representing the AHP     
Common Stock issuable pursuant to Section 1.8 in exchange for outstanding shares
of Warner-Lambert Common Stock. AHP agrees to make available to the Exchange    
Agent from time to time as needed, cash sufficient to pay cash in lieu of       
fractional shares pursuant to Section 2.5 and any dividends and other           
distributions pursuant to Section 2.3. Any cash and certificates of AHP Common  
Stock deposited with the Exchange Agent shall hereinafter be referred to as the 
"EXCHANGE FUND".                                                                

   2.2  EXCHANGE PROCEDURES.  Promptly after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of a          
Certificate (i) a letter of transmittal which shall specify that delivery shall 
be effected, and risk of loss and title to the Certificates shall pass, only    
upon proper delivery of the Certificates to the Exchange Agent, and which letter
shall be in customary form and have such other provisions as AHP may reasonably 
specify (such letter to be reasonably acceptable to Warner-Lambert prior to the 
Effective Time) and (ii) instructions for effecting the surrender of such       
Certificates in exchange for the applicable Merger Consideration. Upon surrender
of a Certificate to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and    
such other documents as may reasonably be required by the Exchange Agent, the   
holder of such Certificate shall be entitled to receive in exchange therefor    
(A) one or more shares of AHP Common Stock (which shall be in uncertificated    
book-entry form unless a physical certificate is requested) representing, in the
aggregate, the whole number of shares that such holder has the right to receive 
pursuant to Section 1.8 (after taking into account all shares of Warner-Lambert 
Common Stock then held by such holder) and (B) a check in the amount equal to   
the cash that such holder has the right to receive pursuant to the provisions of
this Article II, including cash in lieu of any fractional shares of AHP Common  
Stock pursuant to Section 2.5 and dividends and other distributions pursuant to 
Section 2.3. No interest will be paid or will accrue on any cash payable        
pursuant to Section 2.3 or Section 2.5. In the event of a transfer of ownership 
of Warner-Lambert Common Stock which is not registered in the transfer records  
of Warner-Lambert, one or more shares of AHP Common Stock evidencing, in the    
aggregate, the proper number of shares of AHP Common Stock, a check in the      
proper amount of cash in lieu of any fractional shares of AHP Common Stock      
pursuant to Section 2.5 and any dividends or other distributions to which such  
holder is entitled pursuant to Section 2.3, may be issued with respect to such  
Warner-Lambert Common Stock to such a transferee if the Certificate representing
such shares of Warner-Lambert Common Stock is presented to the Exchange Agent,  
accompanied by all documents required to evidence and effect such transfer and  
to evidence that any applicable stock transfer taxes have been paid.            

A-10

PREM14A
117th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 117th
2.3  DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.  No dividends or 
other distributions declared or made with respect to shares of AHP Common Stock 
with a record date after the Effective Time shall be paid to the holder of any  
unsurrendered Certificate with respect to the shares of AHP Common Stock that   
such holder would be entitled to receive upon surrender of such Certificate and 
no cash payment in lieu of fractional shares of AHP Common Stock shall be paid  
to any such holder pursuant to Section 2.5 until such holder shall surrender    
such Certificate in accordance with Section 2.2. Subject to the effect of       
applicable laws, following surrender of any such Certificate, there shall be    
paid to such holder of shares of AHP Common Stock issuable in exchange therefor,
without interest, (a) promptly after the time of such surrender, the amount of  
any cash payable in lieu of fractional shares of AHP Common Stock to which such 
holder is entitled pursuant to Section 2.5 and the amount of dividends or other 
distributions with a record date after the Effective Time theretofore paid with 
respect to such whole shares of AHP Common Stock, and (b) at the appropriate    
payment date, the amount of dividends or other distributions with a record date 
after the Effective Time but prior to such surrender and a payment date         
subsequent to such surrender payable with respect to such shares of AHP Common  
Stock.                                                                          

    2.4  NO FURTHER OWNERSHIP RIGHTS IN WARNER-LAMBERT COMMON STOCK.  All shares
of AHP Common Stock issued and cash paid upon conversion of shares of           
Warner-Lambert Common Stock in accordance with the terms of Article I and this  
Article II (including any cash paid pursuant to Section 2.3 or 2.5) shall be    
deemed to have been issued or paid in full satisfaction of all rights pertaining
to the shares of Warner-Lambert Common Stock.                                   

2.5  NO FRACTIONAL SHARES OF AHP COMMON STOCK.                          

(a) No certificates or scrip or shares of AHP Common Stock representing 
fractional shares of AHP Common Stock or book-entry credit of the same shall be 
issued upon the surrender for exchange of Certificates and such fractional share
interests will not entitle the owner thereof to vote or to have any rights of a 
stockholder of AHP or a holder of shares of AHP Common Stock.                   

 (b) Notwithstanding any other provision of this Agreement, each holder of
shares of Warner-Lambert Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of AHP Common     
Stock (after taking into account all Certificates delivered by such holder)     
shall receive, in lieu thereof, cash (without interest) in an amount equal to   
the product of (i) such fractional part of a share of AHP Common Stock          
multiplied by (ii) the closing price for a share of AHP Common Stock on the New 
York Stock Exchange, Inc. ("NYSE") Composite Transactions Tape on the date of   
the Effective Time or, if such date is not a Business Day, the Business Day     
immediately following the date on which the Effective Time occurs. As promptly  
as practicable after the determination of the amount of cash, if any, to be paid
to holders of fractional interests, the Exchange Agent shall so notify AHP, and 
AHP shall cause the Surviving Corporation to deposit such amount with the       
Exchange Agent and shall cause the Exchange Agent to forward payments to such   
holders of fractional interests subject to and in accordance with the terms     
hereof.                                                                         

  2.6  TERMINATION OF EXCHANGE FUND.  Any portion of the Exchange Fund which
remains undistributed to the holders of Certificates for six months after the   
Effective Time shall be delivered to Newco or otherwise on the instruction of   
Newco, and any holders of the Certificates who have not theretofore complied    
with this Article II shall thereafter look only to Newco for the Merger         
Consideration with respect to the shares of Warner-Lambert Common Stock formerly
represented thereby to which such holders are entitled pursuant to Section 1.8  
and Section 2.2, any cash in lieu of fractional shares of AHP Common Stock to   
which such holders are entitled pursuant to Section 2.5 and any dividends or    
distributions with respect to shares of AHP Common Stock to which such holders  
are entitled pursuant to Section 2.3. Any such portion of the Exchange Fund     
remaining unclaimed by holders of shares of Warner-Lambert Common Stock five    
years after the Effective Time (or such earlier date immediately prior to such  
time as such amounts would otherwise escheat to or become                       

A-11

PREM14A
118th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 118th
property of any Governmental Entity (as defined in Section 3.1(c)(iii)) shall,  
to the extent permitted by law, become the property of the Surviving Corporation
free and clear of any claims or interest of any Person previously entitled      
thereto.                                                                        

  2.7  NO LIABILITY.  None of AHP, Merger Sub, Warner-Lambert, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of   
any Merger Consideration from the Exchange Fund delivered to a public official  
pursuant to any applicable abandoned property, escheat or similar law.          

  2.8  INVESTMENT OF THE EXCHANGE FUND.  The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by Newco on a daily basis;       
provided, that no such investment or loss thereon shall affect the amounts      
payable to Warner-Lambert stockholders pursuant to Article I and the other      
provisions of this Article II. Any interest and other income resulting from such
investments shall promptly be paid to Newco.                                    

   2.9  LOST CERTIFICATES.  If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming  
such Certificate to be lost, stolen or destroyed and, if required by the        
Surviving Corporation, the posting by such Person of a bond in such reasonable  
amount as the Surviving Corporation may direct as indemnity against any claim   
that may be made against it with respect to such Certificate, the Exchange Agent
will deliver in exchange for such lost, stolen or destroyed Certificate the     
applicable Merger Consideration with respect to the shares of Warner-Lambert    
Common Stock formerly represented thereby, any cash in lieu of fractional shares
of AHP Common Stock, and unpaid dividends and distributions on shares of AHP    
Common Stock deliverable in respect thereof, pursuant to this Agreement.        

  2.10  WITHHOLDING RIGHTS.  Each of the Surviving Corporation and AHP shall
be entitled to deduct and withhold from the consideration otherwise payable     
pursuant to this Agreement to any holder of shares of Warner-Lambert Common     
Stock such amounts as it is required to deduct and withhold with respect to the 
making of such payment under the Code and the rules and regulations promulgated 
thereunder, or any provision of state, local or foreign tax law. To the extent  
that amounts are so withheld by the Surviving Corporation or AHP, as the case   
may be, such withheld amounts shall be treated for all purposes of this         
Agreement as having been paid to the holder of the shares of Warner-Lambert     
Common Stock in respect of which such deduction and withholding was made by the 
Surviving Corporation or AHP, as the case may be.                               

    2.11  FURTHER ASSURANCES.  At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and        
deliver, in the name and on behalf of Warner-Lambert or Merger Sub, any deeds,  
bills of sale, assignments or assurances and to take and do, in the name and on 
behalf of Warner-Lambert or Merger Sub, any other actions and things to vest,   
perfect or confirm of record or otherwise in the Surviving Corporation any and  
all right, title and interest in, to and under any of the rights, properties or 
assets acquired or to be acquired by the Surviving Corporation as a result of,  
or in connection with, the Merger.                                              

2.12  STOCK TRANSFER BOOKS.  The stock transfer books of Warner-Lambert 
shall be closed immediately upon the Effective Time and there shall be no       
further registration of transfers of shares of Warner-Lambert Common Stock      
thereafter on the records of Warner-Lambert. On or after the Effective Time, any
Certificates presented to the Exchange Agent or AHP for any reason shall be     
converted into the Merger Consideration with respect to the shares of           
Warner-Lambert Common Stock formerly represented thereby (including any cash in 
lieu of fractional shares of AHP Common Stock to which the holders thereof are  
entitled pursuant to Section 2.5) and any dividends or other distributions to   
which the holders thereof are entitled pursuant to Section 2.3.                 

  2.13  AFFILIATES.  Notwithstanding anything to the contrary herein, to the
fullest extent permitted by law, no certificates representing shares of AHP     
Common Stock or cash shall be delivered to a                                    

A-12

PREM14A
119th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 119th
Person who may be deemed an "affiliate" of Warner-Lambert in accordance with    
Section 5.13 hereof for purposes of Rule 145 under the Securities Act of 1933,  
as amended (the "SECURITIES ACT"), or for purposes of qualifying the Merger for 
pooling of interests accounting treatment under Opinion 16 of the Accounting    
Principles Board and applicable rules and regulations of the Securities and     
Exchange Commission (the "SEC") until such Person has executed and delivered an 
Affiliate Agreement (as defined in Section 5.13) to AHP.                        

ARTICLE III 
REPRESENTATIONS AND WARRANTIES

   3.1  REPRESENTATIONS AND WARRANTIES OF AHP.  Except as set forth in the AHP
Disclosure Schedule delivered by AHP to Warner-Lambert prior to the execution of
this Agreement (the "AHP DISCLOSURE SCHEDULE") (each section of which qualifies 
the correspondingly numbered representation and warranty or covenant to the     
extent specified therein), AHP represents and warrants to Warner-Lambert as     
follows:                                                                        

(a)  ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.                    

(i) Each of AHP and each of its Subsidiaries (as defined in     
   Section 8.11) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or         
organization, has the requisite power and authority to own, lease and   
   operate its properties and to carry on its business as now being conducted,
   except where the failures to be so organized, existing and in good standing
   or to have such power and authority, in the aggregate, would not reasonably
   be expected to have a Material Adverse Effect on AHP, and is duly qualified
    and in good standing to do business in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
   qualification necessary other than in such jurisdictions where the failures
so to qualify or to be in good standing, in the aggregate, would not    
   reasonably be expected to have a Material Adverse Effect on AHP. The copies
   of the certificate of incorporation and bylaws of AHP which were previously
    furnished or made available to Warner-Lambert are true, complete and correct
copies of such documents as in effect on the date of this Agreement.    

      (ii) Exhibit 21 to AHP's Annual Report on Form 10-K for the year ended
   December 31, 1998 includes all the Subsidiaries of AHP which as of the date
  of this Agreement are Significant Subsidiaries (as defined in Rule 1-02 of
   Regulation S-X of the SEC). All the outstanding shares of capital stock of,
or other equity interests in, each such Significant Subsidiary have been
  validly issued and are fully paid and nonassessable and are, except as set
   forth in Exhibit 21, owned directly or indirectly by AHP, free and clear of
   all pledges, claims, liens, charges, encumbrances and security interests of
  any kind or nature whatsoever (collectively "LIENS") and free of any other
restriction (including any restriction on the right to vote, sell or    
otherwise dispose of such capital stock or other ownership interests),  
    except for restrictions imposed by applicable securities laws. Except as set
  forth in the AHP SEC Reports (as defined in Section 3.1(d)) filed prior to
 the date hereof, as of the date of this Agreement, neither AHP nor any of
   its Subsidiaries directly or indirectly owns any equity or similar interest
    in, or any interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or
    entity (other than Subsidiaries), that is or would reasonably be expected to
be material to AHP and its Subsidiaries taken as a whole.               

(b)  CAPITAL STRUCTURE.                                                 

(i) As of October 31, 1999, the authorized capital stock of AHP 
consisted of (A) 2,400,000,000 shares of AHP Common Stock of which      
 1,305,717,877 shares were outstanding and 116,374,487 shares were held in
  the treasury of AHP and (B) 5,000,000 shares of Preferred Stock, par value

A-13

PREM14A
120th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 120th
$2.50 per share, of which 24,466 shares designated as $2 Convertible    
   Preferred Stock (the "$2 Convertible Preferred Stock") were outstanding and
    of which 1,400,000 shares have been designated Series A Junior Participating
  Preferred Stock and reserved for issuance upon exercise of the rights (the
    "AHP RIGHTS") distributed to the holders of AHP Common Stock pursuant to the
  Rights Agreement, dated as of October 13, 1999 between AHP and ChaseMellon
Shareholder Services, L.L.C. (the "AHP RIGHTS AGREEMENT"). As of        
 October 31, 1999, AHP had reserved or has available 880,776 shares of AHP
 Common Stock for issuance upon conversion of the $2 Convertible Preferred
    Stock. Since October 31, 1999 to the date of this Agreement, there have been
  no issuances of shares of the capital stock of AHP or any other securities
of AHP other than issuances of shares (and accompanying AHP Rights) upon
  conversion of the $2 Convertible Preferred Stock or pursuant to options or
rights outstanding as of October 31, 1999 under the Benefit Plans (as   
    defined in Section 8.11(b)) of AHP. All issued and outstanding shares of the
   capital stock of AHP are, and when shares of AHP Common Stock are issued in
the Merger or upon exercise of stock options converted in the Merger    
pursuant to Section 1.9, such shares will be, duly authorized, validly  
issued, fully paid and nonassessable and free of any preemptive rights. 
   There were outstanding as of October 31, 1999 no options, warrants or other
  rights to acquire capital stock from AHP other than (x) the AHP Rights and
    (y) options, restricted stock and other rights to acquire capital stock from
AHP representing in the aggregate the right to purchase approximately   
87,479,042 shares of AHP Common Stock (collectively, the "AHP STOCK     
   OPTIONS") under AHP's 1980 Stock Option Plan, AHP's 1985 Stock Option Plan,
    AHP's Management Incentive Plan, AHP's 1990 Stock Incentive Plan, AHP's 1993
   Stock Incentive Plan, AHP's 1996 Stock Incentive Plan, 1999 Stock Incentive
  Plan, Stock Option Plan for Non-Employee Directors and the 1994 Restricted
  Stock Plan for Non-Employee Directors (collectively, the "AHP STOCK OPTION
    PLANS"). Section 3.1(b) of the AHP Disclosure Schedule sets forth a complete
and correct list, as of October 31, 1999, of the number of shares of AHP
Common Stock subject to AHP Stock Options or other rights to purchase or
  receive AHP Common Stock granted under the AHP Benefit Plans or otherwise,
  the dates of grant and the exercise prices thereof. No options or warrants
or other rights to acquire capital stock from AHP have been issued or   
granted since October 31, 1999 to the date of this Agreement.           

        (ii) No bonds, debentures, notes or other indebtedness of AHP having the
 right to vote on any matters on which holders of capital stock of AHP may
vote ("AHP VOTING DEBT") are issued or outstanding.                     

 (iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 1.8 and Section 1.9, as of the date of this     
Agreement, there are no securities, options, warrants, calls, rights,   
  commitments, agreements, arrangements or undertakings of any kind to which
  AHP or any of its Subsidiaries is a party or by which any of them is bound
obligating AHP or any of its Subsidiaries to issue, deliver or sell, or 
    cause to be issued, delivered or sold, additional shares of capital stock or
   other voting securities of AHP or any of its Subsidiaries or obligating AHP
 or any of its Subsidiaries to issue, grant, extend or enter into any such
  security, option, warrant, call, right, commitment, agreement, arrangement
  or undertaking. As of the date of this Agreement, there are no outstanding
    obligations of AHP, any of its Subsidiaries or, to the knowledge of AHP, any
of its Majority Owned Restricted Affiliates to repurchase, redeem or    
otherwise acquire any shares of capital stock of AHP, any of its        
Subsidiaries or any of its Majority Owned Restricted Affiliates.        

(c)  AUTHORITY; NO CONFLICTS.                                           

     (i) AHP has all requisite corporate power and authority to enter into
this Agreement and the Stock Option Agreements and to consummate the    
transactions contemplated hereby and thereby, subject to obtaining the  
  requisite stockholder approval of the issuance of the shares of AHP Common
   Stock to be issued in the Merger (the "SHARE ISSUANCE") and the Certificate
   Amendment (collectively, the "AHP STOCKHOLDER APPROVAL"). The execution and
delivery of this Agreement and                                          

A-14

PREM14A
121st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 121st
the Stock Option Agreements and the consummation of the transactions    
  contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of AHP, subject to obtaining the AHP       
 Stockholder Approval. This Agreement and the Stock Option Agreements have
been duly executed and delivered by AHP and constitute valid and binding
agreements of AHP, enforceable against it in accordance with their      
respective terms, except as such enforceability may be limited by       
    bankruptcy, insolvency, reorganization, moratorium and similar laws relating
to or affecting creditors generally or by general equity principles     
   (regardless of whether such enforceability is considered in a proceeding in
equity or at law).                                                      

      (ii) The execution and delivery of this Agreement and the Stock Option
Agreements by AHP does not or will not, as the case may be, and the     
 consummation by AHP of the Merger and the other transactions contemplated
  hereby and thereby will not, conflict with, or result in any violation of,
  or constitute a default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result by its terms in the,       
 termination, amendment, cancellation or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on, or the loss of, any  
assets, including Intellectual Property (any such conflict, violation,  
    default, right of termination, amendment, cancellation or acceleration, loss
or creation, a "VIOLATION") pursuant to: (A) any provision of the       
 certificate of incorporation or Bylaws of AHP, any material Subsidiary of
AHP or, to the knowledge of AHP, any of its Majority Owned Restricted   
Affiliates, or (B) except as, in the aggregate, would not reasonably be 
  expected to have a Material Adverse Effect on AHP, subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,  
  declarations and filings referred to in paragraph (iii) below, any loan or
 credit agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession, franchise, 
license, judgment, order, decree, statute, law, ordinance, rule or      
   regulation applicable to AHP, any Subsidiary of AHP or, to the knowledge of
 AHP, any of its Majority Owned Restricted Affiliates, or their respective
properties or assets.                                                   

       (iii) No consent, approval, order or authorization of, or registration,
  declaration or filing with, any supranational, national, state, municipal,
local or foreign government, any instrumentality, subdivision, court,   
administrative agency or commission or other authority thereof, or any  
quasi-governmental or private body exercising any regulatory, taxing,   
importing or other governmental or quasi-governmental authority (a      
"GOVERNMENTAL ENTITY"), is required by or with respect to AHP or any    
Subsidiary of AHP in connection with the execution and delivery of this 
   Agreement and the Stock Option Agreements by AHP or the consummation of the
 Merger and the other transactions contemplated hereby and thereby, except
for those required under or in relation to (A) the Hart-Scott-Rodino    
 Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), (B) state
    securities or "blue sky" laws (the "BLUE SKY LAWS"), (C) the Securities Act,
(D) the Exchange Act, (E) the DGCL with respect to the filing of the    
   Certificate of Merger, (F) rules and regulations of the NYSE, (G) antitrust
or other competition laws of other jurisdictions, and (H) such consents,
  approvals, orders, authorizations, registrations, declarations and filings
the failures of which to make or obtain, in the aggregate, would not    
  reasonably be expected to have a Material Adverse Effect on AHP. Consents,
  approvals, orders, authorizations, registrations, declarations and filings
 required under or in relation to any of the foregoing clauses (A) through
(G) are hereinafter referred to as "NECESSARY CONSENTS".                

(d)  REPORTS AND FINANCIAL STATEMENTS.                                  

     (i) AHP has filed all required registration statements, prospectuses,
reports, schedules, forms, statements and other documents required to be
   filed by it with the SEC since January 1, 1998 (collectively, including all
  exhibits thereto, the "AHP SEC REPORTS"). No Subsidiary of AHP is required
to file any form, report, registration statement, prospectus or other   
  document with the SEC. None of the AHP SEC Reports, as of their respective
dates (and, if amended or superseded                                    

A-15

PREM14A
122nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 122nd
    by a filing prior to the date of this Agreement or the Closing Date, then on
   the date of such filing), contained or will contain any untrue statement of
    a material fact or omitted or will omit to state a material fact required to
  be stated therein or necessary to make the statements therein, in light of
 the circumstances under which they were made, not misleading. Each of the
  financial statements (including the related notes) included in the AHP SEC
Reports presents fairly, in all material respects, the consolidated     
   financial position and consolidated results of operations and cash flows of
   AHP and its consolidated Subsidiaries as of the respective dates or for the
respective periods set forth therein, all in conformity with GAAP       
  consistently applied during the periods involved except as otherwise noted
therein, and subject, in the case of the unaudited interim financial    
statements, to the absence of notes and normal year-end adjustments that
    have not been and are not expected to be material in amount. All of such AHP
SEC Reports, as of their respective dates (and as of the date of any    
amendment to the respective AHP SEC Report), complied as to form in all 
    material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.  

       (ii) Except as disclosed in the AHP SEC Reports filed prior to the date
   hereof, since December 31, 1998, AHP and its Subsidiaries have not incurred
   any liabilities that are of a nature that would be required to be disclosed
on a balance sheet of AHP and its Subsidiaries or the footnotes thereto 
    prepared in conformity with GAAP, other than (A) liabilities incurred in the
    ordinary course of business or (B) liabilities that, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on AHP.    

(e)  INFORMATION SUPPLIED.                                              

 (i) None of the information supplied or to be supplied by AHP for
  inclusion or incorporation by reference in (A) the Form S-4 (as defined in
 Section 5.1) will, at the time the Form S-4 is filed with the SEC, at any
    time it is amended or supplemented or at the time it becomes effective under
   the Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (B) the Joint Proxy      
Statement/Prospectus (as defined in Section 5.1) will, on the date it is
 first mailed to Warner-Lambert stockholders or AHP stockholders or at the
time of the Warner-Lambert Stockholders Meeting or the AHP Stockholders 
   Meeting (each as defined in Section 5.1), contain any untrue statement of a
material fact or omit to state any material fact required to be stated  
 therein or necessary in order to make the statements therein, in light of
  the circumstances under which they were made, not misleading. The Form S-4
and the Joint Proxy Statement/ Prospectus will comply as to form in all 
material respects with the requirements of the Exchange Act and the     
Securities Act and the rules and regulations of the SEC thereunder.     

        (ii) Notwithstanding the foregoing provisions of this Section 3.1(e), no
    representation or warranty is made by AHP with respect to statements made or
incorporated by reference in the Form S-4 or the Joint Proxy            
Statement/Prospectus based on information supplied by Warner-Lambert for
inclusion or incorporation by reference therein.                        

(f)  BOARD APPROVAL.  The Board of Directors of AHP, by resolutions duly
adopted by unanimous vote at a meeting duly called and held and not subsequently
rescinded or modified in any way (the "AHP BOARD APPROVAL"), has duly           
(i) determined that this Agreement and the Merger and the AHP Stock Option      
Agreement are fair to and in the best interests of AHP and its stockholders,    
(ii) approved this Agreement, the AHP Stock Option Agreement, the Merger, the   
Certificate Amendment, the amendments to the bylaws of AHP provided for in      
Section 1.6(b) hereto and the Share Issuance and (iii) recommended that the     
stockholders of AHP approve the Share Issuance, the AHP Bylaw Amendment and     
adopt the Certificate Amendment and directed that the Certificate Amendment, the
AHP Bylaw Amendment and the Share Issuance be submitted for consideration by    
AHP's stockholders at the AHP Stockholders Meeting. The AHP Board Approval      
constitutes approval                                                            

A-16

PREM14A
123rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 123rd
of this Agreement, the AHP Stock Option Agreement and the Merger for purposes of
Section 203 of the DGCL. To the knowledge of AHP, except for Section 203 of the 
DGCL (which has been rendered inapplicable), no state takeover statute is       
applicable to this Agreement, the AHP Stock Option Agreement or the Merger or   
the other transactions contemplated hereby or thereby.                          

 (g)  VOTE REQUIRED.  The adoption of the Certificate Amendment by (i) the
holders of a majority of the outstanding shares of AHP Common Stock and $2      
Convertible Preferred Stock, voting together as a single class, and (ii) the    
holders of a majority of the outstanding shares of AHP Common Stock voting as a 
separate class, and the approval of the Stock Issuance by a majority of the     
votes cast thereon by the holders of shares of AHP Common Stock and shares of $2
Convertible Preferred Stock, voting together as a single class, are the only    
votes of the holders of any class or series of AHP capital stock necessary to   
approve the transactions contemplated by the Merger Agreement, including, the   
Certificate Amendment and the Share Issuance.                                   

(h)  LITIGATION; COMPLIANCE WITH LAWS.                                  

      (i) Except as disclosed in the AHP SEC Reports filed prior to the date
   of this Agreement, there are no suits, actions or proceedings (collectively
"ACTIONS") pending or, to the knowledge of AHP, threatened, against or  
affecting AHP or any Subsidiary of AHP which, in the aggregate, would   
reasonably be expected to have a Material Adverse Effect on AHP, nor are
there any judgments, decrees, injunctions, rules or orders of any       
   Governmental Entity or arbitrator outstanding against AHP or any Subsidiary
of AHP which, in the aggregate, would reasonably be expected to have a  
Material Adverse Effect on AHP.                                         

       (ii) Except as disclosed in the AHP SEC Reports filed prior to the date
  of this Agreement and except as, in the aggregate, would not reasonably be
   expected to have a Material Adverse Effect on AHP, AHP and its Subsidiaries
  hold all permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities which are necessary for the operation of the  
businesses of AHP and its Subsidiaries, taken as a whole (the "AHP      
   PERMITS"). AHP and its Subsidiaries are in compliance with the terms of the
    AHP Permits, except where the failures to so comply, in the aggregate, would
   not reasonably be expected to have a Material Adverse Effect on AHP. Except
as disclosed in the AHP SEC Reports filed prior to the date of this     
   Agreement, neither AHP nor its Subsidiaries is in violation of, and AHP and
 its Subsidiaries have not received any notices of violations with respect
  to, any laws, ordinances or regulations of any Governmental Entity, except
   for violations which, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on AHP.                                  

(iii) As of the date of this Agreement, AHP has provided to     
Warner-Lambert prior to the execution of this Agreement all information 
known to AHP which is relevant and material to an assessment of the     
  liability exposure of AHP and its Subsidiaries with respect to the matters
referred to in clauses (I) and (II) of the proviso in the definition of 
Material Adverse Effect as to which Warner-Lambert has requested such   
information prior to the date hereof. As of the date hereof, there is no
   information relating to the litigation matters and Actions disclosed in the
AHP SEC Reports or included on the AHP Disclosure Schedule as to which  
Warner-Lambert has requested such information, including the matters    
referred to in the preceding sentence (the "AHP SPECIFIED LITIGATION    
 MATTERS") in the possession of AHP, its Subsidiaries or their counsel not
heretofore provided to Warner-Lambert which, in the aggregate, would    
reasonably be expected to have a Material Adverse Effect.               

   (i)  ABSENCE OF CERTAIN CHANGES OR EVENTS.  Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby,      
except as disclosed in the AHP SEC Reports filed prior to the date of this      
Agreement, and except as permitted by Section 4.1, since December 31, 1998,     
(i) AHP and its Subsidiaries have conducted their business only in the ordinary 
course and (ii) there has not been any action taken by AHP or any of its        
Subsidiaries during the period from December 31,                                

A-17

PREM14A
124th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 124th
1998 through the date of this Agreement that, if taken during the period from   
the date of this Agreement through the Effective Time, would constitute a breach
of Section 4.1. Except as disclosed in the AHP SEC Reports filed prior to the   
date of this Agreement, since December 31, 1998 (or in the event the second     
proviso in the definition of Material Adverse Effect is applicable (and         
accordingly so that the exclusion in the first proviso of the definition of     
Material Adverse Effect is inoperative with respect to Section 3.1(i)) in the   
case of matters referred to in clauses (I) and (II) of the proviso in the       
definition of Material Adverse Effect, since the date of the Agreement), there  
have not been any changes, circumstances or events (including changes,          
circumstances or events involving, impacting or related to development stage    
products of AHP) which, in the aggregate, have had, or would reasonably be      
expected to have, a Material Adverse Effect on AHP.                             

(j)  ENVIRONMENTAL MATTERS.  Except as, in the aggregate, would not     
reasonably be expected to have a Material Adverse Effect on AHP and except as   
disclosed in the AHP SEC Reports filed prior to the date of this Agreement      
(i) the operations of AHP and its Subsidiaries have been and are in compliance  
with all Environmental Laws (as defined below), and with all licenses required  
by Environmental Laws, (ii) there are no pending or, to the knowledge of AHP,   
threatened, Actions under or pursuant to Environmental Laws against AHP or its  
Subsidiaries or involving any real property currently or, to the knowledge of   
AHP, formerly owned, operated or leased by AHP or its Subsidiaries, (iii) AHP   
and its Subsidiaries are not subject to any Environmental Liabilities (as       
defined below), and, to the knowledge of AHP, no facts, circumstances or        
conditions relating to, arising from, associated with or attributable to any    
real property currently or, to the knowledge of AHP, formerly owned, operated or
leased by AHP or its Subsidiaries or operations thereon would reasonably be     
expected to result in Environmental Liabilities, (iv) all real property owned   
and to the knowledge of AHP all real property operated or leased by AHP or its  
Subsidiaries is free of contamination from Hazardous Material (as defined below)
that would have an adverse effect on human health or the environment and        
(v) there is not now, nor, to the knowledge of AHP, has there been in the past, 
on, in or under any real property owned, leased or operated by AHP or any of its
predecessors (a) any underground storage tanks regulated pursuant to 40 C.F.R.  
Part 280 or delegated state programs, dikes or impoundments containing more than
a reportable quantity of Hazardous Materials, (b) any friable                   
asbestos-containing materials or (c) any polychlorinated biphenyls.             

  As used in this Agreement, "ENVIRONMENTAL LAWS" means any and all federal,
state, foreign, interstate, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders, decrees,           
requirements of any Governmental Entity, any and all common law requirements,   
rules and bases of liability regulating, relating to or imposing liability or   
standards of conduct concerning pollution, Hazardous Materials or protection of 
human health, safety or the environment, as currently in effect and includes the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 
Section 9601 ET SEQ., the Hazardous Materials Transportation Act, 49 U.S.C.     
Section 1801 ET SEQ., the Resource Conservation and Recovery Act, 42 U.S.C.     
Section 6901 ET SEQ., the Clean Water Act, 33 U.S.C. Section 1251 ET SEQ., the  
Clean Air Act, 33 U.S.C. Section 2601 ET SEQ., the Toxic Substances Control Act,
15 U.S.C. Section 2601 ET SEQ., the Federal Insecticide, Fungicide and          
Rodenticide Act, 7 U.S.C., Section 136 ET SEQ., Occupational Safety and Health  
Act 29 U.S.C. Section 651 ET SEQ. and the Oil Pollution Act of 1990, 33 U.S.C.  
Section 2701 ET SEQ., as such laws have been amended or supplemented, and the   
regulations promulgated pursuant thereto, and all analogous state or local      
statutes. As used in this Agreement, "ENVIRONMENTAL LIABILITIES" with respect to
any person means any and all liabilities of or relating to such person or any of
its Subsidiaries (including any entity which is, in whole or in part, a         
predecessor of such person or any of such Subsidiaries), whether vested or      
unvested, contingent or fixed, actual or potential, known or unknown, which     
(i) arise under or relate to matters covered by Environmental Laws and          
(ii) relate to actions occurring or conditions existing on or prior to the      
Closing Date. As used in this Agreement, "HAZARDOUS MATERIALS" means any        
materials or wastes, defined, listed, classified or regulated as hazardous,     
toxic, a pollutant, a contaminant or dangerous in or under any Environmental    
Laws which includes petroleum, petroleum products, friable asbestos, urea       
formaldehyde, radioactive materials and polychlorinated biphenyls.              

A-18

PREM14A
125th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 125th
(k)  INTELLECTUAL PROPERTY.  Except as, in the aggregate, would not     
reasonably be expected to have a Material Adverse Effect on AHP and except as   
disclosed in the AHP SEC Reports filed prior to the date of the Agreement:      
(a) AHP and each of its Subsidiaries owns, or is licensed to use (in each case, 
free and clear of any Liens), all Intellectual Property (as defined below) used 
in or necessary for the conduct of its business as currently conducted; (b) the 
use of any Intellectual Property by AHP and its Subsidiaries does not infringe  
on or otherwise violate the rights of any Person and is in accordance with any  
applicable license pursuant to which AHP or any Subsidiary acquired the right to
use any Intellectual Property; (c) to the knowledge of AHP, no Person is        
challenging, infringing on or otherwise violating any right of AHP or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or licensed 
to AHP or its Subsidiaries; and (d) neither AHP nor any of its Subsidiaries has 
received any written notice or otherwise has knowledge of any pending claim,    
order or proceeding with respect to any Intellectual Property used by AHP and   
its Subsidiaries and to its knowledge no Intellectual Property owned and/or     
licensed by AHP or its Subsidiaries is being used or enforced in a manner that  
would reasonably be expected to result in the abandonment, cancellation or      
unenforceability of such Intellectual Property. For purposes of this Agreement, 
"INTELLECTUAL PROPERTY" shall mean trademarks, service marks, brand names,      
certification marks, trade dress and other indications of origin, the goodwill  
associated with the foregoing and registrations in any jurisdiction of, and     
applications in any jurisdiction to register, the foregoing, including any      
extension, modification or renewal of any such registration or application;     
inventions, discoveries and ideas, whether patentable or not, in any            
jurisdiction; patents, applications for patents (including, without limitation, 
divisions, continuations, continuations in part and renewal applications), and  
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic    
information, trade secrets and confidential information and rights in any       
jurisdiction to limit the use or disclosure thereof by any person; writings and 
other works, whether copyrightable or not, in any jurisdiction; and             
registrations or applications for registration of copyrights in any             
jurisdiction, and any renewals or extensions thereof; any similar intellectual  
property or proprietary rights.                                                 

(l)  BROKERS OR FINDERS.  No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or       
finder's fee or any other similar commission or fee in connection with any of   
the transactions contemplated by this Agreement based upon arrangements made by 
or on behalf of AHP, except Chase Securities Inc. and Morgan Stanley & Co.      
Incorporated, each of whose fees and expenses will be paid by AHP in accordance 
with AHP's agreements with such firms, copies of which have been provided to    
Warner-Lambert.                                                                 

  (m)  OPINIONS OF AHP FINANCIAL ADVISORS.  AHP has received the opinions of
Chase Securities Inc. and Morgan Stanley & Co. Incorporated, each dated the date
of this Agreement, to the effect that, as of such date, the Exchange Ratio is   
fair, from a financial point of view, to AHP and its stockholders, a copy of    
which opinions have been made available to Warner-Lambert.                      

 (n)  ACCOUNTING MATTERS.  To the knowledge of AHP, neither AHP nor any of
its affiliates has taken or agreed to take any action, and no fact or           
circumstance is known to AHP, that would prevent AHP from accounting for the    
Merger as a "pooling of interests". At or prior to the date hereof, AHP has     
received a letter from its independent public accountants addressed to AHP, with
a copy to Warner-Lambert, to the effect that, based upon representations        
provided by AHP and Warner-Lambert and a poolability letter from the independent
public accountants of Warner-Lambert, accounting for the Merger as a pooling of 
interests under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations is appropriate if the Merger is consummated and closed as 
contemplated by this Agreement.                                                 

(o)  TAXES.  Each of AHP and its Subsidiaries has filed all Tax Returns 
required to have been filed (or extensions have been duly obtained) and has paid
all Taxes required to have been paid by it, except where failure to file such   
Tax Returns or pay such Taxes would not, in the aggregate, reasonably be        
expected to have a Material Adverse Effect on AHP. For purposes of this         
Agreement: (i) "Tax"                                                            

A-19

PREM14A
126th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 126th
(and, with correlative meaning, "Taxes") means any federal, state, local or     
foreign income, gross receipts, property, sales, use, license, excise,          
franchise, employment, payroll, withholding, alternative or add on minimum, ad  
valorem, transfer or excise tax, or any other tax, custom, duty, governmental   
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority or any obligation to 
pay Taxes imposed on any entity for which a party to this Agreement is liable as
a result of any indemnification provision or other contractual obligation, and  
(ii) "Tax Return" means any return, report or similar statement required to be  
filed with respect to any Tax (including any attached schedules), including,    
without limitation, any information return, claim for refund, amended return or 
declaration of estimated Tax.                                                   

  (p)  CERTAIN CONTRACTS.  As of the date hereof, except as set forth in the
AHP SEC Reports filed prior to the date of this Agreement, neither AHP nor any  
of its Subsidiaries is a party to or bound by (i) any "material contracts" (as  
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or        
(ii) any non-competition agreements or any other agreements or arrangements that
limit or otherwise restrict AHP or any of its Subsidiaries or any of their      
respective affiliates or any successor thereto, or that would, after the        
Effective Time, to the knowledge of AHP, limit or restrict Newco or any of its  
affiliates (including the Surviving Corporation) or any successor thereto, from 
engaging or competing in any line of business or in any geographic area, which  
agreements or arrangements, in the aggregate, would reasonably be expected to   
have a Material Adverse Effect on Newco and its Subsidiaries (including the     
Surviving Corporation and its Subsidiaries), taken together, after giving effect
to the Merger.                                                                  

    (q)  AHP STOCKHOLDER RIGHTS PLAN.  The Board of Directors of AHP has amended
the AHP Rights Agreement in accordance with its terms to render it inapplicable 
to the transactions contemplated by this Agreement and the AHP Stock Option     
Agreement. AHP has delivered to Warner-Lambert a true and correct copy of the   
AHP Rights Agreement, as amended, in effect as of execution and delivery of this
Agreement.                                                                      

   3.2  REPRESENTATIONS AND WARRANTIES OF WARNER-LAMBERT.  Except as set forth
in the Warner-Lambert Disclosure Schedule delivered by Warner-Lambert to AHP    
prior to the execution of this Agreement (the "WARNER-LAMBERT DISCLOSURE        
SCHEDULE") (each section of which qualifies the correspondingly numbered        
representation and warranty or covenant to the extent specified therein),       
Warner-Lambert represents and warrants to AHP as follows:                       

(a)  ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.                    

        (i) Each of Warner-Lambert and each of its Subsidiaries is a corporation
   duly organized, validly existing and in good standing under the laws of its
  jurisdiction of incorporation or organization, has the requisite power and
authority to own, lease and operate its properties and to carry on its  
business as now being conducted, except where the failures to be so     
organized, existing and in good standing or to have such power and      
authority, in the aggregate, would not reasonably be expected to have a 
   Material Adverse Effect on Warner-Lambert and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its 
business or the ownership or leasing of its properties makes such       
   qualification necessary other than in such jurisdictions where the failures
so to qualify or to be in good standing in the aggregate would not      
   reasonably be expected to have a Material Adverse Effect on Warner-Lambert.
   The copies of the certificate of incorporation and Bylaws of Warner-Lambert
   which were previously furnished or made available to AHP are true, complete
and correct copies of such documents as in effect on the date of this   
Agreement.                                                              

      (ii) Exhibit 21 to Warner-Lambert's Annual Report on Form 10-K for the
    year ended December 31, 1998 includes all the Subsidiaries of Warner-Lambert
which as of the date of this Agreement are Significant Subsidiaries (as 
defined in Rule 1-02 of Regulation S-X of the SEC). All the outstanding 
shares of capital stock of, or other equity interests in, each such     
Significant                                                             

A-20

PREM14A
127th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 127th
    Subsidiary have been validly issued and are fully paid and nonassessable and
are, except as set forth in Exhibit 21, owned directly or indirectly by 
Warner-Lambert, free and clear of all Liens and free of any other       
restriction (including any restriction on the right to vote, sell or    
otherwise dispose of such capital stock or other ownership interests),  
    except for restrictions imposed by applicable securities laws. Except as set
    forth in the Warner-Lambert SEC Reports (as defined in Section 3.2(d)) filed
    prior to the date hereof, neither Warner-Lambert nor any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any   
interest convertible into or exchangeable or exercisable for, any       
corporation, partnership, joint venture or other business association or
    entity (other than Subsidiaries), that is or would reasonably be expected to
be material to Warner-Lambert and its Subsidiaries taken as a whole.    

(b)  CAPITAL STRUCTURE.                                                 

(i) As of October 31, 1999, the authorized capital stock of     
Warner-Lambert consisted of (A) 1,200,000,000 shares of Warner-Lambert  
  Common Stock, of which 858,661,329 shares were outstanding and 103,320,279
   shares were held in the treasury of Warner-Lambert and (B) 5,000,000 shares
of Preferred Stock, par value $1.00 per share, none of which were       
    outstanding and 400,000 shares of which have been designated Series A Junior
    Participating Preferred Stock and reserved for issuance upon exercise of the
rights (the "WARNER-LAMBERT RIGHTS") distributed to the holders of      
Warner-Lambert Common Stock pursuant to the Rights Agreement dated as of
 March 25, 1997, between Warner-Lambert and First Chicago Trust Company of
   New York (the "WARNER-LAMBERT RIGHTS AGREEMENT"). Since October 31, 1999 to
 the date of this Agreement, there have been no issuances of shares of the
 capital stock of Warner-Lambert or any other securities of Warner-Lambert
other than issuances of shares (and accompanying Warner-Lambert Rights) 
  pursuant to options or rights outstanding as of October 31, 1999 under the
 Benefit Plans of Warner-Lambert. All issued and outstanding shares of the
  capital stock of Warner-Lambert are duly authorized, validly issued, fully
paid and nonassessable, and no class of capital stock is entitled to    
    preemptive rights. There were outstanding as of October 31, 1999 no options,
   warrants or other rights to acquire capital stock from Warner-Lambert other
than (x) the Warner-Lambert Rights and (y) options and other rights to  
 acquire capital stock of Warner-Lambert representing in the aggregate the
right to purchase 75,056,685 shares of Warner-Lambert Common Stock      
(collectively, the "WARNER-LAMBERT STOCK OPTIONS") under the 1989 Stock 
 Plan, the 1992 Stock Plan, the 1996 Stock Plan, the Restricted Stock Plan
for Directors and the Deferred Compensation Plan for Directors          
(collectively, the "WARNER-LAMBERT STOCK OPTION PLANS"). Except in      
  connection with pre-employment grants of Warner-Lambert Stock Options made
    in a manner consistent with past practice to purchase, in the aggregate, not
    more than 5,000 shares of Warner-Lambert Common Stock, Section 3.2(b) of the
  Warner-Lambert Disclosure Schedule sets forth a complete and correct list,
as of October 31, 1999, of the number of shares of Warner-Lambert Common
    Stock subject to Warner-Lambert Stock Options or other rights to purchase or
    receive Warner-Lambert Common Stock granted under the Warner-Lambert Benefit
Plans or otherwise, the dates of grant and the exercise prices thereof. 
Except in connection with pre-employment grants of Warner-Lambert Stock 
  Options made in a manner consistent with past practice to purchase, in the
aggregate, not more than 5,000 shares of Warner-Lambert Common Stock, no
options or warrants or other rights to acquire capital stock from       
Warner-Lambert have been issued or granted since October 31, 1999 to the
date of this Agreement.                                                 

        (ii) No bonds, debentures, notes or other indebtedness of Warner-Lambert
having the right to vote on any matters on which stockholders may vote  
("WARNER-LAMBERT VOTING DEBT") are issued or outstanding.               

     (iii) Except as otherwise set forth in this Section 3.2(b), as of the
  date of this Agreement, there are no securities, options, warrants, calls,
    rights, commitments, agreements, arrangements or undertakings of any kind to
which Warner-Lambert or any of its Subsidiaries is a party or by which  

A-21

PREM14A
128th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 128th
    any of them is bound obligating Warner-Lambert or any of its Subsidiaries to
    issue, deliver or sell, or cause to be issued, delivered or sold, additional
   shares of capital stock or other voting securities of Warner-Lambert or any
   of its Subsidiaries or obligating Warner-Lambert or any of its Subsidiaries
 to issue, grant, extend or enter into any such security, option, warrant,
 call, right, commitment, agreement, arrangement or undertaking. As of the
date of this Agreement, there are no outstanding obligations of         
Warner-Lambert, any of its Subsidiaries or to the knowledge of          
Warner-Lambert, any of its Majority Owned Restricted Affiliates to      
repurchase, redeem or otherwise acquire any shares of capital stock of  
Warner-Lambert, any of its Subsidiaries or, to the knowledge of         
Warner-Lambert, any of its Majority Owned Restricted Affiliates.        

(c)  AUTHORITY; NO CONFLICTS.                                           

     (i) Warner-Lambert has all requisite corporate power and authority to
   enter into this Agreement and the Stock Option Agreements and to consummate
    the transactions contemplated hereby and thereby, subject in the case of the
    consummation of the Merger to the adoption of this Agreement by the Required
Warner-Lambert Vote (as defined in Section 3.2(g)). The execution and   
delivery of this Agreement and the consummation of the transactions     
  contemplated hereby and thereby have been duly authorized by all necessary
  corporate action on the part of Warner-Lambert, subject in the case of the
    consummation of the Merger to the adoption of this Agreement by the Required
Warner-Lambert Vote. This Agreement and the Stock Option Agreements have
   been duly executed and delivered by Warner-Lambert and constitute valid and
  binding agreements of Warner-Lambert, enforceable against it in accordance
    with their respective terms, except as such enforceability may be limited by
    bankruptcy, insolvency, reorganization, moratorium and similar laws relating
to or affecting creditors generally or by general equity principles     
   (regardless of whether such enforceability is considered in a proceeding in
equity or at law).                                                      

      (ii) The execution and delivery of this Agreement and the Stock Option
  Agreements by Warner-Lambert does not or will not, as the case may be, and
   the consummation by Warner-Lambert of the Merger and the other transactions
contemplated hereby and thereby will not, conflict with, or result in a 
    Violation pursuant to: (A) any provision of the certificate of incorporation
  or Bylaws of Warner-Lambert, any material Subsidiary of Warner-Lambert or,
to the knowledge of Warner-Lambert, any of its Majority Owned Restricted
Affiliates or (B) except as, in the aggregate, would not reasonably be  
   expected to have a Material Adverse Effect on Warner-Lambert or, subject to
obtaining or making the consents, approvals, orders, authorizations,    
registrations, declarations and filings referred to in paragraph (iii)  
    below, any loan or credit agreement, note, mortgage, bond, indenture, lease,
    benefit plan or other agreement, obligation, instrument, permit, concession,
  franchise, license, judgment, order, decree, statute, law, ordinance, rule
    or regulation applicable to Warner-Lambert, any Subsidiary of Warner-Lambert
    or, to the knowledge of Warner-Lambert, any of its Majority Owned Restricted
Affiliates or their respective properties or assets.                    

       (iii) No consent, approval, order or authorization of, or registration,
  declaration or filing with, any Governmental Entity is required by or with
   respect to Warner-Lambert or any Subsidiary of Warner-Lambert in connection
with the execution and delivery of this Agreement and the Stock Option  
    Agreements by Warner-Lambert or the consummation of the Merger and the other
   transactions contemplated hereby and thereby, except the Necessary Consents
and such consents, approvals, orders, authorizations, registrations,    
declarations and filings the failure of which to make or obtain, in the 
aggregate, would not reasonably be expected to have a Material Adverse  
Effect on Warner-Lambert.                                               

A-22

PREM14A
129th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 129th
(d)  REPORTS AND FINANCIAL STATEMENTS.                                  

  (i) Warner-Lambert has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents 
    required to be filed by it with the SEC since January 1, 1998 (collectively,
including all exhibits thereto, the "WARNER-LAMBERT SEC REPORTS"). No   
Subsidiary of Warner-Lambert is required to file any form, report,      
    registration statement or prospectus or other document with the SEC. None of
the Warner-Lambert SEC Reports, as of their respective dates (and, if   
    amended or superseded by a filing prior to the date of this Agreement or the
 Closing Date, then on the date of such filing), contained or will contain
  any untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the    
statements therein, in light of the circumstances under which they were 
made, not misleading. Each of the financial statements (including the   
  related notes) included in the Warner-Lambert SEC Reports presents fairly,
in all material respects, the consolidated financial position and       
   consolidated results of operations and cash flows of Warner-Lambert and its
  consolidated Subsidiaries as of the respective dates or for the respective
   periods set forth therein, all in conformity with GAAP consistently applied
   during the periods involved except as otherwise noted therein, and subject,
    in the case of the unaudited interim financial statements, to the absence of
  notes and normal and recurring year-end adjustments that have not been and
 are not expected to be material in amount. All of such Warner-Lambert SEC
  Reports, as of their respective dates (and as of the date of any amendment
to the respective Warner-Lambert SEC Report), complied as to form in all
    material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.  

      (ii) Except as disclosed in the Warner-Lambert SEC Reports filed prior
to the date hereof, since December 31, 1998, Warner-Lambert and its     
Subsidiaries have not incurred any liabilities that are of a nature that
  would be required to be disclosed on a balance sheet of Warner-Lambert and
   its Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
 other than (A) liabilities incurred in the ordinary course of business or
   (B) liabilities that, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Warner-Lambert.                       

(e)  INFORMATION SUPPLIED.                                              

        (i) None of the information supplied or to be supplied by Warner-Lambert
    for inclusion or incorporation by reference in (A) the Form S-4 will, at the
time the Form S-4 is filed with the SEC, at any time it is amended or   
  supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any    
material fact required to be stated therein or necessary to make the    
statements therein not misleading, and (B) the Joint Proxy              
   Statement/Prospectus will, on the date it is first mailed to Warner-Lambert
stockholders or AHP stockholders or at the time of the Warner-Lambert   
Stockholders Meeting or the AHP Stockholders Meeting, contain any untrue
   statement of a material fact or omit to state any material fact required to
  be stated therein or necessary in order to make the statements therein, in
  light of the circumstances under which they were made, not misleading. The
   Form S-4 and the Joint Proxy Statement/Prospectus will comply as to form in
all material respects with the requirements of the Exchange Act and the 
Securities Act and the rules and regulations of the SEC thereunder.     

        (ii) Notwithstanding the foregoing provisions of this Section 3.2(e), no
representation or warranty is made by Warner-Lambert with respect to    
 statements made or incorporated by reference in the Form S-4 or the Joint
 Proxy Statement/Prospectus based on information supplied by AHP or Merger
Sub for inclusion or incorporation by reference therein.                

(f)  BOARD APPROVAL.  The Board of Directors of Warner-Lambert, by      
resolutions duly adopted by unanimous vote of those voting at a meeting duly    
called and held and not subsequently rescinded or modified in any way (the      
"WARNER-LAMBERT BOARD APPROVAL"), has duly (i) determined that this             

A-23

PREM14A
130th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 130th
Agreement and the Merger and the Warner-Lambert Stock Option Agreement are fair 
to and in the best interests of Warner-Lambert and its stockholders,            
(ii) approved this Agreement, the Warner-Lambert Stock Option Agreement and the 
Merger and (iii) recommended that the stockholders of Warner-Lambert adopt this 
Agreement and approve the Merger and directed that this Agreement and the       
transactions contemplated hereby be submitted for consideration by              
Warner-Lambert's stockholders at the Warner-Lambert Stockholders Meeting. The   
Warner-Lambert Board Approval constitutes approval of this Agreement, the       
Warner-Lambert Stock Option Agreement and the Merger for purposes of            
Section 203 of the DGCL. To the knowledge of Warner-Lambert, except for         
Section 203 of the DGCL (which has been rendered inapplicable), no state        
takeover statute is applicable to this Agreement, the Warner-Lambert Stock      
Option Agreement or the Merger or the other transactions contemplated hereby or 
thereby.                                                                        

 (g)  VOTE REQUIRED.  The affirmative vote of the holders of a majority of
the outstanding shares of Warner-Lambert Common Stock to adopt this Agreement   
and approve the Merger (the "REQUIRED WARNER-LAMBERT VOTE") is the only vote of 
the holders of any class or series of Warner-Lambert capital stock necessary to 
adopt this Agreement and approve the Merger and the other transactions          
contemplated hereby.                                                            

(h)  LITIGATION; COMPLIANCE WITH LAWS.                                  

        (i) Except as disclosed in the Warner-Lambert SEC Reports filed prior to
the date of this Agreement, there are no Actions pending or, to the     
    knowledge of Warner-Lambert, threatened, against or affecting Warner-Lambert
or any Subsidiary of Warner-Lambert which, in the aggregate, would      
   reasonably be expected to have a Material Adverse Effect on Warner-Lambert,
 nor are there any judgments, decrees, injunctions, rules or orders of any
   Governmental Entity or arbitrator outstanding against Warner-Lambert or any
 Subsidiary of Warner-Lambert which, in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Warner-Lambert.           

      (ii) Except as disclosed in the Warner-Lambert SEC Reports filed prior
to the date of the Agreement and except as would, in the aggregate, not 
   reasonably be expected to have a Material Adverse Effect on Warner-Lambert,
  Warner-Lambert and its Subsidiaries hold all permits, licenses, variances,
   exemptions, orders and approvals of all Governmental Entities necessary for
the operation of the businesses of Warner-Lambert and its Subsidiaries, 
taken as a whole (the "WARNER-LAMBERT PERMITS"). Warner-Lambert and its 
    Subsidiaries are in compliance with the terms of the Warner-Lambert Permits,
except where the failures to so comply, in the aggregate, would not     
   reasonably be expected to have a Material Adverse Effect on Warner-Lambert.
Except as disclosed in the Warner-Lambert SEC Reports filed prior to the
 date of this Agreement, neither Warner-Lambert nor its Subsidiaries is in
   violation of, and Warner-Lambert and its Subsidiaries have not received any
  notices of violations with respect to, any laws, ordinances or regulations
  of any Governmental Entity, except for violations which, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on   
Warner-Lambert.                                                         

(iii) As of the date hereof, there is no information relating to
  litigation matters disclosed in the Warner-Lambert SEC Reports or included
    on the Warner-Lambert Disclosure Schedule as to which AHP has requested such
information (the "WARNER-LAMBERT SPECIFIED LITIGATION MATTERS") in the  
possession of Warner-Lambert, its Subsidiaries or their counsel not     
heretofore provided to AHP which, in the aggregate, would reasonably be 
expected to have a Material Adverse Effect.                             

   (i)  ABSENCE OF CERTAIN CHANGES OR EVENTS.  Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby,      
except as disclosed in the Warner-Lambert SEC Reports filed prior to the date of
this Agreement, and except as permitted by Section 4.2, since December 31, 1998,
(i) Warner-Lambert and its Subsidiaries have conducted their business only in   
the ordinary course and (ii) there has not been any action taken by             
Warner-Lambert or any of its Subsidiaries during the period from December 31,   
1998 through the date of this Agreement that, if                                

A-24

PREM14A
131st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 131st
taken during the period from the date of this Agreement through the Effective   
Time, would constitute a breach of Section 4.2. Except as disclosed in the      
Warner-Lambert SEC Reports filed prior to the date of this Agreement, since     
December 31, 1998, there have not been any changes, circumstances or events     
(including changes, circumstances or events involving, impacting or related to  
development stage products of Warner-Lambert) which, in the aggregate, have had,
or would reasonably be expected to have, a Material Adverse Effect on           
Warner-Lambert.                                                                 

(j)  ENVIRONMENTAL MATTERS.  Except as, in the aggregate, would not     
reasonably be expected to have a Material Adverse Effect on Warner-Lambert and  
except as disclosed in the Warner-Lambert SEC Reports filed prior to the date of
this Agreement, (i) the operations of Warner-Lambert and its Subsidiaries have  
been and are in compliance with all Environmental Laws and with all licenses    
required by Environmental Laws (ii) there are no pending or, to the knowledge of
Warner-Lambert, threatened, Actions under or pursuant to Environmental Laws     
against Warner-Lambert or its Subsidiaries or involving any real property       
currently or, to the knowledge of Warner-Lambert, formerly owned, operated or   
leased by Warner-Lambert or its Subsidiaries, (iii) Warner-Lambert and its      
Subsidiaries are not subject to any Environmental Liabilities and, to the       
knowledge of Warner-Lambert, no facts, circumstances or conditions relating to, 
arising from, associated with or attributable to any real property currently or,
to the knowledge of Warner-Lambert, formerly owned, operated or leased by       
Warner-Lambert or its Subsidiaries or operations thereon would reasonably be    
expected to result in Environmental Liabilities, (iv) all real property owned   
and to the knowledge of Warner-Lambert all real property operated or leased by  
Warner-Lambert or its Subsidiaries is free of contamination from Hazardous      
Material that would have an adverse effect on human health or the environment   
and (v) there is not now, nor, to the knowledge of Warner-Lambert, has there    
been in the past, on, in or under any real property owned, leased or operated by
Warner-Lambert or any of its predecessors (a) any underground storage tanks,    
regulated pursuant to 40 C.F.R. Part 280 or delegated state programs, dikes or  
impoundments containing more than a reportable quantity of Hazardous Materials, 
(b) any friable asbestos-containing materials or (c) any polychlorinated        
biphenyls.                                                                      

(k)  INTELLECTUAL PROPERTY.  Except as, in the aggregate, would not     
reasonably be expected to have a Material Adverse Effect on Warner-Lambert and  
except as disclosed in the Warner-Lambert SEC Reports filed prior to the date of
this Agreement, (a) Warner-Lambert and each of its Subsidiaries owns, or is     
licensed to use (in each case, free and clear of any Liens), all Intellectual   
Property used in or necessary for the conduct of its business as currently      
conducted; (b) the use of any Intellectual Property by Warner-Lambert and its   
Subsidiaries does not infringe on or otherwise violate the rights of any Person 
and is in accordance with any applicable license pursuant to which              
Warner-Lambert or any Subsidiary acquired the right to use any Intellectual     
Property; (c) to the knowledge of Warner-Lambert, no Person is challenging,     
infringing on or otherwise violating any right of Warner-Lambert or any of its  
Subsidiaries with respect to any Intellectual Property owned by and/or licensed 
to Warner-Lambert or its Subsidiaries; and (d) neither Warner-Lambert nor any of
its Subsidiaries has received any written notice or otherwise has knowledge of  
any pending claim, order or proceeding with respect to any Intellectual Property
used by Warner-Lambert and its Subsidiaries and to its knowledge no Intellectual
Property owned and/or licensed by Warner-Lambert or its Subsidiaries is being   
used or enforced in a manner that would reasonably be expected to result in the 
abandonment, cancellation or unenforceability of such Intellectual Property.    

(l)  BROKERS OR FINDERS.  No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or       
finder's fee or any other similar commission or fee in connection with any of   
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of Warner-Lambert except Bear, Stearns & Co. Inc., whose fees and  
expenses will be paid by Warner-Lambert in accordance with Warner-Lambert's     
agreements with such firm, copies of which have been provided to AHP.           

A-25

PREM14A
132nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 132nd
(m)  OPINION OF WARNER-LAMBERT FINANCIAL ADVISOR.  Warner-Lambert has   
received the opinion of Bear, Stearns & Co. Inc., dated the date of this        
Agreement, to the effect that, as of such date, the Exchange Ratio is fair, from
a financial point of view, to the holders of Warner-Lambert Common Stock, a copy
of which opinion has been made available to AHP.                                

(n)  ACCOUNTING MATTERS.  To the knowledge of Warner-Lambert, neither   
Warner-Lambert nor any of its affiliates has taken or agreed to take any action,
and no fact or circumstance is known to Warner-Lambert, that would prevent AHP  
from accounting for the Merger as a "pooling of interests". At or prior to the  
date hereof, Warner-Lambert has received a letter from its independent public   
accountants addressed to Warner-Lambert, with a copy to AHP and AHP's           
independent public accountants, to the effect, that, based upon representations 
provided by Warner-Lambert, they concur with Warner-Lambert's conclusion that,  
as of the date of their report, no conditions exist that would preclude         
Warner-Lambert's ability to be a party in a business combination to be accounted
for as a pooling of interests.                                                  

  (o)  TAXES.  Each of Warner-Lambert and its Subsidiaries has filed all Tax
Returns required to have been filed (or extensions have been duly obtained) and 
has paid all Taxes required to have been paid by it, except where failure to    
file such Tax Returns or pay such Taxes would not, in the aggregate, reasonably 
be expected to have a Material Adverse Effect on Warner-Lambert.                

  (p)  CERTAIN CONTRACTS.  As of the date hereof, except as set forth in the
Warner-Lambert SEC Reports filed prior to the date of this Agreement, neither   
Warner-Lambert nor any of its Subsidiaries is a party to or bound by (i) any    
"material contracts" (as such term is defined in Item 601(b)(10) of             
Regulation S-K of the SEC) or (ii) any non-competition agreements or any other  
agreements or arrangements that limit or otherwise restrict Warner-Lambert or   
any of its Subsidiaries or any of their respective affiliates or any successor  
thereto or that would, after the Effective Time, to the knowledge of            
Warner-Lambert, limit or restrict Newco or any of its affiliates (including the 
Surviving Corporation) or any successor thereto, from engaging or competing in  
any line of business or in any geographic area, which agreements or             
arrangements, in the aggregate, would reasonably be expected to have a Material 
Adverse Effect on Newco and its Subsidiaries (including the Surviving           
Corporation and its Subsidiaries), taken together, after giving effect to the   
Merger.                                                                         

(q)  WARNER-LAMBERT STOCKHOLDER RIGHTS PLAN.  The Board of Directors of 
Warner-Lambert has amended the Warner-Lambert Rights Agreement in accordance    
with its terms to render it inapplicable to the transactions contemplated by    
this Agreement and the Warner-Lambert Stock Option Agreement. Warner-Lambert has
delivered to AHP a true and correct copy of the Warner-Lambert Rights Agreement,
as amended, in effect as of execution and delivery of this Agreement.           

  3.3  REPRESENTATIONS AND WARRANTIES OF AHP AND MERGER SUB.  AHP and Merger
Sub represent and warrant to Warner-Lambert as follows:                         

  (a)  ORGANIZATION.  Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware. Merger Sub is a direct
wholly-owned subsidiary of AHP.                                                 

   (b)  CORPORATE AUTHORIZATION.  Merger Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions   
contemplated hereby. The execution, delivery and performance by Merger Sub of   
this Agreement and the consummation by Merger Sub of the transactions           
contemplated hereby have been duly authorized by all necessary corporate action 
on the part of Merger Sub. This Agreement has been duly executed and delivered  
by Merger Sub and constitutes a valid and binding agreement of Merger Sub,      
enforceable against it in accordance with its terms, except as such             
enforceability may be limited by bankruptcy, insolvency, reorganization,        
moratorium and other similar laws relating to or affecting creditors generally  
or by general equity principles (regardless of whether such enforceability is   
considered in a proceeding in equity or at law).                                

A-26

PREM14A
133rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 133rd
  (c)  NON-CONTRAVENTION.  The execution, delivery and performance by Merger
Sub of this Agreement and the consummation by Merger Sub of the transactions    
contemplated hereby do not and will not contravene or conflict with the         
certificate of incorporation or bylaws of Merger Sub.                           

 (d)  NO BUSINESS ACTIVITIES.  Merger Sub has not conducted any activities
other than in connection with the organization of Merger Sub, the negotiation   
and execution of this Agreement and the consummation of the transactions        
contemplated hereby. Merger Sub has no Subsidiaries.                            

ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS 

 4.1  COVENANTS OF AHP.  During the period from the date of this Agreement
and continuing until the Effective Time, AHP agrees as to itself and its        
Subsidiaries that (except as expressly contemplated or permitted by this        
Agreement, the Stock Option Agreements or the AHP Disclosure Schedule or as     
required by a Governmental Entity of competent jurisdiction or to the extent    
that Warner-Lambert shall otherwise consent in writing, which consent shall not 
be unreasonably withheld or delayed):                                           

(a)  ORDINARY COURSE.                                                   

       (i) AHP and its Subsidiaries shall carry on their respective businesses
in the usual, regular and ordinary course in all material respects, in  
substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present lines of business,  
  maintain their rights and franchises and preserve their relationships with
 customers, suppliers and others having business dealings with them to the
end that their ongoing businesses shall not be impaired in any material 
  respect at the Effective Time; PROVIDED, HOWEVER, that no action by AHP or
    its Subsidiaries with respect to matters specifically addressed by any other
provision of this Section 4.1 shall be deemed a breach of this          
Section 4.1(a)(i) unless such action would constitute a breach of one or
more of such other provisions.                                          

(ii) Other than in connection with acquisitions permitted by    
   Section 4.1(e), AHP shall not, and shall not permit any of its Subsidiaries
   to, (A) enter into any new material line of business or (B) incur or commit
   to any capital expenditures or any obligations or liabilities in connection
   therewith other than capital expenditures and obligations or liabilities in
connection therewith incurred or committed to in the ordinary course of 
business consistent with past practice and which, together with all such
   expenditures incurred or committed since January 1, 1999, are not in excess
  of the amounts set forth in Section 4.1(a) of the AHP Disclosure Schedule.

(b)  DIVIDENDS; CHANGES IN SHARE CAPITAL.  AHP shall not, and shall not 
permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay 
any dividends on or make other distributions in respect of any of its capital   
stock, except (A) the declaration and payment of regular quarterly cash         
dividends not in excess of $.23 per share of AHP Common Stock with usual record 
and payment dates for such dividends in accordance with past dividend practice, 
(B) the declaration and payment of regular quarterly cash dividends not in      
excess of $.50 per share on the $2 Convertible Preferred Stock with usual record
and payment dates for such dividends in accordance with past dividend practice  
and (C) for dividends by wholly owned Subsidiaries of AHP, (ii) split, combine  
or reclassify any of its capital stock or issue or authorize or propose the     
issuance of any other securities in respect of, in lieu of or in substitution   
for, shares of its capital stock, except for any such transaction by a wholly   
owned Subsidiary of AHP which remains a wholly owned Subsidiary after           
consummation of such transaction or (iii) repurchase, redeem or otherwise       
acquire any shares of its capital stock or any securities convertible into or   
exercisable for any shares of its capital stock except for the purchase from    
time to time by AHP of AHP Common Stock (and the associated AHP Rights) in the  
ordinary course of business consistent with past practice in connection with the
AHP Benefit Plans. Prior to the Effective Time, AHP shall not redeem the AHP    
Rights.                                                                         

A-27

PREM14A
134th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 134th
    (c)  ISSUANCE OF SECURITIES.  AHP shall not, and shall not permit any of its
Subsidiaries to, issue, deliver or sell, or authorize or propose the issuance,  
delivery or sale of, any shares of its capital stock of any class, any AHP      
Voting Debt or any securities convertible into or exercisable for, or any       
rights, warrants, calls or options to acquire, any such shares or AHP Voting    
Debt, or enter into any commitment, arrangement, undertaking or agreement with  
respect to any of the foregoing, other than (i) the issuance of AHP Common Stock
(and the associated AHP Rights) upon the exercise of AHP Stock Options or in    
connection with other stock-based benefit plans outstanding on the date hereof, 
in each case in accordance with their present terms or pursuant to AHP Stock    
Options or other stock based awards granted pursuant to clause (ii) below,      
(ii) the granting of AHP Stock Options or other stock based awards to acquire   
shares of AHP Common Stock granted under stock based benefit plans outstanding  
on the date hereof in the ordinary course of business consistent with past      
practice not in excess of the amounts set forth in Section 4.1(c) of the AHP    
Disclosure Schedule, (iii) issuances by a wholly owned Subsidiary of AHP of     
capital stock to such Subsidiary's parent or another wholly owned Subsidiary of 
AHP, (iv) pursuant to acquisitions set forth on the AHP Disclosure Schedule or  
the financings therefor, (v) issuances in accordance with the AHP Rights        
Agreement or (vi) issuances pursuant to the AHP Stock Option Agreement.         

(d)  GOVERNING DOCUMENTS.  Except to the extent required to comply with 
their respective obligations hereunder or with applicable law, AHP and Merger   
Sub shall not amend or propose to so amend their respective certificates of     
incorporation, bylaws or other governing documents.                             

  (e)  NO ACQUISITIONS.  Other than (i) pursuant to the Warner-Lambert Stock
Option Agreement, (ii) acquisitions disclosed on the AHP Disclosure Schedule and
(iii) acquisitions for cash in existing or related lines of business of AHP the 
fair market value of the total consideration (including the value of            
indebtedness acquired or assumed) for which does not exceed the amount specified
in the aggregate for all such acquisitions in Section 4.1(e) of the AHP         
Disclosure Schedule and none of which acquisitions referred to in this          
clause (iii) presents a material risk of making it more difficult to obtain any 
approval or authorization required in connection with the Merger under          
Regulatory Laws, AHP shall not, and shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by 
any other manner, any business or any corporation, partnership, association or  
other business organization or division thereof or otherwise acquire or agree to
acquire any assets (other than the acquisition of assets used in the operations 
of the business of AHP and its Subsidiaries in the ordinary course, which assets
do not constitute a business unit, division or all or substantially all of the  
assets of the transferor); PROVIDED, HOWEVER, that the foregoing shall not      
prohibit (x) internal reorganizations or consolidations involving existing      
Subsidiaries of AHP or (y) the creation of new Subsidiaries of AHP organized to 
conduct or continue activities otherwise permitted by this Agreement.           

(f)  NO DISPOSITIONS.  Other than (i) internal reorganizations or       
consolidations involving existing Subsidiaries of AHP, (ii) dispositions        
referred to in AHP SEC Reports filed prior to the date of this Agreement or     
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
the transactions disclosed in the AHP Disclosure Schedule, AHP shall not, and   
shall not permit any of its Subsidiaries to, sell, lease or otherwise dispose   
of, or agree to sell, lease or otherwise dispose of, any of its assets          
(including capital stock of Subsidiaries of AHP but excluding inventory in the  
ordinary course of business), if the fair market value of the total             
consideration (including the value of the indebtedness acquired or assumed)     
therefor exceeds the amount specified in the aggregate for all such dispositions
in Section 4.1(f) of the AHP Disclosure Schedule.                               

   (g)  INVESTMENTS; INDEBTEDNESS.  AHP shall not, and shall not permit any of
its Subsidiaries to, other than in connection with actions permitted by         
Section 4.1(e), (i) make any loans, advances or capital contributions to, or    
investments in, any other Person, other than (x) by AHP or a Subsidiary of AHP  
to or in AHP or any Subsidiary of AHP, (y) pursuant to any contract or other    
legal obligation of                                                             

A-28

PREM14A
135th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 135th
AHP or any of its Subsidiaries existing at the date of this Agreement or (z) in 
the ordinary course of business consistent with past practice in an aggregate   
amount not in excess of the aggregate amount specified in Section 4.1(g) of the 
AHP Disclosure Schedule (provided that none of such transactions referred to in 
this clause (z) presents a material risk of making it more difficult to obtain  
any approval or authorization required in connection with the Merger under      
Regulatory Laws) or (ii) create, incur, assume or suffer to exist any           
indebtedness, issuances of debt securities, guarantees, loans or advances not in
existence as of the date of this Agreement except pursuant to the credit        
facilities, indentures and other arrangements in existence on the date of this  
Agreement or in the ordinary course of business consistent with past practice,  
in each case as such credit facilities, indentures and other arrangements may be
amended, extended, modified, refunded, renewed or refinanced after the date of  
this Agreement.                                                                 

(h)  POOLING; TAX-FREE QUALIFICATION.  AHP shall use its reasonable best
efforts not to, and shall use its reasonable best efforts not to permit any of  
its Subsidiaries to, take any action (including any action otherwise permitted  
by this Section 4.1) that would prevent or impede the Merger from qualifying as 
a "pooling of interests" for accounting purposes or as a "reorganization" under 
Section 368 of the Code; PROVIDED, HOWEVER, that nothing hereunder shall limit  
the ability of AHP to exercise its rights and/or fulfill its obligations under  
the Stock Option Agreements.                                                    

(i)  COMPENSATION.  Other than as contemplated by Section 5.6 or by     
Section 4.1(c) or 4.1(i) of the AHP Disclosure Schedule, AHP shall not increase 
the amount of compensation of any director or executive officer except in the   
ordinary course of business consistent with past practice or as required by an  
existing agreement, make any increase in or commitment to increase any employee 
benefits, issue any additional AHP Stock Options, adopt or make any commitment  
to adopt any additional employee benefit plan or make any contribution, other   
than regularly scheduled contributions, to any AHP Benefit Plan.                

  (j)  ACCOUNTING METHODS; INCOME TAX ELECTIONS.  Except as disclosed in AHP
SEC Reports filed prior to the date of this Agreement, or as required by a      
Governmental Entity, AHP shall not change its methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP as concurred in by     
AHP's independent public accountants. AHP shall not (i) change its fiscal year  
or (ii) make any material tax election, other than in the ordinary course of    
business consistent with past practice.                                         

(k)  CERTAIN AGREEMENTS.  AHP shall not, and shall not permit any of its
Subsidiaries to, enter into any agreements or arrangements that limit or        
otherwise restrict AHP or any of its Subsidiaries or any of their respective    
affiliates or any successor thereto or that could, after the Effective Time,    
limit or restrict Newco or any of its affiliates (including the Surviving       
Corporation) or any successor thereto, from engaging or competing in any line of
business or in any geographic area which agreements or arrangements,            
individually or in the aggregate, would reasonably be expected to have a        
Material Adverse Effect on Newco and its Subsidiaries (including the Surviving  
Corporation and its Subsidiaries), taken together, after giving effect to the   
Merger.                                                                         

(l)  NO CHANGE OR AMENDMENT TO RIGHTS AGREEMENT.  AHP shall not amend,  
modify or waive any provision of the AHP Rights Agreement, and shall not take   
any action to redeem the rights or render the rights inapplicable to any        
transaction, other than the Merger and the transactions contemplated by the AHP 
Stock Option Agreement.                                                         

(m)  NO RELATED ACTIONS.  AHP will not, and will not permit any of its  
Subsidiaries to, agree or commit to do any of the foregoing.                    

  4.2  COVENANTS OF WARNER-LAMBERT.  During the period from the date of this
Agreement and continuing until the Effective Time, Warner-Lambert agrees as to  
itself and its Subsidiaries that (except as expressly contemplated or permitted 
by this Agreement, the Stock Option Agreements or the                           

A-29

PREM14A
136th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 136th
Warner-Lambert Disclosure Schedule or as required by a Governmental Entity of   
competent jurisdiction or to the extent that AHP shall otherwise consent in     
writing, which consent shall not be unreasonably withheld or delayed):          

(a)  ORDINARY COURSE.                                                   

       (i) Warner-Lambert and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material    
respects, in substantially the same manner as heretofore conducted, and 
  shall use all reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their       
   relationships with customers, suppliers and others having business dealings
   with them to the end that their ongoing businesses shall not be impaired in
any material respect at the Effective Time; PROVIDED, HOWEVER, that no  
action by Warner-Lambert or its Subsidiaries with respect to matters    
  specifically addressed by any other provision of this Section 4.2 shall be
deemed a breach of this Section 4.2(a)(i) unless such action would      
constitute a breach of one or more of such other provisions.            

(ii)  Other than in connection with acquisitions permitted by   
 Section 4.2(e), Warner-Lambert shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or    
(B) incur or commit to any capital expenditures or any obligations or   
liabilities in connection therewith other than capital expenditures and 
   obligations or liabilities in connection therewith incurred or committed to
   in the ordinary course of business consistent with past practice and which,
  together with all such expenditures incurred or committed since January 1,
 1999, are not in excess of the amounts set forth in Section 4.2(a) of the
Warner-Lambert Disclosure Schedule.                                     

(b)  DIVIDENDS; CHANGES IN SHARE CAPITAL.  Warner-Lambert shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to,          
(i) declare or pay any dividends on or make other distributions in respect of   
any of its capital stock, except (A) the declaration and payment of regular     
quarterly cash dividends not in excess of $.20 per share of Warner-Lambert      
Common Stock with usual record and payment dates for such dividends in          
accordance with past dividend practice and (B) for dividends by wholly owned    
Subsidiaries of Warner-Lambert, (ii) split, combine or reclassify any of its    
capital stock or issue or authorize or propose the issuance of any other        
securities in respect of, in lieu of or in substitution for, shares of its      
capital stock, except for any such transaction by a wholly owned Subsidiary of  
Warner-Lambert which remains a wholly owned Subsidiary after consummation of    
such transaction, or (iii) repurchase, redeem or otherwise acquire any shares of
its capital stock or any securities convertible into or exercisable for any     
shares of its capital stock except for the purchase from time to time by        
Warner-Lambert of Warner-Lambert Common Stock (and the associated Warner-       
Lambert Rights) in the ordinary course of business consistent with past practice
in connection with the Warner-Lambert Benefit Plans. Prior to the Effective     
Time, Warner-Lambert shall not redeem the Warner-Lambert Rights.                

    (c)  ISSUANCE OF SECURITIES.  Warner-Lambert shall not, and shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the 
issuance, delivery or sale of, any shares of its capital stock of any class, any
Warner-Lambert Voting Debt or any securities convertible into or exercisable    
for, or any rights, warrants, calls or options to acquire, any such shares or   
Warner-Lambert Voting Debt, or enter into any commitment, arrangement,          
undertaking or agreement with respect to any of the foregoing, other than       
(i) the issuance of Warner-Lambert Common Stock (and the associated             
Warner-Lambert Rights) upon the exercise of Warner-Lambert Stock Options or in  
connection with other stock-based benefits plans outstanding on the date hereof,
in each case in accordance with their present terms or pursuant to              
Warner-Lambert Stock Options or other stock based awards granted pursuant to    
clause (iii) below, (ii) issuances by a wholly owned Subsidiary of              
Warner-Lambert of capital stock to such Subsidiary's parent or another wholly   
owned subsidiary of Warner-Lambert, (iii) the granting of Warner-Lambert Stock  
Options or other stock based awards to                                          

A-30

PREM14A
137th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 137th
acquire shares of Warner-Lambert Common Stock granted under stock based benefit 
plans outstanding on the date hereof in the ordinary course of business         
consistent with past practice not in excess of the amounts set forth in         
Section 4.2(c) of the Warner-Lambert Disclosure Schedule, (iv) pursuant to      
acquisitions set forth on the Warner-Lambert Disclosure Schedule or the         
financings therefor, (v) issuances in accordance with the Warner-Lambert Rights 
Agreement or (vi) issuances pursuant to the Warner-Lambert Stock Option         
Agreement.                                                                      

   (d)  GOVERNING DOCUMENTS.  Except to the extent required to comply with its
obligations hereunder or with applicable law, Warner-Lambert shall not amend or 
propose to so amend its respective certificates of incorporation, bylaws or     
other governing documents.                                                      

(e)  NO ACQUISITIONS.  Other than (i) pursuant to the AHP Stock Option  
Agreement, (ii) acquisitions disclosed on the Warner-Lambert Disclosure Schedule
and (iii) acquisitions for cash in existing or related lines of business of     
Warner-Lambert the fair market value of the total consideration (including the  
value of indebtedness acquired or assumed) for which does not exceed the amount 
specified in the aggregate for all such acquisitions in Section 4.2(e) of the   
Warner-Lambert Disclosure Schedule and none of which acquisitions referred to in
this clause (iii) presents a material risk of making it more difficult to obtain
any approval or authorization required in connection with the Merger under      
Regulatory Laws, Warner-Lambert shall not, and shall not permit any of its      
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,  
or by purchasing a substantial equity interest in or a substantial portion of   
the assets of, or by any other manner, any business or any corporation,         
partnership, association or other business organization or division thereof or  
otherwise acquire or agree to acquire any assets (other than the acquisition of 
assets used in the operations of the business of Warner-Lambert and its         
Subsidiaries in the ordinary course, which assets do not constitute a business  
unit, division or all or substantially of the assets of the transferor);        
PROVIDED, HOWEVER, that the foregoing shall not prohibit (x) internal           
reorganizations or consolidations involving existing Subsidiaries of            
Warner-Lambert or (y) the creation of new Subsidiaries of Warner-Lambert        
organized to conduct or continue activities otherwise permitted by this         
Agreement.                                                                      

(f)  NO DISPOSITIONS.  Other than (i) internal reorganizations or       
consolidations involving existing Subsidiaries of Warner-Lambert,               
(ii) dispositions referred to in Warner-Lambert SEC Reports filed prior to the  
date of this Agreement or (iii) as may be required by or in conformance with law
or regulation in order to permit or facilitate the consummation of the          
transactions contemplated hereby or the transactions disclosed in the           
Warner-Lambert Disclosure Schedule, Warner-Lambert shall not, and shall not     
permit any of its Subsidiaries to, sell, lease or otherwise dispose of, or agree
to sell, lease or otherwise dispose of, any of its assets (including capital    
stock of Subsidiaries of Warner-Lambert but excluding inventory in the ordinary 
course of business), if the fair market value of the total consideration        
(including the value of the indebtedness acquired or assumed) therefor exceeds  
the amount specified in the aggregate for all such dispositions in              
Section 4.2(f) of the Warner-Lambert Disclosure Schedule.                       

(g)  INVESTMENTS; INDEBTEDNESS.  Warner-Lambert shall not, and shall not
permit any of its Subsidiaries to, other than in connection with actions        
permitted by Section 4.2(e), (i) make any loans, advances or capital            
contributions to, or investments in, any other Person, other than (x) by Warner-
Lambert or a Subsidiary of Warner-Lambert to or in Warner-Lambert or any        
Subsidiary of Warner-Lambert, (y) pursuant to any contract or other legal       
obligation of Warner-Lambert or any of its Subsidiaries existing at the date of 
this Agreement or (z) in the ordinary course of business consistent with past   
practice in an aggregate amount not in excess of the aggregate amount specified 
in Section 4.2(g) of the Warner-Lambert Disclosure Schedule (provided that none 
of such transactions referred to in this clause (z) presents a material risk of 
making it more difficult to obtain any approval or authorization required in    
connection with the Merger under Regulatory Laws) or (ii) create, incur, assume 
or suffer to exist any indebtedness, issuances of debt securities, guarantees,  
loans or advances not in existence as of the date of this Agreement except      
pursuant to the credit facilities, indentures and                               

A-31

PREM14A
138th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 138th
other arrangements in existence on the date of this Agreement or in the ordinary
course of business consistent with past practice, in each case as such credit   
facilities, indentures and other arrangements and other existing indebtedness   
may be amended, extended, modified, refunded, renewed or refinanced after the   
date of this Agreement.                                                         

(h)  POOLING; TAX-FREE QUALIFICATION.  Warner-Lambert shall use its     
reasonable best efforts not to, and shall use its reasonable best efforts not to
permit any of its Subsidiaries to, take any action (including any action        
otherwise permitted by this Section 4.2) that would prevent or impede the Merger
from qualifying as a "pooling of interests" for accounting purposes or as a     
"reorganization" under Section 368 of the Code; PROVIDED, HOWEVER, that nothing 
hereunder shall limit the ability of Warner-Lambert to exercise its rights      
and/or fulfill its obligations under the Stock Option Agreements.               

    (i)  COMPENSATION.  Other than as contemplated by Section 5.6 or by Sections
4.2(c) or 4.2(i) of the Warner-Lambert Disclosure Schedule, Warner-Lambert shall
not increase the amount of compensation of any director or executive officer    
except in the ordinary course of business consistent with past practice or as   
required by an existing agreement, make any increase in or commitment to        
increase any employee benefits, issue any additional Warner-Lambert Stock       
Options, adopt or make any commitment to adopt any additional employee benefit  
plan or make any contribution, other than regularly scheduled contributions, to 
any Warner-Lambert Benefit Plan.                                                

(j)  ACCOUNTING METHODS; INCOME TAX ELECTIONS.  Except as disclosed in  
Warner-Lambert SEC Reports filed prior to the date of this Agreement, or as     
required by a Governmental Entity, Warner-Lambert shall not change its methods  
of accounting in effect at December 31, 1998, except as required by changes in  
GAAP as concurred in by Warner-Lambert's independent public accountants. Warner-
Lambert shall not (i) change its fiscal year or (ii) make any material tax      
election, other than in the ordinary course of business consistent with past    
practice.                                                                       

    (k)  CERTAIN AGREEMENTS.  Warner-Lambert shall not, and shall not permit any
of its Subsidiaries to, enter into any agreements or arrangements that limit or 
otherwise restrict Warner-Lambert or any of its Subsidiaries or any of their    
respective affiliates or any successor thereto, or that could, after the        
Effective Time, limit or restrict Newco or any of its affiliates (including the 
Surviving Corporation) or any successor thereto, from engaging or competing in  
any line of business or in any geographic area which agreements or arrangements,
individually or in the aggregate, would reasonably be expected to have a        
Material Adverse Effect on Newco and its Subsidiaries (including the Surviving  
Corporation and its Subsidiaries), taken together, after giving effect to the   
Merger.                                                                         

  (l)  NO CHANGE OR AMENDMENT TO RIGHTS AGREEMENT.  Warner-Lambert shall not
amend, modify or waive any provision of the Warner-Lambert Rights Agreement, and
shall not take any action to redeem the rights or render the rights inapplicable
to any transaction, other than the Merger and the transactions contemplated by  
the Warner-Lambert Stock Option Agreement.                                      

  (m)  NO RELATED ACTIONS.  Warner-Lambert will not, and will not permit any
of its Subsidiaries to, agree or commit to any of the foregoing.                

4.3  GOVERNMENTAL FILINGS.  Each party shall (a) confer on a regular and
frequent basis with the other and (b) report to the other (to the extent        
permitted by law or regulation or any applicable confidentiality agreement) on  
operational matters. Warner-Lambert and AHP shall file all reports required to  
be filed by each of them with the SEC (and all other Governmental Entities)     
between the date of this Agreement and the Effective Time and shall (to the     
extent permitted by law or regulation or any applicable confidentiality         
agreement) deliver to the other party copies of all such reports, announcements 
and publications promptly after the same are filed.                             

    4.4  CONTROL OF OTHER PARTY'S BUSINESS.  Nothing contained in this Agreement
shall give Warner-Lambert, directly or indirectly, the right to control or      
direct AHP's operations prior to the Effective Time. Nothing contained in this  
Agreement shall give AHP, directly or indirectly, the right to control or       

A-32

PREM14A
139th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 139th
direct Warner-Lambert's operations prior to the Effective Time. Prior to the    
Effective Time, each of Warner-Lambert and AHP shall exercise, consistent with  
the terms and conditions of this Agreement, complete control and supervision    
over its respective operations.                                                 

ARTICLE V 
ADDITIONAL AGREEMENTS 

5.1  PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETINGS.             

    (a) As promptly as reasonably practicable following the date hereof, AHP and
Warner-Lambert shall prepare and file with the SEC mutually acceptable proxy    
materials which shall constitute the Joint Proxy Statement/Prospectus (such     
proxy statement/prospectus, and any amendments or supplements thereto, the      
"JOINT PROXY STATEMENT/PROSPECTUS") and AHP shall prepare and file a            
registration statement on Form S-4 with respect to the issuance of AHP Common   
Stock in the Merger (the "FORM S-4"). The Joint Proxy Statement/Prospectus will 
be included in and will constitute a part of the Form S-4 as AHP's prospectus.  
The Form S-4 and the Joint Proxy Statement/Prospectus shall comply as to form in
all material respects with the applicable provisions of the Securities Act and  
the Exchange Act and the rules and regulations thereunder. Each of AHP and      
Warner-Lambert shall use reasonable best efforts to have the Form S-4 declared  
effective by the SEC and to keep the Form S-4 effective as long as is necessary 
to consummate the Merger and the transactions contemplated thereby. AHP and     
Warner-Lambert shall, as promptly as practicable after receipt thereof, provide 
the other party copies of any written comments and advise the other party of any
oral comments, with respect to the Joint Proxy Statement/Prospectus received    
from the SEC. AHP will provide Warner-Lambert with a reasonable opportunity to  
review and comment on any amendment or supplement to the Form S-4 prior to      
filing such with the SEC, and will provide Warner-Lambert with a copy of all    
such filings made with the SEC. Notwithstanding any other provision herein to   
the contrary, no amendment or supplement (including by incorporation by         
reference) to the Joint Proxy Statement/Prospectus or the Form S-4 shall be made
without the approval of both parties, which approval shall not be unreasonably  
withheld or delayed; PROVIDED, that with respect to documents filed by a party  
which are incorporated by reference in the Form S-4 or Joint Proxy              
Statement/Prospectus, this right of approval shall apply only with respect to   
information relating to the other party or its business, financial condition or 
results of operations; and PROVIDED, FURTHER, that AHP, in connection with a    
Change in the AHP Recommendation, and Warner-Lambert, in connection with a      
Change in the Warner-Lambert Recommendation, may amend or supplement the Joint  
Proxy Statement/Prospectus or Form S-4 (including by incorporation by reference)
pursuant to a Qualifying Amendment (as defined below)to effect such a Change,   
and in such event, this right of approval shall apply only with respect to      
information relating to the other party or its business, financial condition or 
results of operations, and shall be subject to the right of each party to have  
its Board of Directors' deliberations and conclusions to be accurately          
described. A "QUALIFYING AMENDMENT" means an amendment or supplement to the     
Joint Proxy Statement/Prospectus or Form S-4 (including by incorporation by     
reference) to the extent it contains (i) a Change in the AHP Recommendation or a
Change in the Warner-Lambert Recommendation (as the case may be), (ii) a        
statement of the reasons of the Board of Directors of AHP or Warner-Lambert (as 
the case may be) for making such Change in the AHP Recommendation or Change in  
the Warner-Lambert Recommendation (as the case may be) and (iii) additional     
information reasonably related to the foregoing. AHP will use reasonable best   
efforts to cause the Joint Proxy Statements/Prospectus to be mailed to AHP      
stockholders, and Warner-Lambert will use reasonable best efforts to cause the  
Joint Proxy Statement/Prospectus to be mailed to Warner-Lambert's stockholders, 
in each case after the Form S-4 is declared effective under the Securities Act. 
AHP shall also take any action (other than qualifying to do business in any     
jurisdiction in which it is not now so qualified or to file a general consent to
service of process) required to be taken under any applicable state securities  
laws in connection with the Share Issuance and Warner-Lambert shall furnish all 
information concerning                                                          

A-33

PREM14A
140th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 140th
Warner-Lambert and the holders of Warner-Lambert Common Stock as may be         
reasonably requested in connection with any such action. Each party will advise 
the other party, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective, the issuance of any stop order, the suspension of
the qualification of the AHP Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for         
amendment of the Joint Proxy Statement/Prospectus or the Form S-4. If at any    
time prior to the Effective Time any information relating to AHP or             
Warner-Lambert, or any of their respective affiliates, officers or directors,   
should be discovered by AHP or Warner-Lambert which should be set forth in an   
amendment or supplement to any of the Form S-4 or the Joint Proxy               
Statement/Prospectus so that any of such documents would not include any        
misstatement of a material fact or omit to state any material fact necessary to 
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly 
notify the other party hereto and, to the extent required by law, rules or      
regulations, an appropriate amendment or supplement describing such information 
shall be promptly filed with the SEC and disseminated to the stockholders of AHP
and Warner-Lambert.                                                             

(b) Warner-Lambert shall, duly take (subject to compliance with the     
provisions of Section 3.1(e) and Section 3.2(e) (provided that Warner-Lambert   
shall have used reasonable best efforts to ensure that such representation is   
true and correct)), all lawful action to call, give notice of, convene and hold 
a meeting of its stockholders on a date determined in accordance with the mutual
agreement of Warner-Lambert and AHP (the "WARNER-LAMBERT STOCKHOLDERS MEETING") 
for the purpose of obtaining the Required Warner-Lambert Vote with respect to   
the transactions contemplated by this Agreement and shall take all lawful action
to solicit the adoption of this Agreement by the Required Warner-Lambert Vote;  
and the Board of Directors of Warner-Lambert shall recommend adoption of this   
Agreement by the stockholders of Warner-Lambert to the effect as set forth in   
Section 3.2(f) (the "WARNER-LAMBERT RECOMMENDATION"), and shall not withdraw,   
modify or qualify (or propose to withdraw, modify or qualify) in any manner     
adverse to AHP such recommendation or take any action or make any statement in  
connection with the Warner-Lambert Stockholders Meeting inconsistent with such  
recommendation (collectively, a "CHANGE IN THE WARNER-LAMBERT RECOMMENDATION"); 
PROVIDED the foregoing shall not prohibit accurate disclosure (and such         
disclosure shall not be deemed to be a Change in the Warner-Lambert             
Recommendation) of factual information regarding the business, financial        
condition or results of operations of AHP or Warner-Lambert or the fact that an 
Acquisition Proposal has been made, the identity of the party making such       
proposal or the material terms of such proposal (provided, that the Board of    
Directors of Warner-Lambert does not withdraw, modify or qualify (or propose to 
withdraw, modify or qualify) in any manner adverse to AHP its recommendation) in
the Form S-4 or the Joint Proxy Statement/Prospectus, to the extent such        
information, facts, identity or terms is required to be disclosed therein under 
applicable law; and, PROVIDED FURTHER, that the Board of Directors of           
Warner-Lambert may make a Change in the Warner-Lambert Recommendation           
(x) pursuant to Section 5.5 hereof or (y) prior to the Warner-Lambert           
Stockholders Meeting if (i) after the date of this Agreement, Warner-Lambert    
acquires knowledge of facts or circumstances that the Board of Directors of     
Warner-Lambert determines in good faith, after taking into account those facts  
and circumstances concerning AHP that are disclosed in the AHP SEC Reports filed
prior to the date of this Agreement (or that Warner-Lambert otherwise has       
knowledge of as of the date of this Agreement), constitute a material adverse   
development with respect to AHP and (ii) the Board of Directors of              
Warner-Lambert determines in good faith that, by reason of its determination in 
clause (i) and based upon the advice of outside counsel to Warner-Lambert, the  
failure to effect such Change in the Warner-Lambert Recommendation would create 
a substantial probability of violating the fiduciary duties of the              
Warner-Lambert Board of Directors under applicable law. Notwithstanding any     
Change in the Warner-Lambert Recommendation, this Agreement shall be submitted  
to the stockholders of Warner-Lambert at the Warner-Lambert Stockholders Meeting
for the                                                                         

A-34

PREM14A
141st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 141st
purpose of adopting the Agreement and approving the Merger and nothing contained
herein shall be deemed to relieve Warner-Lambert of such obligation.            

(c) AHP shall duly take (subject to compliance with the provisions of   
Section 3.2(e) and Section 3.1(e) (provided that AHP shall have used reasonable 
best efforts to ensure that such representation is true and correct) all lawful 
action to call, give notice of, convene and hold a meeting of its stockholders  
on a date determined in accordance with the mutual agreement of AHP and         
Warner-Lambert (the "AHP STOCKHOLDERS MEETING") for the purpose of obtaining the
AHP Stockholder Approval and the Bylaw Amendment Vote and shall take all lawful 
action to solicit the approval of the AHP Bylaw Amendment, the Share Issuance   
and the adoption of the Certificate Amendment; and the Board of Directors of AHP
shall recommend approval of the Share Issuance, the AHP Bylaw Amendment and the 
adoption of the Certificate Amendment by the stockholders of AHP to the effect  
as set forth in Section 3.1(f) (the "AHP RECOMMENDATION"), and shall not        
withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any  
manner adverse to Warner-Lambert such recommendation or take any action or make 
any statement in connection with the AHP Stockholders Meeting inconsistent with 
such recommendation (collectively, a "CHANGE IN THE AHP RECOMMENDATION");       
PROVIDED the foregoing shall not prohibit accurate disclosure (and such         
disclosure shall not be deemed to be a Change in the AHP Recommendation) of     
factual information regarding the business, financial condition or operations of
AHP or Warner-Lambert or the fact that an Acquisition Proposal has been made,   
the identity of the party making such proposal or the material terms of such    
proposal (provided, that the Board of Directors of AHP does not withdraw, modify
or qualify (or propose to withdraw, modify or qualify) in any manner adverse to 
Warner-Lambert its recommendation) in the Form S-4 or the Joint Proxy           
Statement/Prospectus, to the extent such information, facts, identity or terms  
is required to be disclosed therein under applicable law; and, PROVIDED FURTHER,
that the Board of Directors of AHP may make a Change in the AHP Recommendation  
(x) pursuant to Section 5.5 hereof or (y) prior to the AHP Stockholders Meeting 
if (i) after the date of this Agreement, AHP acquires knowledge of facts or     
circumstances that the Board of Directors of AHP determines in good faith, after
taking into account those facts and circumstances concerning Warner-Lambert that
are disclosed in the Warner-Lambert SEC Reports filed prior to the date of this 
Agreement (or that AHP otherwise has knowledge of as of the date of this        
Agreement), constitute a material adverse development with respect to           
Warner-Lambert and (ii) the Board of Directors of AHP determines in good faith  
that, by reason of its determination in clause (i) and based upon the advice of 
outside counsel to AHP, the failure to effect such Change in the AHP            
Recommendation would create a substantial probability of violating the fiduciary
duties of the AHP Board of Directors under applicable law. Notwithstanding any  
Change in the AHP Recommendation, a proposal to approve the Share Issuance, a   
proposal to approve the AHP Bylaw Amendment and a proposal to adopt the         
Certificate Amendment shall be submitted to the stockholders of AHP at the AHP  
Stockholders Meeting for the purpose of obtaining the AHP Stockholder Approval  
and nothing contained herein shall be deemed to relieve AHP of such obligation. 

(d) For purposes of this Agreement, a Change in the Warner-Lambert      
Recommendation shall be deemed to include, without limitation, a recommendation 
by the Warner-Lambert Board of Directors of a third party Acquisition Proposal  
with respect to Warner-Lambert and a Change in the AHP Recommendation shall be  
deemed to include, without limitation, a recommendation by the AHP Board of     
Directors of a third party Acquisition Proposal with respect to AHP.            

5.2  NEWCO BOARD OF DIRECTORS; EXECUTIVE OFFICERS; NAME; HEADQUARTERS.  

    (a) At or prior to the Effective Time, AHP will take all action necessary to
(i) reconstitute the Board of Directors of Newco as of the Effective Time in    
accordance with Exhibit 5.2(a) hereto and the amendment to the AHP By-Laws      
provided for in Section 1.6 of this Agreement, (ii) cause John R. Stafford to be
appointed as Chairman of the Board and Lodewijk J.R. de Vink to be appointed as 
Chief Executive Officer of Newco; each to be effective as of the Effective Time 
in accordance with Exhibit 5.2(a) hereto, (iii) cause the other individuals     
listed in Exhibit 5.2(a) hereto to be appointed as                              

A-35

PREM14A
142nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 142nd
officers of Newco as of the Effective Time in accordance with Exhibit 5.2(a)    
hereto and (iv) adopt a retirement policy which contains the terms set forth on 
Exhibit 5.2(a) hereto.                                                          

(b) AHP shall change its name as of the Effective Time to               
"AmericanWarner, Inc." as set forth on Exhibit 1.5(b).                          

  (c) Following the Effective Time, (i) Newco shall continue to maintain its
principal corporate offices in Madison, New Jersey, (ii) Newco shall maintain   
the headquarters of its over-the-counter division in Morris Plains, New Jersey  
and (iii) Newco shall maintain the headquarters of its pharmaceutical division  
in Radnor, Pennsylvania.                                                        

  5.3  ACCESS TO INFORMATION.  Upon reasonable notice, each party shall (and
shall cause its Subsidiaries to) afford to the officers, employees, accountants,
counsel, financial advisors and other representatives of the other party        
reasonable access during normal business hours, during the period prior to the  
Effective Time, to all its properties, books, contracts, commitments, records,  
officers and employees and, during such period, such party shall (and shall     
cause its Subsidiaries to) furnish promptly to the other party (a) a copy of    
each report, schedule, registration statement and other document filed,         
published, announced or received by it during such period pursuant to the       
requirements of Federal or state securities laws, as applicable (other than     
documents which such party is not permitted to disclose under applicable law),  
and (b) all other information concerning it and its business, properties and    
personnel as such other party may reasonably request (including consultation on 
a regular basis with respect to litigation matters); PROVIDED, HOWEVER, that    
either party may restrict the foregoing access to the extent that (i) any law,  
treaty, rule or regulation of any Governmental Entity applicable to such party  
requires such party or its Subsidiaries to restrict or prohibit access to any   
such properties or information or (ii) the information is subject to            
confidentiality obligations to a third party. The parties will hold any such    
information obtained pursuant to this Section 5.3 in confidence in accordance   
with, and shall otherwise be subject to, the provisions of the Mutual           
Confidentiality Agreement letter dated July 27, 1999, between Warner-Lambert and
AHP (the "CONFIDENTIALITY AGREEMENT"), as if such Confidentiality Agreement were
in full force and effect; provided, that nothing in Section 13 thereof shall    
prohibit or otherwise restrict a party from making an acquisition proposal to   
the other party or from engaging in or becoming a participant in a proxy contest
or a solicitation of proxies with respect to the Merger or the other            
transactions contemplated hereby (including the Share Issuance, the Certificate 
Amendment and the AHP Bylaw Amendment). Any investigation by AHP or             
Warner-Lambert shall not affect the representations and warranties of           
Warner-Lambert or AHP, as the case may be.                                      

5.4  REASONABLE BEST EFFORTS.                                           

  (a) Subject to the terms and conditions of this Agreement, each party will
use its reasonable best efforts to take, or cause to be taken, all actions and  
to do, or cause to be done, all things necessary, proper or advisable under this
Agreement and applicable laws and regulations to consummate the Merger and the  
other transactions contemplated by this Agreement as soon as practicable after  
the date hereof, including (i) preparing and filing as promptly as practicable  
all documentation to effect all necessary applications, notices, petitions,     
filings, tax ruling requests and other documents and to obtain as promptly as   
practicable all consents, waivers, licenses, orders, registrations, approvals,  
permits, tax rulings and authorizations necessary or advisable to be obtained   
from any third party and/or any Governmental Entity in order to consummate the  
Merger or any of the other transactions contemplated by this Agreement and      
(ii) taking all reasonable steps as may be necessary to obtain all such material
consents, waivers, licenses, registrations, permits, authorizations, tax        
rulings, orders and approvals. In furtherance and not in limitation of the      
foregoing, each party hereto agrees to make an appropriate filing of a          
Notification and Report Form pursuant to the HSR Act and any other Regulatory   
Law (as defined below) with respect to the transactions contemplated hereby as  
promptly as practicable after the date hereof and to supply as promptly as      
practicable any additional information                                          

A-36

PREM14A
143rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 143rd
and documentary material that may be requested pursuant to the HSR Act and any  
other Regulatory Law and to take all other actions necessary to cause the       
expiration or termination of the applicable waiting periods under the HSR Act as
soon as practicable. Nothing in this Agreement shall require any of AHP and its 
Subsidiaries or Warner-Lambert and its Subsidiaries to sell, hold separate or   
otherwise dispose of or conduct their business in a specified manner, or agree  
to sell, hold separate or otherwise dispose of or conduct their business in a   
specified manner, or permit the sale, holding separate or other disposition of, 
any assets of AHP, Warner-Lambert or their respective Subsidiaries or the       
conduct of their business in a specified manner, whether as a condition to      
obtaining any approval from a Governmental Entity or any other Person or for any
other reason, if such sale, holding separate or other disposition or the conduct
of their business in a specified manner is not conditioned on the Closing or, in
the aggregate, would reasonably be expected to have a Material Adverse Effect on
Newco and its Subsidiaries (including the Surviving Corporation and its         
Subsidiaries), taken together, after giving effect to the Merger.               

(b) Each of AHP and Warner-Lambert shall, in connection with the efforts
referenced in Section 5.4(a) to obtain all requisite material approvals and     
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Regulatory Law, use its reasonable best efforts to             
(i) cooperate in all respects with each other in connection with any filing or  
submission and in connection with any investigation or other inquiry, including 
any proceeding initiated by a private party, (ii) promptly inform the other     
party of any communication received by such party from, or given by such party  
to, the Antitrust Division of the Department of Justice (the "DOJ"), the Federal
Trade Commission (the "FTC") or any other Governmental Entity and of any        
material communication received or given in connection with any proceeding by a 
private party, in each case regarding any of the transactions contemplated      
hereby, and (iii) permit the other party to review any communication given by it
to, and consult with each other in advance of any meeting or conference with,   
the DOJ, the FTC or any such other Governmental Entity or, in connection with   
any proceeding by a private party, with any other Person, and to the extent     
appropriate or permitted by the DOJ, the FTC or such other applicable           
Governmental Entity or other Person, give the other party the opportunity to    
attend and participate in such meetings and conferences. For purposes of this   
Agreement, "REGULATORY LAW" means the Sherman Act, as amended, Council          
Regulation No. 4064/89 of the European Community, as amended (the "EC MERGER    
REGULATION") the Clayton Act, as amended, the HSR Act, the Federal Trade        
Commission Act, as amended, and all other federal, state and foreign, if any,   
statutes, rules, regulations, orders, decrees, administrative and judicial      
doctrines and other laws that are designed or intended to prohibit, restrict or 
regulate (i) foreign investment or (ii) actions having the purpose or effect of 
monopolization or restraint of trade or lessening of competition.               

 (c) Subject to the terms and conditions of this Agreement, in furtherance
and not in limitation of the covenants of the parties contained in Sections     
5.4(a) and 5.4(b), if any administrative or judicial action or proceeding,      
including any proceeding by a private party, is instituted (or threatened to be 
instituted) challenging any transaction contemplated by this Agreement as       
violative of any Regulatory Law, each of AHP and Warner-Lambert shall cooperate 
in all respects with each other and use its respective reasonable best efforts, 
including without limitation, selling, holding separate or otherwise disposing  
of or conducting their business in a specified manner, or agreeing to sell, hold
separate or otherwise dispose of or conduct their business in a specified manner
or permitting the sale, holding separate or other disposition of, any assets of 
AHP, Warner-Lambert or their respective Subsidiaries or the conducting of their 
business in a specified manner, in order to contest and resist any such action  
or proceeding and to have vacated, lifted, reversed or overturned any decree,   
judgment, injunction or other order, whether temporary, preliminary or          
permanent, that is in effect and that prohibits, prevents or restricts          
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this         
Section 5.4 shall limit a party's right to terminate this Agreement pursuant to 
Article VII; provided that the foregoing is subject in all respects to the last 
sentence of Section 5.4(a).                                                     

A-37

PREM14A
144th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 144th
(d) If any objections are asserted with respect to the transactions     
contemplated hereby under any Regulatory Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions    
contemplated hereby as violative of any Regulatory Law, each of AHP and         
Warner-Lambert shall use its reasonable best efforts to resolve any such        
objections or challenge as such Governmental Entity or private party may have to
such transactions under such Regulatory Law so as to permit consummation of the 
transactions contemplated by this Agreement.                                    

5.5  ACQUISITION PROPOSALS.                                             

Without limitation on any of such party's other obligations under this  
Agreement (including under Article IV hereof), each of AHP and Warner-Lambert   
agrees that neither it nor any of its Subsidiaries nor any of the officers and  
directors of it or its Subsidiaries shall, and that it shall use its reasonable 
best efforts to cause its and its Subsidiaries' employees, agents and           
representatives (including any investment banker, attorney or accountant        
retained by it or any of its Subsidiaries) not to, directly or indirectly,      
initiate, solicit, encourage or knowingly facilitate (including by way of       
furnishing information) any inquiries or the making of any proposal or offer    
with respect to a merger, reorganization, share exchange, consolidation,        
business combination, recapitalization, liquidation, dissolution or similar     
transaction involving it, or any purchase or sale of the consolidated assets    
(including without limitation stock of Subsidiaries and Majority Owned          
Restricted Affiliates) of such party and its Subsidiaries, taken as a whole,    
having an aggregate value equal to 10% or more of the market capitalization of  
such party, or any purchase or sale of, or tender or exchange offer for, 10% or 
more of the equity securities of such party (any such proposal or offer (other  
than a proposal or offer made by the other party or an affiliate thereof) being 
hereinafter referred to as an "ACQUISITION PROPOSAL"). Each of AHP and Warner-  
Lambert further agrees that neither it nor any of its Subsidiaries nor any of   
the officers and directors of it or its Subsidiaries shall, and that it shall   
use its reasonable best efforts to cause its and its Subsidiaries' employees,   
agents and representatives (including any investment banker, attorney or        
accountant retained by it or any of its Subsidiaries) not to, directly or       
indirectly, have any discussion with or provide any confidential information or 
data to any Person relating to an Acquisition Proposal, or engage in any        
negotiations concerning an Acquisition Proposal, or knowingly facilitate any    
effort or attempt to make or implement an Acquisition Proposal or accept an     
Acquisition Proposal. Notwithstanding anything in this Agreement to the         
contrary, each of AHP and Warner-Lambert or its respective Board of Directors   
shall be permitted to (A) to the extent applicable, comply with Rule 14d-9 and  
Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition     
Proposal, (B) effect a Change in the AHP or Warner-Lambert Recommendation, as   
the case may be, or (C) engage in any discussions or negotiations with, or      
provide any information to, any Person in response to an unsolicited bona fide  
written Acquisition Proposal by any such Person, if and only to the extent that,
in any such case as is referred to in clause (B) or (C), (i) its Stockholders   
Meeting shall not have occurred, (ii) (x) in the case of clause (B) above such  
change is permitted by clause (y) of the second proviso of the first sentence of
Section 5.1(b) or Section 5.1(c), as the case may be, or it has received an     
unsolicited bona fide written Acquisition Proposal from a third party and its   
Board of Directors conclude in good faith that such Acquisition Proposal        
constitutes a Superior Proposal (as defined in Section 8.11) and (y) in the case
of clause (C) above, its Board of Directors concludes in good faith that there  
is a reasonable likelihood that such Acquisition Proposal could result in a     
Superior Proposal, (iii) prior to providing any information or data to any      
Person in connection with an Acquisition Proposal by any such Person, its Board 
of Directors receives from such Person an executed confidentiality agreement    
containing terms at least as stringent as those contained in the Confidentiality
Agreement (including Section 13 thereof) and (iv) prior to providing any        
information or data to any Person or entering into discussions or negotiations  
with any Person, such party notifies the other party promptly of such inquiries,
proposals or offers received by, any such information requested from, or any    
such discussions or negotiations sought to be initiated or continued with, any  
of its representatives indicating, in connection with such notice, the name of  
such Person and the material terms and conditions of any inquiries, proposals or
offers. Each of AHP and Warner-Lambert agrees that it will                      

A-38

PREM14A
145th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 145th
promptly keep the other party informed of the status and terms of any such      
proposals or offers and the status and terms of any such discussions or         
negotiations. Each of AHP and Warner-Lambert agrees that it will, and will cause
its officers, directors and representatives to, immediately cease and cause to  
be terminated any activities, discussions or negotiations existing as of the    
date of this Agreement with any parties conducted heretofore with respect to any
Acquisition Proposal. Each of AHP and Warner-Lambert agrees that it will use    
reasonable best efforts to promptly inform its directors, officers, key         
employees, agents and representatives of the obligations undertaken in this     
Section 5.5. Nothing in this Section 5.5 shall (x) permit AHP or Warner-Lambert 
to terminate this Agreement (except as specifically provided in Article VII     
hereof) or (y) affect any other obligation of AHP or Warner-Lambert under this  
Agreement. Neither AHP nor Warner-Lambert shall submit to the vote of its       
stockholders any Acquisition Proposal other than the Merger.                    

5.6  EMPLOYEE BENEFITS MATTERS.                                         

 (a)  CONTINUATION AND COMPARABILITY OF BENEFITS.  Following the Effective
Time, Newco shall honor, cause the Surviving Corporation to honor, all          
Warner-Lambert Benefit Plans and related funding arrangements in accordance with
their respective terms. From the Effective Time until such later date to be     
agreed by the Task Force (which date shall not be earlier than the first        
anniversary of the Effective Time), Newco shall provide compensation and        
employee benefits under Benefit Plans (as defined in Section 8.11) to the       
employees and former employees of AHP and Warner-Lambert and their respective   
Subsidiaries (the "Newco Employees") that are, in the aggregate, no less        
favorable in any material respects than those provided to such persons pursuant 
to the Benefit Plans in effect on the date hereof, except to the extent their   
equity and equity based compensation shall be dealt with in accordance with     
Section 5.6(c). Nothing herein shall require Newco to continue any particular   
Benefit Plan or prevent the amendment or termination thereof (subject to the    
maintenance, in the aggregate, of the benefits as provided in the preceding     
sentence); provided, however, that Newco shall not take any action (by way of   
amendment, termination or otherwise) which is in violation of the terms of any  
Benefit Plan or applicable law.                                                 

    (b)  PRE-EXISTING LIMITATIONS; DEDUCTIBLES; SERVICE CREDIT.  With respect to
any Benefit Plans in which any Newco Employees first become eligible to         
participate, on or after the Effective Time, and in which are plans that the    
Newco Employees did not participate prior to the Effective Time (the "NEW NEWCO 
PLANS"), Newco shall: (A) waive all pre-existing conditions exclusions and      
waiting periods with respect to participation and coverage requirements         
applicable to the Newco Employees under any New Newco Plans in which such       
employees may be eligible to participate after the Effective Time; (B) provide  
each Newco Employee with credit for any co-payments and deductibles paid prior  
to the Effective Time (to the same extent such credit was given under the       
analogous Benefit Plan prior to the Effective Time) in satisfying any applicable
deductible or out-of-pocket requirements under any New Newco Plans in which such
employees may be eligible to participate after the Effective Time, and          
(C) recognize all service of the Newco Employees with AHP and Warner-Lambert,   
respectively, for all purposes (including, without limitation, purposes of      
eligibility to participate, vesting credit, entitlement to benefits, and benefit
accrual) in any New Newco Plan in which such employees may be eligible to       
participate after the Effective Time, to the extent such service is taken into  
account under the applicable New Newco Plan; provided, that the foregoing shall 
not apply to the extent it would result in duplication of benefits, under       
multiple plans or would result in benefit accruals under multiple defined       
benefit pension plans with respect to the same period of service without offset 
for benefits accrued under a predecessor defined benefit pension plan.          

(c)  TREATMENT OF EQUITY AND EQUITY--BASED BENEFIT PLANS.  AHP and      
Warner-Lambert shall, as soon as reasonably practicable after the date hereof,  
create a task force comprised of key executive officers and other employees of  
each of AHP and Warner-Lambert (half of whom shall be employed by AHP and half  
of whom shall be employed by Warner-Lambert) (the "TASK FORCE") which shall     
review all Benefit Plans of AHP and Warner-Lambert including those which related
to, or were based upon                                                          

A-39

PREM14A
146th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 146th
the equity of AHP or Warner-Lambert and recommend appropriate Benefit Plans for 
Newco on and after the Effective Time, including how to deal with the use of    
equity and equity based compensation for employees of Newco. In so doing, the   
Task Force shall fully and fairly take into account the past practices of both  
AHP and Warner-Lambert, shall comply with the provisions of paragraph (a) of    
this Section 5.6 and shall in good faith consider appropriate methods by which  
Newco Employees may be fairly compensated through the use of Benefit Plans.     

5.7  FEES AND EXPENSES.  Whether or not the Merger is consummated, all  
Expenses incurred in connection with this Agreement and the transactions        
contemplated hereby shall be paid by the party incurring such Expenses, except  
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause 
to be paid, any and all property or transfer taxes imposed on Warner-Lambert or 
its Subsidiaries and (b) Expenses incurred in connection with the filing,       
printing and mailing of the Joint Proxy Statement/Prospectus, which shall be    
shared equally by AHP and Warner-Lambert. As used in this Agreement, "EXPENSES" 
includes all out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in      
connection with or related to the authorization, preparation, negotiation,      
execution and performance of this Agreement and the transactions contemplated   
hereby, including the preparation, printing, filing and mailing of the Joint    
Proxy Statement/Prospectus and the solicitation of stockholder approvals and all
other matters related to the transactions contemplated hereby.                  

   5.8  DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.  The Surviving
Corporation shall, and Newco shall cause the Surviving Corporation to,          
(i) indemnify and hold harmless, and provide advancement of expenses to, all    
past and present directors, officers and employees of Warner-Lambert and its    
Subsidiaries (in all of their capacities) (a) to the same extent such persons   
are indemnified or have the right to advancement of expenses as of the date of  
this Agreement by Warner-Lambert pursuant to Warner-Lambert's certificate of    
incorporation, bylaws and indemnification agreements, if any, in existence on   
the date hereof with any directors, officers and employees of Warner-Lambert and
its Subsidiaries and (b) without limitation to clause (a), to the fullest extent
permitted by law, in each case for acts or omissions occurring at or prior to   
the Effective Time (including for acts or omissions occurring in connection with
the approval of this Agreement and the consummation of the transactions         
contemplated hereby), (ii) include and cause to be maintained in effect in the  
Surviving Corporation's (or any successor's) certificate of incorporation and   
bylaws for a period of six years after the Effective Time, the current          
provisions regarding elimination of liability of directors, indemnification of  
officers, directors and employees and advancement of expenses contained in the  
certificate of incorporation and bylaws of Warner-Lambert and (iii) cause to be 
maintained for a period of six years after the Effective Time the current       
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by Warner-Lambert (PROVIDED that the Surviving Corporation 
(or any successor) may substitute therefor policies of at least the same        
coverage and amounts containing terms and conditions which are, in the          
aggregate, no less advantageous to the insured) with respect to claims arising  
from facts or events that occurred on or before the Effective Time; PROVIDED,   
HOWEVER, that in no event shall the Surviving Corporation be required to expend 
in any one year an amount in excess of 200% of the annual premiums currently    
paid by Warner-Lambert for such insurance; and, PROVIDED, further, that if the  
annual premiums of such insurance coverage exceed such amount, the Surviving    
Corporation shall be obligated to obtain a policy with the greatest coverage    
available for a cost not exceeding such amount. The obligations of the Surviving
Corporation under this Section 5.8 shall not be terminated or modified in such a
manner as to adversely affect any indemnitee to whom this Section 5.8 applies   
without the consent of such affected indemnitee (it being expressly agreed that 
the indemnitees to whom this Section 5.8 applies shall be third party           
beneficiaries of this Section 5.8).                                             

    5.9  PUBLIC ANNOUNCEMENTS.  AHP and Warner-Lambert shall use reasonable best
efforts to develop a joint communications plan and each party shall use         
reasonable best efforts (i) to ensure that                                      

A-40

PREM14A
147th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 147th
all press releases and other public statements with respect to the transactions 
contemplated hereby shall be consistent with such joint communications plan, and
(ii) unless otherwise required by applicable law or by obligations pursuant to  
any listing agreement with or rules of any securities exchange, to consult with 
each other before issuing any press release or, to the extent practical,        
otherwise making any public statement with respect to this Agreement or the     
transactions contemplated hereby. In addition to the foregoing, except to the   
extent disclosed in or consistent with the Joint Proxy Statement/Prospectus in  
accordance with the provisions of Section 5.1, neither AHP nor Warner-Lambert   
shall issue any press release or otherwise make any public statement or         
disclosure concerning the other party or the other party's business, financial  
condition or results of operations without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.                          

 5.10  ACCOUNTANT'S LETTERS.  (a) AHP shall use reasonable best efforts to
cause to be delivered to Warner-Lambert two letters from AHP's independent      
public accountants, one dated approximately the date on which the Form S-4 shall
become effective and one dated the Closing Date, each addressed to AHP and      
Warner-Lambert, in form reasonably satisfactory to Warner-Lambert and customary 
in scope for comfort letters delivered by independent public accountants in     
connection with registration statements similar to the Form S-4. AHP shall use  
reasonable best efforts to cause to be delivered to Warner-Lambert a copy of a  
letter from AHP's independent accountants dated approximately the date the      
Form S-4 is declared effective and as of the Closing Date, stating that         
accounting for the Merger as a pooling of interests under Opinion 16 of the     
Accounting Principles Board and applicable SEC rules and regulations is         
appropriate if the Merger is closed and consummated as contemplated by this     
Agreement.                                                                      

(b) Warner-Lambert shall use reasonable best efforts to cause to be     
delivered to AHP two letters from Warner-Lambert's independent public           
accountants, one dated approximately the date on which the Form S-4 shall become
effective and one dated the Closing Date, each addressed to Warner-Lambert and  
AHP, in form reasonably satisfactory to AHP and customary in scope for comfort  
letters delivered by independent public accountants in connection with          
registration statements similar to the Form S-4. Warner-Lambert shall use       
reasonable best efforts to cause to be delivered to AHP a copy of a letter from 
Warner-Lambert's independent public accountants, addressed to Warner-Lambert,   
dated approximately the date the Form S-4 is declared effective and as of the   
Closing Date, stating that they concur with Warner-Lambert's conclusion that, as
of the date of their report, no conditions exist that would preclude            
Warner-Lambert's ability to be a party in a business combination to be accounted
for as a pooling of interests.                                                  

(c) Each of AHP and Warner-Lambert shall use reasonable best efforts to 
cause the transactions contemplated by this Agreement, including the Merger, to 
be accounted for as a pooling of interests under Opinion 16 of the Accounting   
Principles Board and applicable SEC rules and regulations, and such accounting  
treatment to be accepted by the SEC.                                            

  5.11  LISTING OF SHARES OF AHP COMMON STOCK.  AHP shall use its reasonable
best efforts to cause the shares of AHP Common Stock to be issued in the Merger 
and the shares of AHP Common Stock to be reserved for issuance upon exercise of 
the Warner-Lambert Stock Options to be approved for listing on the NYSE, subject
to official notice of issuance, prior to the Closing Date.                      

5.12  DIVIDENDS.  After the date of this Agreement, each of AHP and     
Warner-Lambert shall coordinate with the other the payment of dividends with    
respect to the AHP Common Stock and Warner-Lambert Common Stock and the record  
dates and payment dates relating thereto, it being the intention of the parties 
hereto that holders of AHP Common Stock and Warner-Lambert Common Stock shall   
not receive two dividends, or fail to receive one dividend, for any single      
calendar quarter with respect to their shares of AHP Common Stock and/or        
Warner-Lambert Common Stock or any shares of AHP Common Stock that any such     
holder receives in exchange for such shares of Warner-Lambert Common Stock in   
the Merger.                                                                     

A-41

PREM14A
148th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 148th
 5.13  AFFILIATES.  (a) Not less than 45 days prior to the Effective Time,
Warner-Lambert shall deliver to AHP a letter identifying all persons who, in the
judgment of Warner-Lambert, may be deemed at the time this Agreement is         
submitted for adoption by the stockholders of Warner-Lambert, "affiliates" of   
Warner-Lambert for purposes of Rule 145 under the Securities Act or for purposes
of qualifying the Merger for pooling of interests accounting treatment under    
Opinion 16 of the Accounting Principles Board and applicable SEC rules and      
regulations, and such list shall be updated as necessary to reflect changes from
the date thereof. Warner-Lambert shall use reasonable best efforts to cause each
person identified on such list to deliver to AHP not less than 30 days prior to 
the Effective Time, a written agreement substantially in the form attached as   
Exhibit 5.13 hereto (an "AFFILIATE AGREEMENT"). Not less than 45 days prior to  
the Effective Time, AHP shall deliver to Warner-Lambert a letter identifying all
persons who, in the judgment of AHP, may be deemed "affiliates" of AHP for      
purposes of qualifying the Merger for pooling of interests accounting treatment 
under Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, and such list shall be updated as necessary to reflect changes from
the date hereof. AHP shall use reasonable best efforts to cause each person     
identified on such list to deliver to Warner-Lambert not less than 30 days prior
to the Effective Time, a written agreement including the substance of paragraphs
(C), (D) and (E) of Exhibit 5.13 hereto.                                        

(b) Newco shall use its reasonable best efforts to publish no later than
90 days after the end of the first month after the Effective Time in which there
are at least 30 days of post-Merger combined operations (which month may be the 
month in which the Effective Time occurs), combined sales and net income figures
as contemplated by and in accordance with the terms of SEC Accounting Series    
Release No. 135.                                                                

5.14  SECTION 16 MATTERS.  Prior to the Effective Time, AHP and         
Warner-Lambert shall take all such steps as may be required to cause any        
dispositions of Warner-Lambert Common Stock (including derivative securities    
with respect to Warner-Lambert Common Stock) or acquisitions of AHP Common Stock
(including derivative securities with respect to AHP Common Stock) resulting    
from the transactions contemplated by Article I or Article II of this Agreement 
by each individual who is subject to the reporting requirements of              
Section 16(a) of the Exchange Act with respect to Warner-Lambert, to be exempt  
under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in  
accordance with the No-Action Letter dated January 12, 1999, issued by the SEC  
to Skadden, Arps, Slate, Meagher & Flom LLP.                                    

  5.15  SPECIFIED LITIGATION.  (a) From the date hereof to the Closing Date,
AHP shall promptly advise Warner-Lambert of all developments, and provide       
Warner-Lambert all additional information not otherwise provided pursuant to    
Section 3.1(h) (iii), known to AHP which could reasonably be expected to be     
relevant and material to an assessment of the liability exposure of AHP and its 
Subsidiaries with respect to AHP Specified Litigation Matters.                  

   (b) From the date hereof to the Closing Date, Warner-Lambert shall promptly
advise AHP of all developments, and provide AHP all additional information not  
otherwise provided pursuant to Section 3.2(h) (iii), known to Warner-Lambert    
which could reasonably be expected to be relevant and material to an assessment 
of the liability exposure of Warner-Lambert and its Subsidiaries with respect to
Warner-Lambert Specified Litigation Matters.                                    

A-42

PREM14A
149th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 149th
ARTICLE VI
CONDITIONS PRECEDENT

6.1  CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.  The   
respective obligations of Warner-Lambert, AHP and Merger Sub to effect the      
Merger are subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:                                                    

(a)  STOCKHOLDER APPROVAL.  (i) Warner-Lambert shall have obtained the  
Required Warner-Lambert Vote in connection with the adoption of this Agreement  
by the stockholders of Warner-Lambert and (ii) AHP shall have obtained the AHP  
Stockholder Approval in connection with the approval of the Share Issuance and  
the Certificate Amendment by the stockholders of AHP.                           

(b)  NO INJUNCTIONS OR RESTRAINTS, ILLEGALITY.  No Laws shall have been 
adopted or promulgated, and no temporary restraining order, preliminary or      
permanent injunction or other order issued by a court or other Governmental     
Entity of competent jurisdiction shall be in effect, (i) having the effect of   
making the Merger illegal or otherwise prohibiting consummation of the Merger or
(ii) which otherwise, individually or in the aggregate, would reasonably be     
expected to have a Material Adverse Effect on Newco and its Subsidiaries        
(including the Surviving Corporation and its Subsidiaries), taken together after
giving effect to the Merger.                                                    

  (c)  HSR ACT; EC MERGER REGULATION.  The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated  
or shall have expired and approval of the Merger of the European Commission     
shall have been obtained pursuant to the EC Merger Regulation.                  

   (d)  GOVERNMENTAL AND REGULATORY APPROVALS.  Other than the filing provided
for under Section 1.3 and filings pursuant to the HSR Act and EC Merger         
Regulation (which are addressed in Section 6.1(c)), all consents, approvals and 
actions of, filings with and notices to any Governmental Entity required of AHP,
Warner-Lambert or any of their Subsidiaries to consummate the Merger, the Share 
Issuance and the other transactions contemplated hereby, the failure of which to
be obtained or taken, individually or in the aggregate, would reasonably be     
expected to have a Material Adverse Effect on Newco and its Subsidiaries        
(including the Surviving Corporation and its Subsidiaries), taken together after
giving effect to the Merger, shall have been obtained; PROVIDED HOWEVER, that   
the provisions of this Section 6.1(d) shall not be available to any party whose 
failure to fulfill its obligations pursuant to Section 5.4 shall have been the  
cause of, or shall have resulted in, the failure to obtain such consent or      
approval.                                                                       

(e)  NYSE LISTING.  The shares of AHP Common Stock to be issued in the  
Merger and such other shares to be reserved for issuance in connection with the 
Merger shall have been approved for listing on the NYSE, subject to official    
notice of issuance.                                                             

  (f)  EFFECTIVENESS OF THE FORM S-4.  The Form S-4 shall have been declared
effective by the SEC under the Securities Act. No stop order suspending the     
effectiveness of the Form S-4 shall have been issued by the SEC and no          
proceedings for that purpose shall have been initiated or threatened by the SEC.

  (g)  POOLING.  Warner-Lambert shall have received and delivered to AHP and
AHP's independent public accountants, a letter from its independent public      
accountants, dated approximately the date the Form S-4 is declared effective and
as of the Closing Date, stating that they concur with Warner-Lambert's          
conclusions that, as of the date of their letter, no conditions exist that would
preclude Warner-Lambert's ability to be a party in a business combination to be 
accounted for as a pooling of interests. AHP shall have received and delivered  
to Warner-Lambert, a letter from its independent public accountants, dated      
approximately the date the Form S-4 is declared effective and as of the Closing 
Date, stating that accounting for the Merger as a pooling of interests under    
Opinion 16 of the                                                               

A-43

PREM14A
150th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 150th
Accounting Principles Board and applicable SEC rules and regulations is         
appropriate if the Merger is closed and consummated as contemplated by this     
Agreement.                                                                      

6.2  ADDITIONAL CONDITIONS TO OBLIGATIONS OF AHP AND MERGER SUB.  The   
obligations of AHP and Merger Sub to effect the Merger are subject to the       
satisfaction of, or waiver by AHP, on or prior to the Closing Date of the       
following conditions:                                                           

(a)  REPRESENTATIONS AND WARRANTIES.  Each of the representations and   
warranties of Warner-Lambert set forth in this Agreement that is qualified as to
Material Adverse Effect shall be true and correct, and each of the              
representations and warranties of Warner-Lambert set forth in this Agreement    
that is not so qualified shall be true and correct in all material respects, in 
each case as of the date of this Agreement and as of the Closing Date as though 
made on and as of the Closing Date (except to the extent in either case that    
such representations and warranties speak as of another date); and AHP shall    
have received a certificate of the chief executive officer and the chief        
financial officer of Warner-Lambert to such effect.                             

(b)  PERFORMANCE OF OBLIGATIONS OF WARNER-LAMBERT.  Warner-Lambert shall
have performed or complied with all agreements and covenants required to be     
performed by it under this Agreement at or prior to the Closing Date that are   
qualified as to Material Adverse Effect and shall have performed or complied in 
all material respects with all other agreements and covenants required to be    
performed by it under this Agreement at or prior to the Closing Date that are   
not so qualified, and AHP shall have received a certificate of the chief        
executive officer and the chief financial officer of Warner-Lambert to such     
effect.                                                                         

   (c)  TAX OPINION.  AHP shall have received from Simpson Thacher & Bartlett,
counsel to AHP, on or before the date the Form S-4 shall become effective and,  
subsequently, on the Closing Date, a written opinion dated as of such dates to  
the effect that for federal income tax purposes the Merger will constitute a    
reorganization within the meaning of section 368(a) of the Code and that each of
AHP, Warner-Lambert and Merger Sub will be a party to the reorganization within 
the meaning of section 368(b) of the Code. In rendering such opinion, counsel to
AHP shall be entitled to rely upon information, representations and assumptions 
provided by AHP and Warner-Lambert substantially in the form of Exhibits        
6.2(c)(1) and 6.2(c)(2) (allowing for such amendments to the representations as 
counsel to AHP deems reasonably necessary).                                     

(d)  WARNER-LAMBERT RIGHTS AGREEMENT.  No Stock Acquisition Date or     
Distribution Date (as such terms are defined in the Warner-Lambert Rights       
Agreement) shall have occurred pursuant to the Warner-Lambert Rights Agreement. 

6.3  ADDITIONAL CONDITIONS TO OBLIGATIONS OF WARNER-LAMBERT.  The       
obligations of Warner-Lambert to effect the Merger are subject to the           
satisfaction of, or waiver by Warner-Lambert, on or prior to the Closing Date of
the following additional conditions:                                            

(a)  REPRESENTATIONS AND WARRANTIES.  Each of the representations and   
warranties of AHP set forth in this Agreement that is qualified as to Material  
Adverse Effect shall be true and correct, and each of the representations and   
warranties of AHP set forth in this Agreement that is not so qualified shall be 
true and correct in all material respects, in each case as of the date of this  
Agreement and as of the Closing Date as though made on and as of the Closing    
Date (except to the extent in either case that such representations and         
warranties speak as of another date); and Warner-Lambert shall have received a  
certificate of the chief executive officer and the chief financial officer of   
AHP to such effect.                                                             

(b)  PERFORMANCE OF OBLIGATIONS OF AHP.  AHP shall have performed or    
complied with all agreements and covenants required to be performed by it under 
this Agreement at or prior to the Closing Date that are qualified as to Material
Adverse Effect and shall have performed or complied in all material respects    
with all other agreements and covenants required to be performed by it under    
this                                                                            

A-44

PREM14A
151st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 151st
Agreement at or prior to the Closing Date that are not so qualified, and        
Warner-Lambert shall have received a certificate of the chief executive officer 
and the chief financial officer of AHP to such effect.                          

 (c)  TAX OPINION.  Warner-Lambert shall have received from Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to Warner-Lambert, on or before the date the 
Form S-4 shall become effective and, subsequently, on the Closing Date, a       
written opinion dated as of such dates to the effect that for federal income tax
purposes the Merger will constitute a reorganization within the meaning of      
section 368(a) of the Code and that each of AHP, Warner-Lambert and Merger Sub  
will be a party to the reorganization within the meaning of section 368(b) of   
the Code. In rendering such opinion, counsel to Warner-Lambert shall be entitled
to rely upon information, representations and assumptions provided by AHP and   
Warner-Lambert substantially in the form of Exhibits 6.2(c)(1) and 6.2(c)(2)    
(allowing for such amendments to the representations as counsel to              
Warner-Lambert deems reasonably necessary).                                     

   (d)  AHP RIGHTS AGREEMENT.  No Shares Acquisition Date or Distribution Date
(as such terms are defined in the AHP Rights Agreement) shall have occurred     
pursuant to the AHP Rights Agreement.                                           

(e)  AMENDMENTS.  AHP shall have taken all such actions as shall be     
necessary so that (i) the amendment to the bylaws of AHP required by            
Section 1.6(b) and (ii) the Certificate Amendment shall become effective not    
later than the Effective Time.                                                  

(f)  SETTLEMENT AGREEMENT.  AHP shall have entered into the Settlement  
Agreement (as defined below) and such Settlement Agreement shall be in full     
force and effect, the Preliminary Approval (as defined below) shall have been   
obtained and shall be in full force and effect, the Initial Opt Out Period (as  
defined below) shall have expired and AHP (i) shall not have exercised (or      
publicly announced or notified Warner-Lambert of its intention to exercise) and 
(ii) shall have irrevocably notified the other parties thereto that it will not 
exercise, its "walkaway" rights set forth in Section III.5 of the Memorandum of 
Understanding (as defined below) (or corresponding provision of the Settlement  
Agreement).                                                                     

ARTICLE VII 
TERMINATION AND AMENDMENT 

    7.1  TERMINATION.  This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the  
terminating party or parties, and except as provided below, whether before or   
after approval of the matters presented in connection with the Merger by the    
stockholders of Warner-Lambert or AHP:                                          

(a) By mutual written consent of AHP and Warner-Lambert;                

 (b) By either Warner-Lambert or AHP, if the Effective Time shall not have
occurred on or before November 15, 2000 (the "TERMINATION DATE"); PROVIDED,     
HOWEVER, that the right to terminate this Agreement under this Section 7.1(b)   
shall not be available to any party whose failure to fulfill any obligation     
under this Agreement (including without limitation such party's obligations set 
forth in Section 5.4) has been the cause of, or resulted in, the failure of the 
Effective Time to occur on or before the Termination Date;                      

 (c) By either Warner-Lambert or AHP, if any Governmental Entity (i) shall
have issued an order, decree or ruling or taken any other action (which the     
parties shall have used their reasonable best efforts to resist, resolve or     
lift, as applicable, in accordance with Section 5.4) permanently restraining,   
enjoining or otherwise prohibiting the transactions contemplated by this        
Agreement, and such order, decree, ruling or other action shall have become     
final and nonappealable or (ii) shall have failed to issue an order, decree or  
ruling or to take any other action (which order, decree, ruling or other action 
the parties shall have used their reasonable best efforts to obtain, in         
accordance with Section 5.4), in                                                

A-45

PREM14A
152nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 152nd
the case of each of (i) and (ii) which is necessary to fulfill the conditions   
set forth in subsections 6.1(c) and (d), as applicable, and such denial of a    
request to issue such order, decree, ruling or take such other action shall have
become final and nonappealable; PROVIDED, HOWEVER, that the right to terminate  
this Agreement under this Section 7.1(c) shall not be available to any party    
whose failure to comply with Section 5.4 has been the cause of such action or   
inaction;                                                                       

    (d) By either Warner-Lambert or AHP, if the approvals of the stockholders of
either AHP or Warner-Lambert contemplated by this Agreement (other than the AHP 
Bylaw Amendment) shall not have been obtained by reason of the failure to obtain
the required vote at a duly held meeting of stockholders or of any adjournment  
thereof at which the vote was taken;                                            

  (e) By AHP, if Warner-Lambert shall have failed to make the Warner-Lambert
Recommendation or effected a Change in the Warner-Lambert Recommendation (or    
resolved to take any such action), whether or not permitted by the terms hereof,
or shall have materially breached its obligations under this Agreement by reason
of a failure to call the Warner-Lambert Stockholders Meeting in accordance with 
Section 5.1(b);                                                                 

(f) By Warner-Lambert, if AHP shall have failed to make the AHP         
Recommendation or effected a Change in the AHP Recommendation (or resolved to   
take any such action), whether or not permitted by the terms hereof, or shall   
have materially breached its obligations under this Agreement by reason of a    
failure to call the AHP Stockholders Meeting in accordance with Section 5.1(c); 

    (g) By Warner-Lambert, if a Shares Acquisition Date (as such term is defined
in the AHP Rights Agreement) shall have occurred pursuant to the AHP Rights     
Agreement; or                                                                   

(h) By AHP, if a Stock Acquisition Date (as such term is defined in the 
Warner-Lambert Rights Agreement) shall have occurred pursuant to the            
Warner-Lambert Rights Agreement.                                                

(i) By Warner-Lambert at any time during the 10 Business Day period     
following the earlier of (i) June 30, 2000, if on or before such date the       
condition set forth in Section 6.3(f) is not satisfied, and (ii) the date on    
which the satisfaction on or before June 30, 2000 of the condition set forth in 
Section 6.3(f) is not possible.                                                 

(j) By Warner-Lambert at any time during the 10 Business Day period     
following the delivery by AHP to Warner-Lambert of a fully executed Settlement  
Agreement, if (i) such Settlement Agreement is not on substantially the same    
terms as set forth in the Memorandum of Understanding and (ii) the terms set    
forth in the Settlement Agreement which are not substantially the same as the   
terms set forth in the Memorandum of Understanding are in the aggregate, in the 
reasonable judgment of Warner-Lambert, materially adverse to AHP.               

For purposes of this Article VII and Section 6.3(f), the following terms
shall have the following meanings:                                              

        "MEMORANDUM OF UNDERSTANDING" shall mean the Memorandum of Understanding
Concerning Settlement of Diet Drug Litigation, dated October 7, 1999,   
between AHP and the other parties thereto.                              

"INITIAL OPT OUT PERIOD" shall have the meaning set forth in the
Memorandum of Understanding.                                            

      "PRELIMINARY APPROVAL" shall mean the granting, by order of the United
States District Court for the Eastern District of Pennsylvania, of the  
preliminary approval of the Settlement Agreement as contemplated by     
Section IV.3 of the Memorandum of Understanding and the approval of the 
notice to the Settlement Class (as defined in the Memorandum of         
Understanding) and authorization of the issuance of such notice.        

A-46

PREM14A
153rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 153rd
"SETTLEMENT AGREEMENT" shall have the meaning set forth in the  
Memorandum of Understanding.                                            

7.2  EFFECT OF TERMINATION.                                             

  (a) In the event of termination of this Agreement by either Warner-Lambert
or AHP as provided in Section 7.1, this Agreement shall forthwith become void   
and there shall be no liability or obligation on the part of AHP or             
Warner-Lambert or their respective officers or directors except with respect to 
Section 3.1(l), Section 3.2(l), the second sentence of Section 5.3,             
Section 5.7, this Section 7.2 and Article VIII, which provisions shall survive  
such termination, and except that, notwithstanding anything to the contrary     
contained in this Agreement, neither AHP nor Warner-Lambert shall be relieved or
released from any liabilities or damages arising out of its willful material    
breach of this Agreement.                                                       

(b) If (A) (I) either party shall terminate this Agreement pursuant to  
Section 7.1(d) (provided that the basis for such termination is the failure of  
AHP's stockholders to approve the Share Issuance or adopt the Certificate       
Amendment) and (II) at any time after the date of this Agreement and at or      
before the date of the AHP Stockholders Meeting a Business Combination (as      
defined in Section 7.2(d)) proposal with respect to AHP shall have been publicly
announced or otherwise communicated to the AHP Board of Directors,              
(B) Warner-Lambert shall terminate this Agreement pursuant to Section 7.1(g),   
(C) (I) either party shall terminate this Agreement pursuant to Section 7.1(b), 
(II) at any time after the date of this Agreement and at or before the          
Termination Date a Business Combination proposal with respect to AHP shall have 
been publicly announced or communicated to the AHP Board of Directors,          
(III) following the existence of such Business Combination proposal and prior to
any such termination, AHP shall have breached (and not cured after notice       
thereof) any of its covenants or agreements set forth in this Agreement in any  
material respect, which breach shall have materially contributed to the failure 
of the Effective Time to occur on or before the Termination Date and            
(IV) within twelve months of any such termination of this Agreement, AHP shall  
enter into a definitive agreement with any third party with respect to a        
Business Combination or a Business Combination with respect to AHP is           
consummated, (D) (I) either party shall terminate this Agreement pursuant to    
Section 7.1(b), (II) at any time after the date of this Agreement and at or     
before the Termination Date a Business Combination proposal with respect to AHP 
shall have been publicly announced or communicated to the AHP Board of          
Directors, (III) within twelve months of any such termination of this Agreement,
AHP shall enter into a definitive agreement with any third party with respect to
a Business Combination or a Business Combination with respect to AHP is         
consummated and (IV) Section 7.2(b)(C)(III) is not applicable,                  
(E)(I) Warner-Lambert shall terminate this Agreement pursuant to Section 7.1(f) 
and (II) either AHP's Board of Directors shall have, prior to termination,      
failed to make the AHP Recommendation or effected a change in the AHP           
Recommendation, in either case by reason of a Superior Proposal, or at any time 
after the date of this Agreement and at or before the event giving rise to the  
right of termination a Business Combination proposal which satisfies the        
provisions of subclauses (i) and (ii) of clause (II) (but not the language      
preceding subclause (i) in clause (II)) in the definition of Superior Proposal  
with respect to AHP shall have been publicly announced or communicated to the   
AHP Board of Directors and shall have not been irrevocably withdrawn prior to   
the event giving rise to the right of termination, or (F) Warner-Lambert shall  
terminate this Agreement pursuant to Section 7.1(f) in circumstances where the  
immediately preceding clause (E) (II) is not applicable;                        

then:                                                                           

(i) in the case of clauses (B), (C) or (E), AHP shall pay to    
Warner-Lambert (in the case of clauses (B) and (E) not later than two   
Business Days after the date of termination of this Agreement and in the
    case of clause (C) not later than two Business Days after the earlier of the
date such agreement is entered into or such Business Combination is     
consummated) an amount equal to $1.8 billion,                           

A-47

PREM14A
154th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 154th
     (ii) in the case of clause (A), (i) AHP shall pay Warner-Lambert, not
later than two Business Days after the date of termination of this      
    Agreement, an amount equal to $900 million, and (ii) if within twelve months
of termination of this Agreement, AHP enters into a definitive agreement
   with any third party with respect to a Business Combination or any Business
Combination with respect to AHP is consummated, then AHP shall pay to   
 Warner-Lambert, not later than two Business Days after the earlier of the
date such agreement is entered into or such Business Combination is     
consummated, an additional amount equal to $900 million,                

     (iii) in the case of clause (D), AHP shall pay to Warner-Lambert, not
    later than two Business Days after the earlier of the date such agreement is
    entered into or such Business Combination is consummated, an amount equal to
$180 million,                                                           

        (iv) in the case of clause (F), (i) AHP shall pay to Warner-Lambert, not
later than two Business Days after the date of termination of this      
    Agreement, an amount equal to $900 million, and (ii) if within twelve months
of termination of this Agreement, AHP enters into a definitive agreement
   with any third party with respect to a Business Combination or any Business
  Combination with respect to AHP is consummated, provided in each case such
Business Combination is more favorable to AHP stockholders (in their    
    capacities as such) from a financial point of view than the Merger, then AHP
shall pay to Warner-Lambert, not later than two Business Days after the 
earlier of the date such agreement is entered into or such Business     
    Combination is consummated, an additional amount equal to $1 billion, unless
the option granted pursuant to the AHP Stock Option Agreement has become
  exercisable in which case, such amount shall be $900 million. For purposes
of the foregoing, a Business Combination shall be deemed to be more     
favorable to AHP stockholders from a financial point of view if the AHP 
    Applicable Price exceeds the AHP Reference Price. The "AHP APPLICABLE PRICE"
    means the average of the closing prices of the AHP Common Stock (as reported
    on the NYSE Composite Transactions Reporting System (as reported in The Wall
Street Journal or, if not reported therein, in another authoritative    
source)) during the five trading day period commencing on the first full
trading day following the initial public announcement (or other public  
    disclosure) of the earlier to occur of (i) the date on which AHP enters into
a definitive agreement with respect to such Business Combination and    
  (ii) the date such Business Combination is consummated. The "AHP REFERENCE
  PRICE" means the average of the closing prices of the AHP Common Stock (as
    reported on the NYSE Composite Transactions Reporting System (as reported in
The Wall Street Journal or, if not reported therein, in another         
    authoritative source)) during the five trading day period ending on the last
trading day prior to the initial public announcement (or other public   
 disclosure) of the earliest to occur of the following: (i) termination of
   this Agreement, (ii) AHP's decision to consider effecting the change in the
AHP Recommendation giving use to such right of termination and (iii) the
    development with respect to Warner-Lambert upon which such change in the AHP
Recommendation is based.                                                

Notwithstanding the foregoing, in the event of termination pursuant to  
Section 7.1(d) in circumstances where Warner-Lambert has the right to terminate 
this Agreement pursuant to Section 7.1(f): (i) under circumstances where        
Section 7.2(b)(E)(II) applies, then AHP shall pay to Warner-Lambert, not later  
than two Business Days after the date of termination of this Agreement, an      
amount equal to $1.8 billion and no further fee shall be payable under this     
Section 7.2(b), and (ii) under circumstances where Section 7.2(b)(E)(II) does   
not apply, then AHP shall pay Warner-Lambert upon termination of this Agreement,
as the obligation to pay fees under this Section 7.2, the fees payable under    
Section 7.2(b)(iv) as, when and to the extent payable under such Section.       

(c) If (A) (I) either party shall terminate this Agreement pursuant to  
Section 7.1(d) (provided that the basis for such termination is the failure of  
Warner-Lambert's stockholders to adopt this Agreement or approve the Merger) and
(II) at any time after the date of this Agreement and at or before the date of  
the Warner-Lambert Stockholders Meeting a Business Combination proposal with    
respect to Warner-Lambert shall have been publicly announced or otherwise       
communicated to the Warner-Lambert Board                                        

A-48

PREM14A
155th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 155th
of Directors, (B) AHP shall terminate this Agreement pursuant to                
Section 7.1(h), (C) (I) either party shall terminate this Agreement pursuant to 
Section 7.1(b), (II) at any time after the date of this Agreement and at or     
before the Termination Date a Business Combination proposal with respect to     
Warner-Lambert shall have been publicly announced or communicated to the        
Warner-Lambert Board of Directors, (III) following the existence of such a      
Business Combination proposal and prior to any such termination, Warner-Lambert 
shall have breached (and not cured after notice thereof) any of its covenants or
agreements set forth in this Agreement in any material respect, which breach    
shall have materially contributed to the failure of the Effective Time to occur 
on or before the Termination Date and (IV) within twelve months of any such     
termination of this Agreement, Warner-Lambert shall enter into a definitive     
agreement with any third party with respect to a Business Combination or a      
Business Combination with respect to Warner-Lambert is consummated, (D) (I)     
either party shall terminate this Agreement pursuant to Section 7.1(b), (II) at 
any time after the date of this Agreement and at or before the Termination Date 
a Business Combination proposal with respect to Warner-Lambert shall have been  
publicly announced or communicated to the Warner-Lambert Board of Directors,    
(III) within twelve months of any such termination of this Agreement,           
Warner-Lambert shall enter into a definitive agreement with any third party with
respect to a Business Combination or a Business Combination with respect to     
Warner-Lambert is consummated and (IV) Section 7.2(c)(C)(III) is not applicable,
(E)(I) AHP shall terminate this Agreement pursuant to Section 7.1(e) and        
(II) either Warner-Lambert's Board of Directors shall have, prior to            
termination, failed to make the Warner-Lambert Recommendation or effected a     
change in the Warner-Lambert Recommendation, in either case by reason of a      
Superior Proposal, or at any time after the date of this Agreement and at or    
before the event giving rise to the right of termination a Business Combination 
proposal which satisfies the provisions of subclauses (i) and (ii) of           
clause (II) (but not the language preceding subclause (i) in clause (II)) in the
definition of Superior Proposal with respect to Warner-Lambert shall have been  
publicly announced or communicated to the Warner-Lambert Board of Directors and 
shall have not been irrevocably withdrawn prior to the event giving rise to the 
right of termination, or (F) AHP shall terminate this Agreement pursuant to     
Section 7.1(e) in circumstances where the immediately preceding                 
clause (E)(II) is not applicable;                                               

then:                                                                           

       (i) in the case of clauses (B), (C) or (E), Warner-Lambert shall pay to
AHP (in the case of clauses (B) and (E) not later then two Business Days
after the date of termination of this Agreement and in the case of      
 clause (C) not later than two Business Days after the earlier of the date
   such agreement is entered into or such Business Combination is consummated)
an amount equal to $1.8 billion,                                        

     (ii) in the case of clause (A), (i) Warner-Lambert shall pay AHP, not
later than two Business Days after the date of termination of this      
    Agreement, an amount equal to $900 million, and (ii) if within twelve months
 of termination of this Agreement, Warner-Lambert enters into a definitive
    agreement with any third party with respect to a Business Combination or any
Business Combination with respect to Warner-Lambert is consummated, then
   Warner-Lambert shall pay to AHP, not later than two Business Days after the
earlier of the date such agreement is entered into or such Business     
Combination is consummated, an additional amount equal to $900 million, 

     (iii) in the case of clause (D), Warner-Lambert shall pay to AHP, not
    later than two Business Days after the earlier of the date such agreement is
    entered into or such Business Combination is consummated, an amount equal to
$180 million,                                                           

        (iv) in the case of clause (F), (i) Warner-Lambert shall pay to AHP, not
later then two Business Days after the date of termination of this      
    Agreement, an amount equal to $900 million, and (ii) if within twelve months
 of termination of this Agreement, Warner-Lambert enters into a definitive
    agreement with any third party with respect to a Business Combination or any
Business                                                                

A-49

PREM14A
156th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 156th
   Combination with respect to Warner-Lambert is consummated, provided in each
case such Business Combination is more favorable to Warner-Lambert      
 stockholders (in their capacities as such) from a financial point of view
 than the Merger, then Warner-Lambert shall pay to AHP, not later than two
  Business Days after the earlier of the date such agreement is entered into
  or such Business Combination is consummated, an additional amount equal to
  $1 billion, unless the option granted pursuant to the Warner-Lambert Stock
    Option Agreement has become exercisable, in which case, such amount shall be
    $900 million. For purposes of the foregoing, a Business Combination shall be
   deemed to be more favorable to Warner-Lambert stockholders from a financial
point of view if the Warner-Lambert Applicable Price exceeds the        
   Warner-Lambert Reference Price. The "WARNER-LAMBERT APPLICABLE PRICE" means
the average of the closing prices of the Warner-Lambert Common Stock (as
    reported on the NYSE Composite Transactions Reporting System (as reported in
The Wall Street Journal or, if not reported therein, in another         
   authoritative source)) during the five trading day period commencing on the
  first full trading day following the initial public announcement (or other
public disclosure) of the earlier to occur of (i) the date on which     
Warner-Lambert enters into a definitive agreement with respect to such  
Business Combination and (ii) the date such Business Combination is     
  consummated. The "WARNER-LAMBERT REFERENCE PRICE" means the average of the
  closing prices of the Warner-Lambert Common Stock (as reported on the NYSE
Composite Transactions Reporting System (as reported in The Wall Street 
Journal or, if not reported therein, in another authoritative source))  
  during the five trading day period ending on the last trading day prior to
    the initial public announcement (or other public disclosure) of the earliest
  to occur of the following: (i) termination of this Agreement, (ii) Warner-
 Lambert's decision to consider effecting the Change in the Warner-Lambert
Recommendation giving rise to such right of termination and (iii) the   
    development with respect to AHP upon which such Change in the Warner-Lambert
Recommendation is based.                                                

Notwithstanding the foregoing, in the event of termination pursuant to  
Section 7.1(d) in circumstances where AHP has the right to terminate this       
Agreement pursuant to Section 7.1(e): (i) under circumstances where             
Section 7.2(c)(E)(II) applies, then Warner-Lambert shall pay to AHP, not later  
than two Business Days after the date of termination of this Agreement, an      
amount equal to $1.8 billion and no further fee shall be payable under this     
Section 7.2(c); and (ii) under circumstances where Section 7.2(c)(E)(II) does   
not apply, then Warner-Lambert shall pay AHP upon termination of this Agreement,
as the obligation to pay fees under this Section 7.2, the fees payable under    
Section 7.2(c)(iv) as, when and to the extent payable under such section.       

   (d) For the purposes of this Section 7.2, "BUSINESS COMBINATION" means with
respect to AHP or Warner-Lambert, as the case may be, (i) a merger,             
reorganization, consolidation, share exchange, business combination,            
recapitalization, liquidation, dissolution or similar transaction involving such
party as a result of which either (A) such party's stockholders prior to such   
transaction (by virtue of their ownership of such party's shares) in the        
aggregate cease to own at least 60% of the voting securities of the entity      
surviving or resulting from such transaction (or the ultimate parent entity     
thereof) or, regardless of the percentage of voting securities held by such     
stockholders, if any Person shall beneficially own, directly or indirectly, at  
least 40% of the voting securities of such ultimate parent entity, or (B) the   
individuals comprising the board of directors of such party prior to such       
transaction do not constitute a majority of the board of directors of such      
ultimate parent entity, (ii) a sale, lease, exchange, transfer or other         
disposition of at least 40% of the assets of such party and its Subsidiaries,   
taken as a whole, in a single transaction or a series of related transactions,  
or (iii) the acquisition, directly or indirectly, by a Person of beneficial     
ownership of 40% or more of the common stock of such party whether by merger,   
consolidation, share exchange, business combination, tender or exchange offer or
otherwise (other than a merger, reorganization, consolidation, share exchange,  
business combination, recapitalization, liquidation, dissolution or similar     
transaction upon the consummation of which such party's stockholders would in   
the aggregate beneficially own greater than 60% of the voting securities of such
Person).                                                                        

A-50

PREM14A
157th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 157th
(e) In no event shall AHP or Warner-Lambert be required to pay more than
$1.8 billion (or, as provided in Section 7.2(b)(iv) and 7.2(c)(iv),             
$1.9 billion) pursuant to Section 7.2(b) or 7.2(c), as applicable. All payments 
under this Section 7.2 shall be made by wire transfer of immediately available  
funds to an account designated by the party entitled to receive payment.        

7.3  AMENDMENT.  This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time 
before or after approval of the matters presented in connection with the Merger 
by the stockholders of Warner-Lambert and AHP, but, after any such approval, no 
amendment shall be made which by law or in accordance with the rules of any     
relevant stock exchange requires further approval by such stockholders without  
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.                      

7.4  EXTENSION; WAIVER.  At any time prior to the Effective Time, the   
parties hereto, by action taken or authorized by their respective Boards of     
Directors, may, to the extent legally allowed, (i) extend the time for the      
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained     
herein or in any document delivered pursuant hereto and (iii) waive compliance  
with any of the agreements or conditions contained herein. Any agreement on the 
part of a party hereto to any such extension or waiver shall be valid only if   
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or 
otherwise shall not constitute a waiver of those rights.                        

ARTICLE VIII
GENERAL PROVISIONS

 8.1  NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.  None of
the representations, warranties, covenants and other agreements in this         
Agreement or in any instrument delivered pursuant to this Agreement, including  
any rights arising out of any breach of such representations, warranties,       
covenants and other agreements, shall survive the Effective Time, except for    
those covenants and agreements contained herein and therein (including          
Section 5.8) that by their terms apply or are to be performed in whole or in    
part after the Effective Time and this Article VIII.                            

 8.2  NOTICES.  All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered 
personally, or by telecopy or telefacsimile, upon confirmation of receipt,      
(b) on the first Business Day following the date of dispatch if delivered by a  
recognized next-day courier service, or (c) on the tenth Business Day following 
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set     
forth below, or pursuant to such other instructions as may be designated in     
writing by the party to receive such notice:                                    

(a) if to AHP or Merger Sub, to:                                        

American Home Products Corporation                                
5 Giralda Farms                                                   
Madison, New Jersey 07940                                         
Fax: (973) 660-7156                                               
Attention: Louis L. Hoynes, Jr.                                   

A-51

PREM14A
158th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 158th
with a copy to:                                                   

Simpson Thacher & Bartlett                                        
425 Lexington Avenue                                              
New York, New York 10017                                          
Fax: (212) 455-2502                                               
Attention: Charles I. Cogut, Esq.                                 
Robert E. Spatt, Esq.                           
William E. Curbow, Esq.                         

(b) if to Warner-Lambert to:                                            

Warner-Lambert Company                                            
201 Tabor Road                                                    
Morris Plains, New Jersey 07950                                   
Fax: (973) 631-7704                                               
Attention: Gregory L. Johnson, Esq.                               

with a copy to:                                                   

Skadden, Arps, Slate, Meagher & Flom LLP                          
919 Third Avenue                                                  
New York, New York 10022                                          
Fax: (212) 735-2000                                               
Attention: Lou R. Kling, Esq.                                     
Eileen Nugent Simon, Esq.                       

8.3  INTERPRETATION.  When a reference is made in this Agreement to     
Sections, Exhibits or Schedules, such reference shall be to a Section of or     
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of  
contents and headings contained in this Agreement are for reference purposes    
only and shall not affect in any way the meaning or interpretation of this      
Agreement. Whenever the words "include", "includes" or "including" are used in  
this Agreement, they shall be deemed to be followed by the words "without       
limitation".                                                                    

8.4  COUNTERPARTS.  This Agreement may be executed in one or more       
counterparts, all of which shall be considered one and the same agreement and   
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both     
parties need not sign the same counterpart.                                     

8.5  ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.                    

(a) This Agreement, the Stock Option Agreements, the Confidentiality    
Agreement and the other agreements of the parties referred to herein constitute 
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.  

   (b) This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is        
intended to or shall confer upon any other Person any right, benefit or remedy  
of any nature whatsoever under or by reason of this Agreement, other than       
Section 5.8 (which is intended to be for the benefit of the Persons covered     
thereby and may be enforced by such Persons).                                   

8.6  GOVERNING LAW.  This Agreement shall be governed and construed in  
accordance with the laws of the State of Delaware (without giving effect to     
choice of law principles thereof).                                              

8.7  SEVERABILITY.  If any term or other provision of this Agreement is 
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall                              

A-52

PREM14A
159th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 159th
nevertheless remain in full force and effect so long as the economic or legal   
substance of the transactions contemplated hereby is not affected in any manner 
materially adverse to any party. Upon such determination that any term or other 
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the      
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally   
contemplated to the greatest extent possible.                                   

    8.8  ASSIGNMENT.  Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole  
or in part (whether by operation of law or otherwise), without the prior written
consent of the other party, and any attempt to make any such assignment without 
such consent shall be null and void, except that Merger Sub may assign, in its  
sole discretion, any or all of its rights, interests and obligations under this 
Agreement to any direct wholly owned Subsidiary of AHP without the consent of   
Warner-Lambert, but no such assignment shall relieve Merger Sub of any of its   
obligations under this Agreement. Subject to the preceding sentence, this       
Agreement will be binding upon, inure to the benefit of and be enforceable by   
the parties and their respective successors and assigns.                        

 8.9  SUBMISSION TO JURISDICTION; WAIVERS.  Each of AHP and Warner-Lambert
irrevocably agrees that any legal action or proceeding with respect to this     
Agreement or for recognition and enforcement of any judgment in respect hereof  
brought by the other party hereto or its successors or assigns may be brought   
and determined in the Chancery or other Courts of the State of Delaware, and    
each of AHP and Warner-Lambert hereby irrevocably submits with regard to any    
such action or proceeding for itself and in respect to its property, generally  
and unconditionally, to the nonexclusive jurisdiction of the aforesaid courts.  
Each of AHP and Warner-Lambert hereby irrevocably waives, and agrees not to     
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim that it is not      
personally subject to the jurisdiction of the above-named courts for any reason 
other than the failure to lawfully serve process (b) that it or its property is 
exempt or immune from jurisdiction of any such court or from any legal process  
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or  
otherwise), and (c) to the fullest extent permitted by applicable law, that     
(i) the suit, action or proceeding in any such court is brought in an           
inconvenient forum, (ii) the venue of such suit, action or proceeding is        
improper and (iii) this Agreement, or the subject matter hereof, may not be     
enforced in or by such courts.                                                  

    8.10  ENFORCEMENT.  The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in    
accordance with their specific terms. It is accordingly agreed that the parties 
shall be entitled to specific performance of the terms hereof, this being in    
addition to any other remedy to which they are entitled at law or in equity.    

8.11  DEFINITIONS.  As used in this Agreement:                          

(a) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the meaning 
under Section 13(d) of the Exchange Act and the rules and regulations           
thereunder.                                                                     

    (b) "BENEFIT PLANS" means, with respect to any Person, each employee benefit
plan, program, arrangement and contract (including, without limitation, any     
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement  
Income Security Act of 1974, as amended ("ERISA") and any bonus, deferred       
compensation, stock bonus, stock purchase, restricted stock, stock option,      
employment, termination, stay agreement or bonus, change in control and         
severance plan, program, arrangement and contract) in effect on the date of this
Agreement or disclosed on the Warner-Lambert Disclosure Schedule or the AHP     
Disclosure Schedule, as the case may be, to which such Person or its Subsidiary 
is a party, which is maintained or contributed to by such Person, or with       
respect to which such Person could incur material liability under Section 4069, 
4201 or 4212(c) of ERISA.                                                       

A-53

PREM14A
160th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 160th
(c) "BOARD OF DIRECTORS" means the Board of Directors of any specified  
Person and any committees thereof.                                              

(d) "BUSINESS DAY" means any day on which banks are not required or     
authorized to close in the City of New York.                                    

    (e) "KNOWN OR "KNOWLEDGE" means, with respect to any party, the knowledge of
such party's executive officers after reasonable inquiry.                       

(f) "MAJORITY OWNED RESTRICTED AFFILIATE" when used with respect to any 
party means any corporation or other organization, whether incorporated or      
unincorporated, at least a majority of the securities or other interests of     
which having by their terms ordinary voting power to elect a majority of the    
Board of Directors or others performing similar functions with respect to such  
corporation or other organization, is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and   
one or more of its Subsidiaries, and with respect to which such party is        
restricted from having the ability to, by virtue of contractual limitations or  
limitations imposed in organizational documents, from electing a majority of the
Board of Directors or others performing similar functions.                      

  (g) "MATERIAL ADVERSE EFFECT" means, with respect to any entity any event,
change, circumstance or effect that is or is reasonably likely to be materially 
adverse to (i) the business, financial condition or results of operations of    
such entity and its Subsidiaries taken as a whole, other than any event, change,
circumstance or effect relating (x) to the economy or financial markets in      
general or (y) in general to the industries in which such entity operates and   
not specifically relating to (or having the effect of specifically relating to  
or having a materially disproportionate effect (relative to most other industry 
participants) on) such entity or (ii) the ability of such entity to consummate  
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that for    
purposes of Section 3.1 (other than 3.1(i) if, and only if, the succeeding      
proviso is applicable and Section 3.1(h)(iii)) only, "Material Adverse Effect"  
shall also exclude any event, change, circumstance or effect relating in any way
to (I) any pending, proposed, threatened or potential litigation against AHP    
involving dexfenfluramine or fenfluramine or any settlement or proposed         
settlement of such litigation or (II) any other liabilities, whether known or   
unknown and whether contingent or not, relating in any way to AHP's production, 
sale or marketing of dexfenfluramine or fenfluramine; PROVIDED FURTHER HOWEVER, 
that the exception to the exclusion set forth in the preceding proviso with     
respect to Section 3.1(i) shall apply if, and only if, following the date of the
Warner-Lambert Stockholders Meeting, any events, changes, circumstances or      
effects occur, or Warner-Lambert becomes aware of any events, changes,          
circumstances or effects, relating to the matters referred to in the preceding  
clauses (I) and (II) which in Warner-Lambert's good faith judgment has had or   
has a reasonable likelihood of having material adverse significance with respect
to such matters. All references to Material Adverse Effect on AHP or its        
Subsidiaries contained in this Agreement shall be deemed to refer solely to AHP 
and its Subsidiaries without including its ownership of Warner-Lambert and its  
Subsidiaries after the Merger.                                                  

   (h) "THE OTHER PARTY" means, with respect to Warner-Lambert, AHP and means,
with respect to AHP, Warner-Lambert.                                            

 (i) "PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or   
group (as defined in the Exchange Act).                                         

  (j) "SUBSIDIARY" when used with respect to any party means any corporation
or other organization, whether incorporated or unincorporated, (i) of which such
party or any other Subsidiary of such party is a general partner (excluding     
partnerships, the general partnership interests of which held by such party or  
any Subsidiary of such party do not have a majority of the voting interests in  
such partnership) or (ii) at least a majority of the securities or other        
interests of which having by their terms ordinary voting power to elect a       
majority of the Board of Directors or others performing similar functions with  
respect to such corporation or other organization is directly or indirectly     
owned or controlled by such                                                     

A-54

PREM14A
161st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 161st
party or by any one or more of its Subsidiaries, or by such party and one or    
more of its Subsidiaries, except for any Majority Owned Restricted Affiliates.  

   (k) "SUPERIOR PROPOSAL" means with respect to AHP or Warner-Lambert, as the
case may be, a written proposal made by a Person other than either such party   
which is for (I) (i) a merger, reorganization, consolidation, share exchange,   
business combination, recapitalization, liquidation, dissolution or similar     
transaction involving such party as a result of which either (A) such party's   
stockholders prior to such transaction (by virtue of their ownership of such    
party's shares) in the aggregate cease to own at least 60% of the voting        
securities of the entity surviving or resulting from such transaction (or the   
ultimate parent entity thereof) or (B) the individuals comprising the board of  
directors of such party prior to such transaction do not constitute a majority  
of the board of directors of such ultimate parent entity, (ii) a sale, lease,   
exchange, transfer or other disposition of at least 40% of the assets of such   
party and its Subsidiaries, taken as a whole, in a single transaction or a      
series of related transactions, or (iii) the acquisition, directly or           
indirectly, by a Person of beneficial ownership of 40% or more of the common    
stock of such party whether by merger, consolidation, share exchange, business  
combination, tender or exchange offer or otherwise (other than a merger,        
consolidation, share exchange, business combination, tender or exchange offer or
other transaction upon the consummation of which such party's stockholders would
in the aggregate beneficially own greater than 60% of the voting securities of  
such Person), and which is (II) otherwise on terms which the Board of Directors 
of such party in good faith concludes (after consultation with its financial    
advisors and outside counsel), taking into account, among other things, all     
legal, financial, regulatory and other aspects of the proposal and the Person   
making the proposal, (i) would, if consummated, result in a transaction that is 
more favorable to its stockholders (in their capacities as stockholders), from a
financial point of view, than the transactions contemplated by this Agreement   
and (ii) is reasonably capable of being completed.                              

A-55

PREM14A
162nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 162nd
IN WITNESS WHEREOF, AHP, Merger Sub and Warner-Lambert have caused this 
Agreement to be signed by their respective officers thereunto duly authorized,  
all as of the date first written above.                                         

                                                                [Download Table]
                                              
AMERICAN HOME PRODUCTS CORPORATION            

By:  /s/ JOHN R. STAFFORD                     
     -----------------------------------------
     Name: John R. Stafford                   
     Title: Chairman, President and           
          Chief Executive Officer             

WOLVERINE SUB CORP.                           

By:  /s/ JEFFREY S. SHERMAN                   
     -----------------------------------------
     Name: Jeffrey S. Sherman                 
     Title: Vice President and Assistant      
     Secretary                                

WARNER-LAMBERT COMPANY                        

By:  /s/ LODEWIJK J.R. DE VINK                
     -----------------------------------------
     Name: Lodewijk J.R. de Vink              
     Title: Chairman, President and           
          Chief Executive Officer             

A-56

PREM14A
163rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 163rd
                                                                      APPENDIX B

STOCK OPTION AGREEMENT

  STOCK OPTION AGREEMENT, dated as of November 3, 1999 (the "Agreement"), by
and between Warner-Lambert Company, a Delaware corporation ("Issuer"), and      
American Home Products Corporation, a Delaware corporation ("Grantee").         

WHEREAS, Issuer, Grantee and Wolverine Sub Corp., a Delaware corporation
("Sub"), which is a direct wholly owned subsidiary of Grantee, propose to enter 
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger  
Agreement"; capitalized terms used but not defined herein shall have the        
meanings set forth in the Merger Agreement), providing for, among other things, 
a merger (the "Merger") of Sub with and into Issuer;                            

WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement and the AHP Stock Option Agreement, Grantee has       
requested that Issuer agree, and Issuer has agreed, to grant Grantee the Option 
(as defined below); and                                                         

    WHEREAS, as a condition and inducement to Issuer's willingness to enter into
the Merger Agreement and this Agreement, Issuer has requested that Grantee      
agree, and Grantee has agreed, to grant Issuer an option to purchase shares of  
Grantee's common stock under the AHP Stock Option Agreement.                    

NOW, THEREFORE, in consideration of the foregoing and the respective    
representations, warranties, covenants and agreements set forth herein and in   
the Merger Agreement, Issuer and Grantee agree as follows:                      

    1.  GRANT OF OPTIONS.  Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 127,940,538 shares (the "Option Shares") of common stock, par value $1.00 
per share, of Issuer (the "Shares") (being 14.9% of the number of Shares        
outstanding on October 31, 1999 before such issuance), together with the        
associated purchase rights (the "Rights") under the Amended and Restated Rights 
Agreement, dated as of March 25, 1997, between Issuer and First Chicago Trust   
Company of New York, as Rights Agent (references to the Option Shares shall be  
deemed to include the associated Rights), at a purchase price of $83.81 per     
Option Share (such price, as adjusted if applicable, the "Purchase Price"). The 
number of Option Shares that may be received upon the exercise of the Option and
the Purchase Price are subject to adjustment as set forth herein.               

    2.  EXERCISE OF OPTION.  (a) Grantee may exercise the Option, in whole or in
part, at any time or from time to time following the occurrence of a Purchase   
Event (as defined below); provided that, except as otherwise provided herein,   
the Option shall terminate and be of no further force and effect upon the       
earliest to occur of (i) the Effective Time, (ii) 6 months after the first      
occurrence of a Purchase Event (or if, at the expiration of such 6-months after 
the first occurrence of a Purchase Event, the Option cannot be exercised by     
reason of any applicable judgment, decree, order, law or regulation, 10 business
days after such impediment to exercise shall have been removed, but in no event 
under this clause (ii) later than the first anniversary of the Purchase Event), 
(iii) termination of the Merger Agreement under circumstances which do not and  
cannot result in Grantee's becoming entitled to receive termination fees from   
Issuer pursuant to Section 7.2(c) of the Merger Agreement of $1.8 billion or    
more; and (iv) 12 months after the termination of the Merger Agreement under    
circumstances which could result in Grantee's becoming entitled to receive      
termination fees from Issuer pursuant to Section 7.2(c)(ii)(ii) or 7.2(c)(C),   
unless during such 12-month period, a Purchase Event shall occur.               
Notwithstanding the foregoing, the Option shall terminate and not be exercisable
if (x) at the time the Merger Agreement is terminated, Grantee has the right to 
terminate the Merger Agreement pursuant to Section 7.1(e) thereof and the       
circumstances referred to in Section 7.2(c)(E)(II)                              

B-1 

PREM14A
164th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 164th
of the Merger Agreement are not applicable, and (y) prior to the 90(th) day     
following termination of the Merger Agreement, Issuer does not (i) enter into a 
definitive agreement with any third party with respect to a Business Combination
or (ii) consummate any Business Combination with respect to Grantee, which in   
each case is more favorable to Issuer's stockholders (in their capacities as    
such) from a financial point of view than the Merger, such determination of     
whether such Business Combination is more favorable than the Merger shall be    
made in accordance with the terms of Section 7.2(c)(iv) of the Merger Agreement.
The termination of the Option shall not affect any rights hereunder which by    
their terms extend beyond the date of such termination.                         

    (b) As used herein, a "Purchase Event" means an event the result of which is
that the total fee or fees required to be paid by Issuer to Grantee pursuant to 
Section 7.2(c) of the Merger Agreement equals or exceeds $1.8 billion.          

(c) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the "Exercise Notice"; the date of which being herein  
referred to as the "Notice Date") specifying (i) the total number of Option     
Shares it intends to purchase pursuant to such exercise and (ii) a place and    
date not earlier than three business days nor later than 10 business days from  
such Notice Date for the closing of such purchase (a "Closing"; and the date of 
such Closing, a "Closing Date"); provided that such closing shall be held only  
if (A) such purchase would not otherwise violate or cause the violation of      
applicable law (including the HSR Act), (B) no law, rule or regulation shall    
have been adopted or promulgated, and no temporary restraining order,           
preliminary or permanent injunction or other order, decree or ruling issued by a
court or other governmental authority of competent jurisdiction shall be in     
effect, which prohibits delivery of such Option Shares (and the parties hereto  
shall use their reasonable best efforts to have any such order, injunction,     
decree or ruling vacated or reversed) and (C) any prior notification to or      
approval of any other regulatory authority in the United States or elsewhere    
required in connection with such purchase shall have been made or obtained,     
other than those which if not made or obtained would not reasonably be expected 
to result in a significant detriment to the Grantee and its Subsidiaries taken  
as a whole or the Issuer and its Subsidiaries taken as a whole. If the Closing  
cannot be consummated by reason of a restriction set forth in clause (A), (B) or
(C) above, notwithstanding the provisions of Section 2(a), the Closing shall be 
held within 5 business days following the elimination of such restriction.      

3.  PAYMENT AND DELIVERY OF CERTIFICATES.  On each Closing Date, Grantee
shall pay to Issuer in immediately available funds by wire transfer to a bank   
account designated by Issuer an amount equal to the Purchase Price multiplied by
the Option Shares to be purchased on such Closing Date.                         

(b) At each Closing, simultaneously with the delivery of immediately    
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a  
certificate or certificates representing the Option Shares to be purchased at   
such closing, which Option Shares shall be free and clear of all liens, charges 
or encumbrances ("Liens"), and Grantee shall deliver to Issuer a letter agreeing
that Grantee shall not offer to sell or otherwise dispose of such Option Shares 
in violation of applicable law or the provisions of this Agreement.             

 (c) Certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:   

THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO 
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND  
 PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF NOVEMBER 3,
    1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.        

B-2 

PREM14A
165th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 165th
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of          
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the 
effect that such legend is not required for purposes of the Securities Act and  
(ii) the reference to restrictions pursuant to this Agreement in the above      
legend shall be removed by delivery of substitute certificate(s) without such   
reference if the Option Shares evidenced by certificate(s) containing such      
reference have been sold or transferred in compliance with the provisions of    
this Agreement under circumstances that do not require the retention of such    
reference.                                                                      

    4.  AUTHORIZED STOCK.  Issuer hereby represents and warrants to Grantee that
Issuer has taken all necessary corporate and other action to authorize and      
reserve and to permit it to issue, at all times from the date hereof until the  
obligation to deliver Shares upon the exercise of the Option terminates, will   
have reserved for issuance, upon exercise of the Option, Shares necessary for   
Grantee to exercise the Option, and Issuer will take all necessary corporate    
action to authorize and reserve for issuance all additional Shares or other     
securities which may be issued pursuant to Section 6 upon exercise of the       
Option. The Shares to be issued upon due exercise of the Option, including all  
additional Shares or other securities which may be issuable upon exercise of the
Option pursuant to Section 6, upon issuance pursuant hereto, shall be duly and  
validly issued, fully paid and nonassessable, and shall be delivered free and   
clear of all Liens, including any preemptive rights of any stockholder of       
Issuer.                                                                         

  5.  PURCHASE NOT FOR DISTRIBUTION.  Grantee hereby represents and warrants
to Issuer that any Option Shares or other securities acquired by Grantee upon   
exercise of the Option will not be taken with a view to the public distribution 
thereof and will not be transferred or otherwise disposed of except in a        
transaction registered or exempt from registration under the Securities Act.    

    6.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.  (a) In the event of any
change in Shares by reason of reclassification, recapitalization, stock split,  
split-up, combination, exchange of shares, stock dividend, dividend, dividend   
payable in any other securities, or any similar event, the type and number of   
Shares or securities subject to the Option, and the Purchase Price therefor     
(including for purposes of repurchase thereof pursuant to Section 7), shall be  
adjusted appropriately, and proper provisions shall be made in the agreements   
governing such transaction, so that Grantee shall receive upon exercise of the  
Option the number and class of shares or other securities or property that      
Grantee would have received in respect of Shares if the Option had been         
exercised immediately prior to such event or the record date therefor, as       
applicable. If any additional Shares are issued after the date of this Agreement
(other than pursuant to an event described in the immediately preceding         
sentence), the number of Shares subject to the Option shall be adjusted so that 
immediately prior to such issuance, it equals 14.9% of the number of Shares then
issued and outstanding. In no event shall the number of Shares subject to the   
Option exceed 14.9% of the number of Shares issued and outstanding at the time  
of exercise (without giving effect to any shares subject or issued pursuant to  
the Option).                                                                    

(b) Without limiting the foregoing, whenever the number of Option Shares
purchasable upon exercise of the Option is adjusted as provided in this Section 
6, the Purchase Price per Option Share shall be adjusted by multiplying the     
Purchase Price by a fraction, the numerator of which is equal to the number of  
Option Shares purchasable prior to the adjustment and the denominator of which  
is equal to the number of Option Shares purchasable after the adjustment.       

   (c) Without limiting the parties' relative rights and obligations under the
Merger Agreement, in the event that Issuer enters into an agreement (i) to      
consolidate with or merge into any person, other than Grantee or one of its     
Subsidiaries, and Issuer will not be the continuing or surviving corporation in 
such consolidation or merger, (ii) to permit any Person, other than Grantee or  
one of its Subsidiaries, to merge into Issuer and Issuer will be the continuing 
or surviving corporation, but in connection with such merger, the shares of     
Common Stock outstanding immediately prior to the                               

B-3 

PREM14A
166th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 166th
consummation of such merger will be changed into or exchanged for stock or other
securities of Issuer or any other Person or cash or any other property, or (iii)
to sell or otherwise transfer all or substantially all of its assets to any     
Person, other than Grantee or one of its Subsidiaries, then, and in each such   
case, the agreement governing such transaction will make proper provision so    
that the Option will, upon the consummation of any such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for, an  
option with identical terms appropriately adjusted to acquire the number and    
class of shares or other securities or property that Grantee would have received
in respect of Option Shares had the Option been exercised immediately prior to  
such consolidation, merger, sale or transfer or the record date therefor, as    
applicable. Issuer shall take such steps in connection with such consolidation, 
merger, liquidation or other such transaction as may be reasonably necessary to 
assure that the provisions hereof shall thereafter apply as nearly as possible  
to any securities or property thereafter deliverable upon exercise of the       
Option.                                                                         

7.  REPURCHASE OF OPTION.  (a) Notwithstanding the provisions of Section
2(a), at any time commencing upon the first occurrence of a Purchase Event and  
ending upon termination of this Option in accordance with Section 2, Issuer (or 
any successor entity thereof) shall at the request of Grantee (any such request,
a "Cash Exercise Notice"), repurchase from Grantee the Option or a portion      
thereof (if and to the extent not previously exercised or terminated) at a price
which, subject to Section 10 below, is equal to the excess, if any, of (x) the  
Applicable Price (as defined below) as of the Section 7 Request Date (as defined
below) for a Share over (y) the Purchase Price (subject to adjustment pursuant  
to Section 6), multiplied by all or such portion of the Option Shares subject to
the Option as the Grantee shall specify in the Cash Exercise Notice (the "Option
Repurchase Price").                                                             

 (b) Notwithstanding the provisions of Section 2(a), at any time following
the occurrence of a Purchase Event, Issuer (or any successor entity thereof)    
may, at its election, repurchase the Option (if and to the extent not previously
exercised or terminated) at the Option Repurchase Price; provided that the      
aggregate number of Option Shares as to which the Option may be repurchased     
shall not exceed 85,294,118. For purposes of this Agreement, an exercise of the 
Option shall be deemed to occur on the Closing Date and not on the Notice Date  
relating thereto.                                                               

  (c) In connection with any exercise of rights under this Section 7, Issuer
shall, within 5 business days after the Section 7 Request Date, pay the Option  
Repurchase Price in immediately available funds, and Grantee or such owner, as  
the case may be, shall surrender to Issuer the Option. Upon receipt by the      
Grantee of the Option Repurchase price, the obligations of the Issuer to deliver
Option Shares pursuant to Section 3 of this Agreement shall be terminated with  
respect to the number of Option Shares specified in the Cash Exercise Notice or 
the number of Option Shares as to which the Option is repurchased under Section 
7(b).                                                                           

  (d) For purposes of this Agreement, the following terms have the following
meanings:                                                                       

    (i) "Applicable Price", as of any date, means the highest of (A) the
  highest price per Share paid or proposed to be paid by any third party for
   Shares or the consideration per Share received or to be received by holders
of Shares, in each case pursuant to any Acquisition Proposal for or with
 Issuer made on or prior to such date or (B) the average closing price per
 Share as reported on the New York Stock Exchange, Inc. ("NYSE") Composite
   Tape or if the Shares are not listed on the NYSE, the highest bid price per
   Share as quoted on the National Association of Securities Dealers Automated
   Quotation System or, if the Shares are not quoted thereon, on the principal
  trading market on which such Shares are traded as reported by a recognized
   source during the 10 trading days preceding such date. If the consideration
  to be offered, paid or received pursuant to the foregoing clause (A) shall
  be other than in cash, the value of such consideration shall be determined
in good faith by an independent nationally recognized investment banking
firm selected by Grantee and reasonably acceptable to Issuer.           

B-4 

PREM14A
167th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 167th
        (ii) "Section 7 Request Date" means the date on which Issuer or Grantee,
as the case may be, exercises its rights under this Section.            

8.  REGISTRATION RIGHTS.  Issuer shall, if requested by Grantee or any  
Subsidiary of the Grantee which is the owner of Option Shares (collectively with
Grantee, the "Owners") at any time and from time to time within two years of the
first exercise of the Option, as expeditiously as possible prepare and file up  
to two registration statements under the Securities Act if such registration is 
necessary in order to permit the sale or other disposition of any or all shares 
of securities that have been acquired by or are issuable to such Owners upon    
exercise of the Option in accordance with the intended method of sale or other  
disposition stated by such Owners, including a "shelf" registration statement   
under Rule 415 under the Securities Act or any successor provision, and Issuer  
shall use all reasonable efforts to qualify such shares or other securities     
under any applicable state securities laws. Issuer shall use all reasonable     
efforts to cause each such registration statement to become effective, to obtain
all consents or waivers of other parties which are required therefor and to keep
such registration statement effective for such period at least 90 days from the 
day such registration statement first becomes effective as may be reasonably    
necessary to effect such sale or other disposition. The obligations of Issuer   
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for a period of time not exceeding 90 days in the aggregate if the 
Board of Directors of Issuer shall have determined in good faith that the filing
of such registration statement or the maintenance of its effectiveness would    
require disclosure of nonpublic information that would materially and adversely 
affect Issuer (but in no event shall Issuer exercise such postponement right    
more than once in any 12-month period). Any registration statement prepared and 
filed under this Section 8, and any sale covered thereby, shall be at Issuer's  
expense except for underwriting discounts or commissions, brokers' fees and the 
reasonable fees and disbursements of Owners' counsel related thereto. The Owners
shall provide all information reasonably requested by Issuer for inclusion in   
any registration statement to be filed hereunder. If during the time period     
referred to in the first sentence of this Section 8 Issuer effects a            
registration under the Securities Act of Shares for its own account or for any  
other stockholders of Issuer (other than on Form S-4 or Form S-8, or any        
successor form), it shall allow the Owners the right to participate in such     
registration, and such participation shall not affect the obligation of Issuer  
to effect two registration statements for the Owners under this Section 8;      
provided that, if the managing underwriters of such offering advise Issuer in   
writing that in their opinion the number of Shares requested to be included in  
such registration exceeds the number which can be sold in such offering without 
adversely affecting the offering price, Issuer and the Owners shall each reduce 
on a PRO RATA basis the Shares to be included therein on their respective       
behalf. In connection with any registration pursuant to this Section 8, Issuer  
and the Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and           
contribution in connection with such registration.                              

  9.  ADDITIONAL COVENANTS OF ISSUER.  (a) If Shares or any other securities
to be acquired upon exercise of the Option are then listed on the NYSE or any   
other securities exchange or market, Issuer, upon the request of any Owner, will
promptly file an application to list the Shares or other securities to be       
acquired upon exercise of the Options on the NYSE or such other securities      
exchange or market and will use its reasonable best efforts to obtain approval  
of such listing as soon as practicable.                                         

(b) Issuer will use its reasonable best efforts to take, or cause to be 
taken, all actions and to do, or cause to be done, all things necessary, proper 
or advisable under applicable laws and regulations to permit the exercise of the
Option in accordance with the terms and conditions hereof, as soon as           
practicable after the date hereof, including making any appropriate filing      
pursuant to the HSR Act and any other applicable law, supplying as promptly as  
practicable any additional information and documentary material that may be     
requested pursuant to the HSR Act and any other applicable law, and taking all  
other actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.                       

B-5 

PREM14A
168th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 168th
(c) Issuer agrees not to avoid or seek to avoid (whether by charter     
amendment or through reorganization, consolidation, merger, issuance of rights, 
dissolution or sale of assets, or by any other voluntary act) the observance or 
performance of any of the covenants, agreements or conditions to be observed or 
performed hereunder by it.                                                      

(d) Issuer shall take all such steps as may be required to cause any    
acquisitions or dispositions by Grantee (or any affiliate who may become subject
to the reporting requirements of Section 16(a) of the Exchange Act) of any      
Shares acquired in connection with this Agreement (through conversion or        
exercise of the Option or otherwise) to be exempt under Rule 16b-3 promulgated  
under the Exchange Act.                                                         

   10.  LIMITATION OF GRANTEE PROFIT.  (a) Notwithstanding any other provision
in this Agreement, in no event shall Grantee's Total Profit (as defined below)  
exceed $2 billion (the "Maximum Profit") and, if it otherwise would exceed such 
amount, Grantee, at its sole discretion, shall either (i) reduce the number of  
Shares subject to the Option, (ii) deliver to Issuer for cancellation Shares (or
other securities into which such Option Shares are converted or exchanged)      
previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any          
combination of the foregoing, so that Grantee's actually realized Total Profit  
shall not exceed the Maximum Profit after taking into account the foregoing     
actions.                                                                        

 (b) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of Option Shares as would, as of any Notice Date, 
result in a Notional Total Profit (as defined below) of more than the Maximum   
Amount and, if exercise of the Option otherwise would result in the Notional    
Total Profit exceeding such amount, Grantee, at its discretion, may (in addition
to any of the actions specified in Section 10(a) above) (i) reduce the number of
Shares subject to the Option or (ii) increase the Purchase Price for that number
of Option Shares set forth in the Exercise Notice so that the Notional Total    
Profit shall not exceed the Maximum Profit; PROVIDED that nothing in this       
sentence shall restrict any exercise of the Option permitted hereby on any      
subsequent date at the Purchase Price set forth in Section 1 hereof.            

(c) For purposes of this Agreement, "Total Profit" shall mean: (i) the  
aggregate amount (before taxes) of (A) any excess of (x) the net cash amounts or
fair market value of any property received by Grantee pursuant to a sale of     
Option Shares (or securities into which such shares are converted or exchanged) 
over (y) the Grantee's aggregate purchase price for such Option Shares (or other
securities), plus (B) any amounts received by Grantee on the repurchase of the  
Option by Issuer pursuant to Section 7, plus (C) any termination fee paid by    
Issuer and received by Grantee pursuant to Section 7.2(c) of the Merger         
Agreement, minus (ii) the amounts of any cash previously paid by Grantee to     
Issuer pursuant to this Section 10 plus the value of the Option Shares (or other
securities) previously delivered by Grantee to Issuer for cancellation pursuant 
to this Section 10.                                                             

   (d) For purposes of this Agreement, "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise the     
Option shall mean the Total Profit determined as of the Notice Date assuming    
that the Stock Option was exercised on such date for such number of Option      
Shares and assuming that such Option Shares, together with all other Option     
Shares previously acquired upon exercise of the Option and held by Grantee as of
such date, were sold for cash at the closing price per Share on the NYSE as of  
the close of business on the preceding trading day (less customary brokerage    
commissions).                                                                   

  (e) Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall affect the ability of Grantee to receive, nor relieve Issuer's  
obligation to pay, any termination fee provided for in Section 7.2(c) of the    
Merger Agreement; provided that if and to the extent the Total Profit received  
by Grantee would exceed the Maximum Profit following receipt of such payment,   
Grantee shall be obligated to promptly comply with the terms of Section 10(a).  

B-6 

PREM14A
169th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 169th
(f) For purposes of Section 10(a) and clause (ii) of Section 10(c), the 
value of any Option Shares delivered by Grantee to Issuer shall be the          
Applicable Price of such Option Shares.                                         

    11.  LOSS, THEFT, ETC. OF AGREEMENT.  This Agreement (and the Option granted
hereby) is exchangeable, without expense, at the option of Grantee, upon        
presentation and surrender of this Agreement at the principal office of Issuer  
for other Agreements providing for Options of different denominations entitling 
the holder thereof to purchase in the aggregate the same number of Shares       
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any other Agreements and related Options for which this Agreement (and the      
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence     
reasonably satisfactory to it of the loss, theft, destruction or mutilation of  
this Agreement, and (in the case of loss, theft or destruction) of reasonably   
satisfactory indemnification, and upon surrender and cancellation of this       
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute  
an additional contractual obligation on the part of Issuer, whether or not the  
Agreement so lost, stolen, destroyed or mutilated shall at any time be          
enforceable by anyone.                                                          

12.  MISCELLANEOUS.                                                     

  (a)  EXPENSES.  Except as otherwise provided in Section 9 hereof or in the
Merger Agreement, each of the parties hereto shall bear and pay all expenses    
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,        
investment bankers, accountants and counsel.                                    

    (b)  WAIVER AND AMENDMENT.  Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This  
Agreement may not be modified, amended, altered or supplemented except upon the 
execution and delivery of a written agreement executed by the parties hereto.   

   (c)  ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.  Except as
otherwise set forth in the Merger Agreement, this Agreement, together with the  
Merger Agreement and the Warner-Lambert Stock Option Agreement (a) constitutes  
the entire agreement and supersedes all prior agreements and understandings,    
both written and oral, between the parties with respect to the subject matter   
hereof and (b) is not intended to confer upon any person other than the parties 
hereto any rights or remedies hereunder. If any term, provision, covenant or    
restriction of this Agreement is held by a court of competent jurisdiction or a 
federal or state regulatory agency to be invalid, void or unenforceable, the    
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired 
or invalidated. If for any reason such court or regulatory agency determines    
that the Option does not permit Grantee to acquire, or does not require Issuer  
to repurchase, the full number of Shares as provided in Sections 2 and 7, as    
adjusted pursuant to Section 6, it is the express intention of Issuer to allow  
Grantee to acquire or to require Issuer to repurchase such lesser number of     
Shares as may be permissible without any amendment or modification hereof.      

(d)  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN  
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO     
CHOICE OF LAW PRINCIPLES).                                                      

 (e)  DESCRIPTIVE HEADINGS.  The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.                                               

 (f)  NOTICES.  All notices and other communications hereunder shall be in
writing and shall be deemed given as set forth in Section 8.2 of the Merger     
Agreement.                                                                      

B-7 

PREM14A
170th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 170th
    (g)  COUNTERPARTS.  This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same         
agreement and shall become effective when both counterparts have been signed by 
each of the parties and delivered to the other party, it being understood that  
both parties need not sign the same counterpart.                                

(h)  ASSIGNMENT.  Grantee may not, without the prior written consent of 
Issuer (which shall not be unreasonably withheld), assign this Agreement or the 
Option to any other person. This Agreement shall not be assignable by Issuer    
except by operation of law. Subject to the preceding sentence, this Agreement   
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.                                    

(i)  REPRESENTATIONS AND WARRANTIES.  The representations and warranties
contained in Sections 3.1(a)(i) and 3.2(a)(i) of the Merger Agreement, and, to  
the extent they relate to this Stock Option Agreement, in Sections 3.2(b), (c), 
(f), (g) and (q) and Section 3.1(c) of the Merger Agreement, are incorporated   
herein by reference.                                                            

(j)  FURTHER ASSURANCES.  In the event of any exercise of the Option by 
Grantee, Issuer and Grantee shall execute and deliver all other documents and   
instruments and take all other action that may be reasonably necessary in order 
to consummate the transactions provided for by such exercise.                   

   (k)  ENFORCEMENT.  The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in    
accordance with their specific terms. It is accordingly agreed that the parties 
shall be entitled to specific performance of the terms hereof, this being in    
addition to any other remedy to which they are entitled at law or in equity.    
Both parties further agree to waive any requirement for the securing or posting 
of any bond in connection with the obtaining of any such equitable relief and   
that this provision is without prejudice to any other rights that the parties   
hereto may have for any failure to perform this Agreement.                      

  (l)  CAPTIONS.  The Article, Section and paragraph captions herein are for
convenience only, do not constitute part of this Agreement and shall not be     
deemed to limit or otherwise affect any of the provisions hereof.               

 (m)  CONFIDENTIALITY AGREEMENT.  Issuer hereby waives the restrictions on
Grantee's acquisition of Shares contained in the Confidentiality Agreement to   
the extent necessary to permit Grantee to exercise the Option and purchase the  
Option Shares as herein provided.                                               

IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option    
Agreement to be signed by their respective officers thereunto duly authorized,  
all as of November 3, 1999.                                                     

                                                                [Download Table]
                                              
AMERICAN HOME PRODUCTS CORPORATION            

By:  /s/ JOHN R. STAFFORD                     
     -----------------------------------------
     Name: John R. Stafford                   
     Title: Chairman, President and           
          Chief Executive Officer             

WARNER-LAMBERT COMPANY                        

By:  /s/ LODEWIJK J.R. DE VINK                
     -----------------------------------------
     Name: Lodewijk J.R. de Vink              
     Title: Chairman, President and           
          Chief Executive Officer             

B-8 

PREM14A
171st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 171st
                                                                      APPENDIX C

STOCK OPTION AGREEMENT

  STOCK OPTION AGREEMENT, dated as of November 3, 1999 (the "Agreement"), by
and between American Home Products Corporation, a Delaware corporation          
("Issuer"), and Warner-Lambert Company, a Delaware corporation ("Grantee").     

WHEREAS, Issuer, Grantee and Wolverine Sub Corp., a Delaware corporation
("Sub"), which is a direct wholly owned subsidiary of Issuer, propose to enter  
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger  
Agreement"; capitalized terms used but not defined herein shall have the        
meanings set forth in the Merger Agreement), providing for, among other things, 
a merger (the "Merger") of Sub with and into Grantee;                           

WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement and the Warner-Lambert Stock Option Agreement, Grantee
has requested that Issuer agree, and Issuer has agreed, to grant Grantee the    
Option (as defined below); and                                                  

    WHEREAS, as a condition and inducement to Issuer's willingness to enter into
the Merger Agreement and this Agreement, Issuer has requested that Grantee      
agree, and Grantee has agreed, to grant Issuer an option to purchase shares of  
Grantee's common stock under the Warner-Lambert Stock Option Agreement.         

NOW, THEREFORE, in consideration of the foregoing and the respective    
representations, warranties, covenants and agreements set forth herein and in   
the Merger Agreement, Issuer and Grantee agree as follows:                      

    1.  GRANT OF OPTIONS.  Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 194,551,963 shares (the "Option Shares") of common stock, par value $0.33 
1/3 per share, of Issuer (the "Shares") (being 14.9% of the number of Shares    
outstanding on October 31, 1999 before such issuance), together with the        
associated purchase rights (the "Rights") under the Rights Agreement, dated as  
of October 13, 1999, between Issuer and ChaseMellon Shareholder Services L.L.C.,
as Rights Agent (references to the Option Shares shall be deemed to include the 
associated Rights), at a purchase price of $56.00 per Option Share (such price, 
as adjusted if applicable, the "Purchase Price"). The number of Option Shares   
that may be received upon the exercise of the Option and the Purchase Price are 
subject to adjustment as set forth herein.                                      

    2.  EXERCISE OF OPTION.  (a) Grantee may exercise the Option, in whole or in
part, at any time or from time to time following the occurrence of a Purchase   
Event (as defined below); provided that, except as otherwise provided herein,   
the Option shall terminate and be of no further force and effect upon the       
earliest to occur of (i) the Effective Time, (ii) 6 months after the first      
occurrence of a Purchase Event (or if, at the expiration of such 6-months after 
the first occurrence of a Purchase Event, the Option cannot be exercised by     
reason of any applicable judgment, decree, order, law or regulation, 10 business
days after such impediment to exercise shall have been removed, but in no event 
under this clause (ii) later than the first anniversary of the Purchase Event), 
(iii) termination of the Merger Agreement under circumstances which do not and  
cannot result in Grantee's becoming entitled to receive termination fees from   
Issuer pursuant to Section 7.2(b) of the Merger Agreement of $1.8 billion or    
more; and (iv) 12 months after the termination of the Merger Agreement under    
circumstances which could result in Grantee's becoming entitled to receive      
termination fees from Issuer pursuant to Section 7.2(b)(ii)(ii) or 7.2(b)(C),   
unless during such 12-month period, a Purchase Event shall occur.               
Notwithstanding the foregoing, the Option shall terminate and not be exercisable
if (x) at the time the Merger Agreement is terminated, Grantee has the right to 
terminate the Merger Agreement pursuant to Section 7.1(f) thereof and the       
circumstances referred to in Section 7.2(b)(E)(II)                              

C-1 

PREM14A
172nd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 172nd
of the Merger Agreement are not applicable, and (y) prior to the 90(th) day     
following termination of the Merger Agreement, Issuer does not (i) enter into a 
definitive agreement with any third party with respect to a Business Combination
or (ii) consummate any Business Combination with respect to Issuer, which in    
each case is more favorable to Issuer's stockholders (in their capacities as    
such) from a financial point of view than the Merger, such determination of     
whether such Business Combination is more favorable than the Merger shall be    
made in accordance with the terms of Section 7.2(b)(iv) of the Merger Agreement.
The termination of the Option shall not affect any rights hereunder which by    
their terms extend beyond the date of such termination.                         

    (b) As used herein, a "Purchase Event" means an event the result of which is
that the total fee or fees required to be paid by Issuer to Grantee pursuant to 
Section 7.2(b) of the Merger Agreement equals or exceeds $1.8 billion.          

(c) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the "Exercise Notice"; the date of which being herein  
referred to as the "Notice Date") specifying (i) the total number of Option     
Shares it intends to purchase pursuant to such exercise and (ii) a place and    
date not earlier than three business days nor later than 10 business days from  
such Notice Date for the closing of such purchase (a "Closing"; and the date of 
such Closing, a "Closing Date"); provided that such closing shall be held only  
if (A) such purchase would not otherwise violate or cause the violation of      
applicable law (including the HSR Act), (B) no law, rule or regulation shall    
have been adopted or promulgated, and no temporary restraining order,           
preliminary or permanent injunction or other order, decree or ruling issued by a
court or other governmental authority of competent jurisdiction shall be in     
effect, which prohibits delivery of such Option Shares (and the parties hereto  
shall use their reasonable best efforts to have any such order, injunction,     
decree or ruling vacated or reversed) and (C) any prior notification to or      
approval of any other regulatory authority in the United States or elsewhere    
required in connection with such purchase shall have been made or obtained,     
other than those which if not made or obtained would not reasonably be expected 
to result in a significant detriment to the Grantee and its Subsidiaries taken  
as a whole or the Issuer and its Subsidiaries taken as a whole. If the Closing  
cannot be consummated by reason of a restriction set forth in clause (A), (B) or
(C) above, notwithstanding the provisions of Section 2(a), the Closing shall be 
held within 5 business days following the elimination of such restriction.      

3.  PAYMENT AND DELIVERY OF CERTIFICATES.  On each Closing Date, Grantee
shall pay to Issuer in immediately available funds by wire transfer to a bank   
account designated by Issuer an amount equal to the Purchase Price multiplied by
the Option Shares to be purchased on such Closing Date.                         

(b) At each Closing, simultaneously with the delivery of immediately    
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a  
certificate or certificates representing the Option Shares to be purchased at   
such closing, which Option Shares shall be free and clear of all liens, charges 
or encumbrances ("Liens"), and Grantee shall deliver to Issuer a letter agreeing
that Grantee shall not offer to sell or otherwise dispose of such Option Shares 
in violation of applicable law or the provisions of this Agreement.             

 (c) Certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:   

THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO 
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND  
 PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF NOVEMBER 3,
    1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.        

C-2 

PREM14A
173rd Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 173rd
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of          
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the 
effect that such legend is not required for purposes of the Securities Act and  
(ii) the reference to restrictions pursuant to this Agreement in the above      
legend shall be removed by delivery of substitute certificate(s) without such   
reference if the Option Shares evidenced by certificate(s) containing such      
reference have been sold or transferred in compliance with the provisions of    
this Agreement under circumstances that do not require the retention of such    
reference.                                                                      

    4.  AUTHORIZED STOCK.  Issuer hereby represents and warrants to Grantee that
Issuer has taken all necessary corporate and other action to authorize and      
reserve and to permit it to issue, at all times from the date hereof until the  
obligation to deliver Shares upon the exercise of the Option terminates, will   
have reserved for issuance, upon exercise of the Option, Shares necessary for   
Grantee to exercise the Option, and Issuer will take all necessary corporate    
action to authorize and reserve for issuance all additional Shares or other     
securities which may be issued pursuant to Section 6 upon exercise of the       
Option. The Shares to be issued upon due exercise of the Option, including all  
additional Shares or other securities which may be issuable upon exercise of the
Option pursuant to Section 6, upon issuance pursuant hereto, shall be duly and  
validly issued, fully paid and nonassessable, and shall be delivered free and   
clear of all Liens, including any preemptive rights of any stockholder of       
Issuer.                                                                         

  5.  PURCHASE NOT FOR DISTRIBUTION.  Grantee hereby represents and warrants
to Issuer that any Option Shares or other securities acquired by Grantee upon   
exercise of the Option will not be taken with a view to the public distribution 
thereof and will not be transferred or otherwise disposed of except in a        
transaction registered or exempt from registration under the Securities Act.    

    6.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.  (a) In the event of any
change in Shares by reason of reclassification, recapitalization, stock split,  
split-up, combination, exchange of shares, stock dividend, dividend, dividend   
payable in any other securities, or any similar event, the type and number of   
Shares or securities subject to the Option, and the Purchase Price therefor     
(including for purposes of repurchase thereof pursuant to Section 7), shall be  
adjusted appropriately, and proper provisions shall be made in the agreements   
governing such transaction, so that Grantee shall receive upon exercise of the  
Option the number and class of shares or other securities or property that      
Grantee would have received in respect of Shares if the Option had been         
exercised immediately prior to such event or the record date therefor, as       
applicable. If any additional Shares are issued after the date of this Agreement
(other than pursuant to an event described in the immediately preceding         
sentence), the number of Shares subject to the Option shall be adjusted so that 
immediately prior to such issuance, it equals 14.9% of the number of Shares then
issued and outstanding. In no event shall the number of Shares subject to the   
Option exceed 14.9% of the number of Shares issued and outstanding at the time  
of exercise (without giving effect to any shares subject or issued pursuant to  
the Option).                                                                    

(b) Without limiting the foregoing, whenever the number of Option Shares
purchasable upon exercise of the Option is adjusted as provided in this Section 
6, the Purchase Price per Option Share shall be adjusted by multiplying the     
Purchase Price by a fraction, the numerator of which is equal to the number of  
Option Shares purchasable prior to the adjustment and the denominator of which  
is equal to the number of Option Shares purchasable after the adjustment.       

   (c) Without limiting the parties' relative rights and obligations under the
Merger Agreement, in the event that Issuer enters into an agreement (i) to      
consolidate with or merge into any person, other than Grantee or one of its     
Subsidiaries, and Issuer will not be the continuing or surviving corporation in 
such consolidation or merger, (ii) to permit any Person, other than Grantee or  
one of its Subsidiaries, to merge into Issuer and Issuer will be the continuing 
or surviving corporation, but in connection with such merger, the shares of     
Common Stock outstanding immediately prior to the                               

C-3 

PREM14A
174th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 174th
consummation of such merger will be changed into or exchanged for stock or other
securities of Issuer or any other Person or cash or any other property, or (iii)
to sell or otherwise transfer all or substantially all of its assets to any     
Person, other than Grantee or one of its Subsidiaries, then, and in each such   
case, the agreement governing such transaction will make proper provision so    
that the Option will, upon the consummation of any such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for, an  
option with identical terms appropriately adjusted to acquire the number and    
class of shares or other securities or property that Grantee would have received
in respect of Option Shares had the Option been exercised immediately prior to  
such consolidation, merger, sale or transfer or the record date therefor, as    
applicable. Issuer shall take such steps in connection with such consolidation, 
merger, liquidation or other such transaction as may be reasonably necessary to 
assure that the provisions hereof shall thereafter apply as nearly as possible  
to any securities or property thereafter deliverable upon exercise of the       
Option.                                                                         

7.  REPURCHASE OF OPTION.  (a) Notwithstanding the provisions of Section
2(a), at any time commencing upon the first occurrence of a Purchase Event and  
ending upon termination of this Option in accordance with Section 2, Issuer (or 
any successor entity thereof) shall at the request of Grantee (any such request,
a "Cash Exercise Notice"), repurchase from Grantee the Option or a portion      
thereof (if and to the extent not previously exercised or terminated) at a price
which, subject to Section 10 below, is equal to the excess, if any, of (x) the  
Applicable Price (as defined below) as of the Section 7 Request Date (as defined
below) for a Share over (y) the Purchase Price (subject to adjustment pursuant  
to Section 6), multiplied by all or such portion of the Option Shares subject to
the Option as the Grantee shall specify in the Cash Exercise Notice (the "Option
Repurchase Price").                                                             

 (b) Notwithstanding the provisions of Section 2(a), at any time following
the occurrence of a Purchase Event, Issuer (or any successor entity thereof)    
may, at its election, repurchase the Option (if and to the extent not previously
exercised or terminated) at the Option Repurchase Price; provided that the      
aggregate number of Option Shares as to which the Option may be repurchased     
shall not exceed 129,701,373. For purposes of this Agreement, an exercise of the
Option shall be deemed to occur on the Closing Date and not on the Notice Date  
relating thereto.                                                               

  (c) In connection with any exercise of rights under this Section 7, Issuer
shall, within 5 business days after the Section 7 Request Date, pay the Option  
Repurchase Price in immediately available funds, and Grantee or such owner, as  
the case may be, shall surrender to Issuer the Option. Upon receipt by the      
Grantee of the Option Repurchase price, the obligations of the Issuer to deliver
Option Shares pursuant to Section 3 of this Agreement shall be terminated with  
respect to the number of Option Shares specified in the Cash Exercise Notice or 
the number of Option Shares as to which the Option is repurchased under Section 
7(b).                                                                           

  (d) For purposes of this Agreement, the following terms have the following
meanings:                                                                       

    (i) "Applicable Price", as of any date, means the highest of (A) the
  highest price per Share paid or proposed to be paid by any third party for
   Shares or the consideration per Share received or to be received by holders
of Shares, in each case pursuant to any Acquisition Proposal for or with
 Issuer made on or prior to such date or (B) the average closing price per
 Share as reported on the New York Stock Exchange, Inc. ("NYSE") Composite
   Tape or if the Shares are not listed on the NYSE, the highest bid price per
   Share as quoted on the National Association of Securities Dealers Automated
   Quotation System or, if the Shares are not quoted thereon, on the principal
  trading market on which such Shares are traded as reported by a recognized
   source during the 10 trading days preceding such date. If the consideration
  to be offered, paid or received pursuant to the foregoing clause (A) shall
  be other than in cash, the value of such consideration shall be determined
in good faith by an independent nationally recognized investment banking
firm selected by Grantee and reasonably acceptable to Issuer.           

C-4 

PREM14A
175th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 175th
        (ii) "Section 7 Request Date" means the date on which Issuer or Grantee,
as the case may be, exercises its rights under this Section.            

8.  REGISTRATION RIGHTS.  Issuer shall, if requested by Grantee or any  
Subsidiary of the Grantee which is the owner of Option Shares (collectively with
Grantee, the "Owners") at any time and from time to time within two years of the
first exercise of the Option, as expeditiously as possible prepare and file up  
to two registration statements under the Securities Act if such registration is 
necessary in order to permit the sale or other disposition of any or all shares 
of securities that have been acquired by or are issuable to such Owners upon    
exercise of the Option in accordance with the intended method of sale or other  
disposition stated by such Owners, including a "shelf" registration statement   
under Rule 415 under the Securities Act or any successor provision, and Issuer  
shall use all reasonable efforts to qualify such shares or other securities     
under any applicable state securities laws. Issuer shall use all reasonable     
efforts to cause each such registration statement to become effective, to obtain
all consents or waivers of other parties which are required therefor and to keep
such registration statement effective for such period at least 90 days from the 
day such registration statement first becomes effective as may be reasonably    
necessary to effect such sale or other disposition. The obligations of Issuer   
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for a period of time not exceeding 90 days in the aggregate if the 
Board of Directors of Issuer shall have determined in good faith that the filing
of such registration statement or the maintenance of its effectiveness would    
require disclosure of nonpublic information that would materially and adversely 
affect Issuer (but in no event shall Issuer exercise such postponement right    
more than once in any 12-month period). Any registration statement prepared and 
filed under this Section 8, and any sale covered thereby, shall be at Issuer's  
expense except for underwriting discounts or commissions, brokers' fees and the 
reasonable fees and disbursements of Owners' counsel related thereto. The Owners
shall provide all information reasonably requested by Issuer for inclusion in   
any registration statement to be filed hereunder. If during the time period     
referred to in the first sentence of this Section 8 Issuer effects a            
registration under the Securities Act of Shares for its own account or for any  
other stockholders of Issuer (other than on Form S-4 or Form S-8, or any        
successor form), it shall allow the Owners the right to participate in such     
registration, and such participation shall not affect the obligation of Issuer  
to effect two registration statements for the Owners under this Section 8;      
provided that, if the managing underwriters of such offering advise Issuer in   
writing that in their opinion the number of Shares requested to be included in  
such registration exceeds the number which can be sold in such offering without 
adversely affecting the offering price, Issuer and the Owners shall each reduce 
on a PRO RATA basis the Shares to be included therein on their respective       
behalf. In connection with any registration pursuant to this Section 8, Issuer  
and the Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and           
contribution in connection with such registration.                              

  9.  ADDITIONAL COVENANTS OF ISSUER.  (a) If Shares or any other securities
to be acquired upon exercise of the Option are then listed on the NYSE or any   
other securities exchange or market, Issuer, upon the request of any Owner, will
promptly file an application to list the Shares or other securities to be       
acquired upon exercise of the Options on the NYSE or such other securities      
exchange or market and will use its reasonable best efforts to obtain approval  
of such listing as soon as practicable.                                         

(b) Issuer will use its reasonable best efforts to take, or cause to be 
taken, all actions and to do, or cause to be done, all things necessary, proper 
or advisable under applicable laws and regulations to permit the exercise of the
Option in accordance with the terms and conditions hereof, as soon as           
practicable after the date hereof, including making any appropriate filing      
pursuant to the HSR Act and any other applicable law, supplying as promptly as  
practicable any additional information and documentary material that may be     
requested pursuant to the HSR Act and any other applicable law, and taking all  
other actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.                       

C-5 

PREM14A
176th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 176th
(c) Issuer agrees not to avoid or seek to avoid (whether by charter     
amendment or through reorganization, consolidation, merger, issuance of rights, 
dissolution or sale of assets, or by any other voluntary act) the observance or 
performance of any of the covenants, agreements or conditions to be observed or 
performed hereunder by it.                                                      

(d) Issuer shall take all such steps as may be required to cause any    
acquisitions or dispositions by Grantee (or any affiliate who may become subject
to the reporting requirements of Section 16(a) of the Exchange Act) of any      
Shares acquired in connection with this Agreement (through conversion or        
exercise of the Option or otherwise) to be exempt under Rule 16b-3 promulgated  
under the Exchange Act.                                                         

   10.  LIMITATION OF GRANTEE PROFIT.  (a) Notwithstanding any other provision
in this Agreement, in no event shall Grantee's Total Profit (as defined below)  
exceed $2 billion (the "Maximum Profit") and, if it otherwise would exceed such 
amount, Grantee, at its sole discretion, shall either (i) reduce the number of  
Shares subject to the Option, (ii) deliver to Issuer for cancellation Shares (or
other securities into which such Option Shares are converted or exchanged)      
previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any          
combination of the foregoing, so that Grantee's actually realized Total Profit  
shall not exceed the Maximum Profit after taking into account the foregoing     
actions.                                                                        

 (b) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of Option Shares as would, as of any Notice Date, 
result in a Notional Total Profit (as defined below) of more than the Maximum   
Amount and, if exercise of the Option otherwise would result in the Notional    
Total Profit exceeding such amount, Grantee, at its discretion, may (in addition
to any of the actions specified in Section 10(a) above) (i) reduce the number of
Shares subject to the Option or (ii) increase the Purchase Price for that number
of Option Shares set forth in the Exercise Notice so that the Notional Total    
Profit shall not exceed the Maximum Profit; PROVIDED that nothing in this       
sentence shall restrict any exercise of the Option permitted hereby on any      
subsequent date at the Purchase Price set forth in Section 1 hereof.            

(c) For purposes of this Agreement, "Total Profit" shall mean: (i) the  
aggregate amount (before taxes) of (A) any excess of (x) the net cash amounts or
fair market value of any property received by Grantee pursuant to a sale of     
Option Shares (or securities into which such shares are converted or exchanged) 
over (y) the Grantee's aggregate purchase price for such Option Shares (or other
securities), plus (B) any amounts received by Grantee on the repurchase of the  
Option by Issuer pursuant to Section 7, plus (C) any termination fee paid by    
Issuer and received by Grantee pursuant to Section 7.2(b) of the Merger         
Agreement, minus (ii) the amounts of any cash previously paid by Grantee to     
Issuer pursuant to this Section 10 plus the value of the Option Shares (or other
securities) previously delivered by Grantee to Issuer for cancellation pursuant 
to this Section 10.                                                             

   (d) For purposes of this Agreement, "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise the     
Option shall mean the Total Profit determined as of the Notice Date assuming    
that the Stock Option was exercised on such date for such number of Option      
Shares and assuming that such Option Shares, together with all other Option     
Shares previously acquired upon exercise of the Option and held by Grantee as of
such date, were sold for cash at the closing price per Share on the NYSE as of  
the close of business on the preceding trading day (less customary brokerage    
commissions).                                                                   

  (e) Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall affect the ability of Grantee to receive, nor relieve Issuer's  
obligation to pay, any termination fee provided for in Section 7.2(b) of the    
Merger Agreement; provided that if and to the extent the Total Profit received  
by Grantee would exceed the Maximum Profit following receipt of such payment,   
Grantee shall be obligated to promptly comply with the terms of Section 10(a).  

C-6 

PREM14A
177th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 177th
(f) For purposes of Section 10(a) and clause (ii) of Section 10(c), the 
value of any Option Shares delivered by Grantee to Issuer shall be the          
Applicable Price of such Option Shares.                                         

    11.  LOSS, THEFT, ETC. OF AGREEMENT.  This Agreement (and the Option granted
hereby) is exchangeable, without expense, at the option of Grantee, upon        
presentation and surrender of this Agreement at the principal office of Issuer  
for other Agreements providing for Options of different denominations entitling 
the holder thereof to purchase in the aggregate the same number of Shares       
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any other Agreements and related Options for which this Agreement (and the      
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence     
reasonably satisfactory to it of the loss, theft, destruction or mutilation of  
this Agreement, and (in the case of loss, theft or destruction) of reasonably   
satisfactory indemnification, and upon surrender and cancellation of this       
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute  
an additional contractual obligation on the part of Issuer, whether or not the  
Agreement so lost, stolen, destroyed or mutilated shall at any time be          
enforceable by anyone.                                                          

12.  MISCELLANEOUS.                                                     

  (a)  EXPENSES.  Except as otherwise provided in Section 9 hereof or in the
Merger Agreement, each of the parties hereto shall bear and pay all expenses    
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,        
investment bankers, accountants and counsel.                                    

    (b)  WAIVER AND AMENDMENT.  Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This  
Agreement may not be modified, amended, altered or supplemented except upon the 
execution and delivery of a written agreement executed by the parties hereto.   

   (c)  ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.  Except as
otherwise set forth in the Merger Agreement, this Agreement, together with the  
Merger Agreement and the Warner-Lambert Stock Option Agreement (a) constitutes  
the entire agreement and supersedes all prior agreements and understandings,    
both written and oral, between the parties with respect to the subject matter   
hereof and (b) is not intended to confer upon any person other than the parties 
hereto any rights or remedies hereunder. If any term, provision, covenant or    
restriction of this Agreement is held by a court of competent jurisdiction or a 
federal or state regulatory agency to be invalid, void or unenforceable, the    
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired 
or invalidated. If for any reason such court or regulatory agency determines    
that the Option does not permit Grantee to acquire, or does not require Issuer  
to repurchase, the full number of Shares as provided in Sections 2 and 7, as    
adjusted pursuant to Section 6, it is the express intention of Issuer to allow  
Grantee to acquire or to require Issuer to repurchase such lesser number of     
Shares as may be permissible without any amendment or modification hereof.      

(d)  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN  
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO     
CHOICE OF LAW PRINCIPLES).                                                      

 (e)  DESCRIPTIVE HEADINGS.  The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.                                               

 (f)  NOTICES.  All notices and other communications hereunder shall be in
writing and shall be deemed given as set forth in Section 8.2 of the Merger     
Agreement.                                                                      

C-7 

PREM14A
178th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 178th
    (g)  COUNTERPARTS.  This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same         
agreement and shall become effective when both counterparts have been signed by 
each of the parties and delivered to the other party, it being understood that  
both parties need not sign the same counterpart.                                

(h)  ASSIGNMENT.  Grantee may not, without the prior written consent of 
Issuer (which shall not be unreasonably withheld), assign this Agreement or the 
Option to any other person. This Agreement shall not be assignable by Issuer    
except by operation of law. Subject to the preceding sentence, this Agreement   
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.                                    

(i)  REPRESENTATIONS AND WARRANTIES.  The representations and warranties
contained in Sections 3.1(a)(i) and 3.2(a)(i) of the Merger Agreement, and, to  
the extent they relate to this Stock Option Agreement, in Sections 3.1(b), (c), 
(f), (g) and (q) and Section 3.2(c) of the Merger Agreement, are incorporated   
herein by reference.                                                            

(j)  FURTHER ASSURANCES.  In the event of any exercise of the Option by 
Grantee, Issuer and Grantee shall execute and deliver all other documents and   
instruments and take all other action that may be reasonably necessary in order 
to consummate the transactions provided for by such exercise.                   

   (k)  ENFORCEMENT.  The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in    
accordance with their specific terms. It is accordingly agreed that the parties 
shall be entitled to specific performance of the terms hereof, this being in    
addition to any other remedy to which they are entitled at law or in equity.    
Both parties further agree to waive any requirement for the securing or posting 
of any bond in connection with the obtaining of any such equitable relief and   
that this provision is without prejudice to any other rights that the parties   
hereto may have for any failure to perform this Agreement.                      

  (l)  CAPTIONS.  The Article, Section and paragraph captions herein are for
convenience only, do not constitute part of this Agreement and shall not be     
deemed to limit or otherwise affect any of the provisions hereof.               

 (m)  CONFIDENTIALITY AGREEMENT.  Issuer hereby waives the restrictions on
Grantee's acquisition of Shares contained in the Confidentiality Agreement to   
the extent necessary to permit Grantee to exercise the Option and purchase the  
Option Shares as herein provided.                                               

IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option    
Agreement to be signed by their respective officers thereunto duly authorized,  
all as of November 3, 1999.                                                     

                                                                [Download Table]
                                              
WARNER-LAMBERT COMPANY                        

By:  /s/ LODEWIJK J.R. DE VINK                
     -----------------------------------------
     Name: Lodewijk J.R. de Vink              
     Title: Chairman, President and           
          Chief Executive Officer             

AMERICAN HOME PRODUCTS CORPORATION            

By:  /s/ JOHN R. STAFFORD                     
     -----------------------------------------
     Name: John R. Stafford                   
     Title: Chairman, President and           
          Chief Executive Officer             

C-8 

PREM14A
179th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 179th
FORM OF PROXY CARD                
AMERICAN HOME PRODUCTS CORPORATION                
FIVE GIRALDA FARMS                
MADISON, NEW JERSEY 07940               

PROXY               
   THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MANAGEMENT.

The undersigned hereby appoints, JOHN R. STAFFORD, LOUIS L. HOYNES, JR. and     
EILEEN M. LACH and each of them proxies with power of substitution, to          
represent and to vote, as designated below, on behalf of the undersigned at     
the Special Meeting of Stockholders of the Corporation to be held on            
____________ __, 2000 and at any adjournment thereof on each of the following   
matters, as set forth in the Joint Proxy Statement/Prospectus, and upon such    
other matters properly coming before the meeting.                               

(CONTINUED AND TO BE SIGNED IF VOTING BY MAIL ON THE REVERSE SIDE OR FOLLOW THE 
      INSTRUCTIONS TO VOTE BY TELEPHONE)

     YOU CAN VOTE YOUR SHARES IN ONE OF TWO WAYS

     VOTE BY TELEPHONE
         AVAILABLE TO STOCKHOLDERS IN THE UNITED STATES,
         CANADA AND PUERTO RICO.  ALL OTHER STOCKHOLDERS
           MUST VOTE BY RETURNING THEIR PROXY CARDS.

1. This proxy when properly executed will be voted in the manner                
directed by the stockholder. If no direction is given, this proxy will be 
voted FOR Items 1, 2 and 3.                                               

OR    

2. CALL TOLL FREE [1-800-840-1208] 24 hours a day, 7 days a week                
on a Touch Tone telephone and follow the instructions.                    

 PLEASE VOTE
--------------------------------------------------------------------------------
    TRIANGLE   FOLD AND DETACH HERE   TRIANGLE

PREM14A
180th Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 180th
Please mark your votes as indicated in this example   /X/                       

Optional Secret Proxy                                                           

THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND YOU VOTE "FOR" ITEMS 1, 2 AND 3.

ITEM 1 - AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION                     
APPROVAL OF AMENDMENT TO AHP'S RESTATED CERTIFICATE OF INCORPORATION TO         
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND TO CHANGE THE      
NAME OF AHP TO AMERICANWARNER, INC.                                             

ITEM 2 - APPROVAL OF SHARE ISSUANCE                                             
APPROVAL OF ISSUANCE OF SHARES OF AMERICAN HOME PRODUCTS CORPORATION ("AHP")    
COMMON STOCK, $.331/3 PAR VALUE PER SHARE ("COMMON STOCK"), TO STOCKHOLDERS     
OF WARNER-LAMBERT COMPANY PURSUANT TO THE AGREEMENT AND PLAN OF MERGER AMONG    
AHP, WOLVERINE SUB CORP. AND WARNER-LAMBERT COMPANY, DATED AS OF NOVEMBER 3,    
1999.                                                                           

ITEM 3 - AMENDMENT TO BY-LAWS                                                   
APPROVAL OF AMENDMENT TO AHP'S BY-LAWS TO INCREASE THE MAXIMUM NUMBER OF        
DIRECTORS OF THE AHP BOARD OF DIRECTORS TO 24 MEMBERS.                          

FOR           against      abstain                      
/ /             / /          / /                        
/ /             / /          / /                        
/ /             / /          / /                        

NOTE: Please sign exactly as the name appears above. When shares are held by    
joint owners, both should sign. When signing as attorney, executor,             
administrator, trustee or guardian, please give full title as such. If a        
corporation, please sign full corporate name by President or other authorized   
officer. If a partnership, please sign in partnership name by authorized        
person.                                                                         

Signature(s)_______________________________________ Dated____________, 1997     

--------------------------------------------------------------------------------
    TRIANGLE    FOLD AND DETACH HERE    TRIANGLE

[LOGO]                  VOTE BY TELEPHONE                [LOGO]       

AVAILABLE TO STOCKHOLDERS IN THE UNITED STATES,   
CANADA AND PUERTO RICO.  ALL OTHER STOCKHOLDERS     
MUST VOTE BY RETURNING THEIR PROXY CARDS.     

YOUR VOTE IS IMPORTANT!  -  YOU CAN VOTE IN ONE OF TWO WAYS:

1. TO VOTE BY PHONE:  Call toll-free [1-800-840-1206] on a touch tone telephone 
24 hours a day-7 days a week                                              

   There is NO CHARGE to you for this call.  -  Have your proxy card in hand

   You will be asked to enter a Control Number, which is located in the box in
the lower right hand corner of this form. 

     OPTION #1:  TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON
     ALL PROPOSALS, PRESS 1.

       WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.

   OPTION #2:  IF YOU CHOOSE TO VOTE ON EACH PROPOSAL SEPARATELY, PRESS 0.
     YOU WILL HEAR THESE INSTRUCTIONS:

Proposal 1:  To have your shares voted FOR, press 1; AGAINST, press 9; ABSTAIN, 
press 0.                                              

Proposal 2:  To have your shares voted FOR, press 1; AGAINST, press 9; ABSTAIN, 
press 0.                                              

Proposal 3:  To have your shares voted FOR, press 1; AGAINST, press 9; ABSTAIN, 
press 0.                                              

   WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.

        OR

2.  VOTE BY PROXY:  Mark, sign and date your proxy card and return promptly     
       in the enclosed envelope.

NOTE:  If you vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card. 
   THANK YOU FOR VOTING.

PREM14A
181st Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 181st
FORM OF PROXY CARD                    
WARNER-LAMBERT COMPANY                    
PROXY                     

PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS               
TO BE HELD AT [TIME] ON [DATE] AT [PLACE]               

LODEWIJK J.R. DE VINK, ERNEST J. LARINI and GREGORY L. JOHNSON and
each of them, with full power of substitution, are hereby authorized to         
represent and to vote and act with respect to all stock of the undersigned at   
the Special Meeting of Stockholders of Warner-Lambert Company on ___________    
_________, 2000 and any adjournment or adjournments thereof, as designated      
herein upon the proposal set forth herein, as set forth in the Joint Proxy      
Statement/Prospectus, and, in their discretion, upon such other matters as      
may be properly brought before the meeting.                                     

Change of Address                                                               

___________________                                                             
___________________                                                             
___________________                                                             

--------------------------------------------------------------------------------
     TRIANGLE    FOLD AND DETACH HERE   TRIANGLE

PREM14A
Last Page of 182
TOC
1st
Previous
Next
↓Bottom
Just 182nd
PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE /X/                         

PLEASE VOTE BY RETURNING THE ATTACHED PROXY CARD                                

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL (1), THE      
APPROVAL OF THE MERGER AND ADOPTION OF THE MERGER AGREEMENT.                    

1. Adoption of the Agreement and Plan of Merger,                                
dated as of November 3, 1999, among Warner-Lambert Company, American Home       
Products Corporation and Wolverine Sub Corp. and the approval of the merger     
contemplated thereby.                                                           

FOR      AGAINST     ABSTAIN                              
/ /        / /         / /                                

/ /  PLEASE SEND AN ADMITTANCE CARD                                             

IF YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE CHECK THE BOX       
ABOVE AND AN ADMITTANCE CARD WILL BE MAILED TO YOU.                             

Vote, sign and date this Proxy and return it promptly in the enclosed           
envelope. No postage is required if mailed in the United States.                

/ /  CHANGE OF ADDRESS ON REVERSE SIDE                                          

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF WARNER-LAMBERT COMPANY.    
WHEN PROPERLY EXECUTED IT WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER BUT,     
UNLESS OTHERWISE SPECIFIED, IT WILL BE VOTED FOR PROPOSAL (1), THE ADOPTION     
AND APPROVAL OF THE MERGER AGREEMENT.                                           

VOTE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED           
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.                

Signature __________________________________    Dated_______________            

NOTE: Please sign exactly as name appears hereon.  Joint owners should each     
sign.  When signing as attorney, executor, administrator, trustee or            
guardian, please give full title as such.                                       

------------------------------------------------------------------------------- 
     TRIANGLE    FOLD AND DETACH HERE   TRIANGLE