ABBOTT LABORATORIES 1996 INCENTIVE STOCK PROGRAM
1. PURPOSE. The purpose of the Abbott Laboratories 1996 Incentive Stock Program
(the "Program") is to attract and retain outstanding directors, officers and
other employees of Abbott Laboratories (the "Company") and its subsidiaries, and
to furnish incentives to such persons by providing opportunities to acquire
common shares of the Company, or monetary payments based on the value of such
shares or the financial performance of the Company, or both, on advantageous
terms as herein provided and to further align such persons' interests with those
of the Company's other shareholders through compensation that is based on the
value of the Company's common shares.
2. ADMINISTRATION. The Program will be administered by a committee (the
"Committee") of at least two persons which shall be either the Compensation
Committee of the Board of Directors of the Company or such other committee
comprised entirely of persons who are both: (i) "disinterested persons" as
defined in Rule 16b-3 of the Securities and Exchange Commission; and (ii)
"outside directors" as defined under Section 162(m) of the Internal Revenue Code
of 1986, as amended, or any successor provision; as the Board of Directors may
from time to time designate. The Committee shall interpret the Program,
prescribe, amend and rescind rules and regulations relating thereto and make all
other determinations necessary or advisable for the administration of the
Program. A majority of the members of the Committee shall constitute a quorum
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Program may be made
without notice of meeting of the Committee by a writing signed by all of the
Committee members. The Committee may, from time to time, delegate any or all of
its duties, powers and authority to any officer or officers of the Company,
except to the extent such delegation would be inconsistent with Rule 16b-3 of
the Securities and Exchange Commission or other applicable law, rule or
regulation. The Chief Executive Officer of the Company may, on behalf of the
Committee, grant stock options and restricted stock awards under the Program,
other than to persons subject to Section 16 of the Securities Exchange Act of
1934. All such grants by the Chief Executive Officer must be reported to, and
ratified by, the Committee within twelve months of the grant date but, if
ratified, shall be effective as of the grant date.
3. PARTICIPANTS. Participants in the Program will consist of such officers and
other employees of the Company and its subsidiaries as the Committee in its sole
discretion may designate from time to time to receive Benefits hereunder. The
Committee's designation of a participant in any year shall not require the
Committee to designate such person to receive a Benefit in any other year. The
Committee shall consider such factors as it deems pertinent in selecting
participants and in determining the type and amount of their respective
Benefits, including without limitation (i) the financial condition of the
Company; (ii) anticipated profits for the current or future years; (iii)
contributions of participants to the profitability and development of the
Company; (iv) prior awards to participants; and (v) other compensation provided
to participants. Non-Employee Directors shall also be participants in the
Program solely for purposes of receiving Restricted Stock Awards under paragraph
13 and Non-qualified Stock Options under paragraph 14. The term "Non-Employee
Director" shall mean a member of the Board of Directors who is not a full-time
employee of the Company or any of its subsidiaries.
4. TYPES OF BENEFITS. Benefits under the Program may be granted in any one or a
combination of (a) Incentive Stock Options; (b) Non-qualified Stock Options; (c)
Stock Appreciation Rights; (d) Limited Stock Appreciation Rights; (e) Restricted
Stock Awards; (f) Performance Awards; and (g) Foreign Qualified Benefits, all as
described below.
5. SHARES RESERVED UNDER THE PROGRAM. There is hereby reserved for issuance
under the Program: (i) an aggregate of Five Million (5,000,000) common shares;
plus (ii) an authorization for each calendar year (the "Annual Authorization")
for the years 1996 through 1999, of seven-tenths of one percent (0.7%) of the
total common shares of the Company issued and outstanding as of the first day of
such calendar year and for the years from and including 2000, one and a half
percent (1.5%) of the total common shares of the Company
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issued and outstanding as of the first day of such calendar year; which may be
newly issued or treasury shares. The shares hereby reserved are in addition to
the shares previously reserved under the Company's 1981 Incentive Stock Program,
1986 Incentive Stock Program and 1991 Incentive Stock Program (the "Prior
Programs"). Any common shares reserved for issuance under the Prior Programs in
excess of the number of shares as to which options or other Benefits have been
awarded on the date of shareholder approval of this Program, plus any such
shares as to which options or other Benefits granted under the Prior Programs
may lapse, expire, terminate or be canceled after such date, shall also be
reserved and available for issuance in connection with Benefits under this
Program. Any common shares reserved under the Program for any calendar year
under an Annual Authorization as to which options or other Benefits have not
been awarded as of the end of such calendar year shall be available for issuance
in connection with Benefits granted in subsequent years.
If there is a lapse, expiration, termination or cancellation of any
Benefit granted hereunder without the issuance of shares or payment of cash
thereunder, or if shares are issued under any Benefit and thereafter are
reacquired by the Company pursuant to rights reserved upon the issuance thereof,
or shares are reacquired pursuant to the payment of the purchase price of shares
under stock options by delivery of other common shares of the Company, the
shares subject to or reserved for such Benefit, or so reacquired, may again be
used for new options, rights or awards of any sort authorized under this
Program; provided, however, that in no event may the number of common shares
issued under this Program, and not reacquired by the Company pursuant to rights
reserved upon the issuance thereof or pursuant to the payment of the purchase
price of shares under stock options by delivery of other common shares of the
Company, exceed the total number of shares reserved for issuance hereunder.
6. INCENTIVE STOCK OPTIONS. Incentive Stock Options will consist of options to
purchase common shares at purchase prices not less than One Hundred percent
(100%) of the Fair Market Value of such common shares on the date of grant. An
Incentive Stock Option will not be exercisable after the expiration of ten (10)
years from the date such option is granted. In the event of termination of
employment for any reason other than retirement, disability or death, the right
of the optionee to exercise an Incentive Stock Option shall terminate upon the
earlier of the end of the original term of the option or three (3) months after
the optionee's last day of work for the Company and its subsidiaries. In the
event of termination of employment due to retirement or disability, or if the
optionee should die while employed, the right of the optionee or his or her
successor in interest to exercise an Incentive Stock Option shall terminate upon
the end of the original term of the option. If the optionee should die within
three (3) months after termination of employment for any reason other than
retirement or disability, the right of his or her successor in interest to
exercise an Incentive Stock Option shall terminate upon the earlier of the end
of the original term of the option or three (3) months after the date of such
death. To the extent the aggregate fair market value (determined as of the time
the Option is granted) of the common shares with respect to which any Incentive
Stock Option is exercisable for the first time by any individual during any
calendar year (under all option plans of the Company and its subsidiary
corporations) exceeds $100,000, the excess shall be treated as a Non-qualified
Stock Option. An Incentive Stock Option shall be exercisable as determined by
the Committee, but in no event earlier than six (6) months from its grant date.
7. NON-QUALIFIED STOCK OPTIONS. Non-qualified Stock Options will consist of
options to purchase common shares at purchase prices not less than One Hundred
percent (100%) of the Fair Market Value of such common shares on the date of
grant. A Non-qualified Stock Option will not be exercisable after the expiration
of ten (10) years from the date such option is granted. In the event of
termination of employment for any reason other than retirement, disability or
death, the right of the optionee to exercise a Non-qualified Stock Option shall
terminate upon the earlier of the end of the original term of the option or
three (3) months after the optionee's last day of work for the Company and its
subsidiaries. In the event of termination of employment due to retirement or
disability, or if the optionee should die while employed, the right of the
optionee or his or her successor in interest to exercise a Non-qualified Stock
Option shall terminate upon the end of the original term of the option. If the
optionee should die within three (3) months after termination of
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employment for any reason other than retirement or disability, the right of his
or her successor in interest to exercise a Non-qualified Stock Option shall
terminate upon the earlier of the end of the original term of the option or
three (3) months after the date of such death. A Non-qualified Stock Option
shall be exercisable as determined by the Committee, but in no event earlier
than six (6) months from its grant date.
8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant a
Stock Appreciation Right to the holder of any stock option granted hereunder or
under the Prior Programs. Such Stock Appreciation Rights shall be subject to
such terms and conditions consistent with the Program as the Committee shall
impose from time to time, including the following:
(a) A Stock Appreciation Right may be granted with respect to a
stock option at the time of its grant or at any time thereafter up to
six (6) months prior to its expiration.
(b) Stock Appreciation Rights will permit the holder to
surrender any related stock option or portion thereof which is then
exercisable and to elect to receive in exchange therefor cash in an
amount equal to:
(i) The excess of the Fair Market Value on the date of such
election of one common share over the option price multiplied by
(ii) The number of shares covered by such option or portion
thereof which is so surrendered.
(c) A Stock Appreciation Right granted to a participant who is
subject to Section 16 of the Securities Exchange Act of 1934, as
amended, may be exercised only after six (6) months from its grant
date (unless such exercise would not affect the exemption under Rule
16b-3 of the Securities and Exchange Commission).
(d) A Stock Appreciation Right may be granted to a participant
regardless of whether such participant has been granted a Limited
Stock Appreciation Right with respect to the same stock option.
However, a Stock Appreciation Right may not be exercised during any
period that a Limited Stock Appreciation Right with respect to the
same stock option may be exercised.
(e) In the event of the exercise of a Stock Appreciation Right,
the number of shares reserved for issuance hereunder shall be reduced
by the number of shares covered by the stock option or portion thereof
surrendered.
9. LIMITED STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant a Limited Stock Appreciation Right to the holder of any stock option
granted hereunder or under the Prior Programs. Such Limited Stock Appreciation
Rights shall be subject to such terms and conditions consistent with the Program
as the Committee shall impose from time to time, including the following:
(a) A Limited Stock Appreciation Right may be granted with
respect to a stock option at the time of its grant or at any time
thereafter up to six (6) months prior to its expiration.
(b) A Limited Stock Appreciation Right will permit the holder to
surrender any related stock option or portion thereof which is then
exercisable and to receive in exchange therefor cash in an amount
equal to:
(i) The excess of the Fair Market Value on the date of such
election of one common share over the option price multiplied by
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(ii) The number of shares covered by such option or portion
thereof which is so surrendered.
(c) A Limited Stock Appreciation Right granted to a participant
who is subject to Section 16 of the Securities Exchange Act of 1934,
as amended, may be exercised only after six (6) months from its grant
date (unless such exercise would not affect the exemption under Rule
16b-3 of the Securities and Exchange Commission) and only during the
sixty (60) day period commencing on the later of: (i) the day
following the date of a Change in Control; or (ii) the first date on
which such exercise would be exempt under Rule 16b-3 of the Securities
and Exchange Commission.
(d) A Limited Stock Appreciation Right may be granted to a
participant regardless of whether such participant has been granted a
Stock Appreciation Right with respect to the same stock option.
(e) In the event of the exercise of a Limited Stock Appreciation
Right, the number of shares reserved for issuance hereunder shall be
reduced by the number of shares covered by the stock option or portion
thereof surrendered.
10. RESTRICTED STOCK AWARDS. Restricted Stock Awards will consist of common
shares transferred to participants without other payment therefor as additional
compensation for their services to the Company or any of its subsidiaries.
Restricted Stock Awards granted under this paragraph 10 shall be satisfied from
the Company's available treasury shares. Restricted Stock Awards shall be
subject to such terms and conditions as the Committee determines appropriate,
including, without limitation, restrictions on the sale or other disposition of
such shares and rights of the Company to reacquire such shares upon termination
of the participant's employment within specified periods. Subject to such other
restrictions as are imposed by the Committee, the common shares covered by a
Restricted Stock Award granted to a participant who is subject to Section 16 of
the Securities Exchange Act of 1934, as amended, may be sold or otherwise
disposed of only after six (6) months from the grant date of the award (unless
such sale would not affect the exemption under Rule 16b-3 of the Securities and
Exchange Commission). No more than ten percent (10%) of the total number of
shares available for grant in any calendar year may be issued as Restricted
Stock Awards under paragraphs 10 and 13 in that year.
11. PERFORMANCE AWARDS. Performance Awards in the form of Performance Units
or Performance Shares may be granted to any participant in the Program.
Performance Units shall consist of monetary awards which may be earned in
whole or in part if the Company achieves certain goals established by the
Committee over a designated period of time. Performance Shares shall consist
of common shares or awards denominated in common shares which may be earned
in whole or in part if the Company achieves certain goals established by the
Committee over a designated period of time. The goals established by the
Committee shall be based on any one, or combination of, earnings per share,
return on equity, return on assets, total shareholder return, net operating
income, cash flow, increase in revenue, economic value added, increase in
share price or cash flow return on investment. Partial achievement of the
goal(s) may result in a payment or vesting corresponding to the degree of
achievement. Payment of an award earned may be in cash or in common shares or
in a combination of both, and may be made when earned, or may be vested and
deferred, as the Committee in its sole discretion determines. The maximum
amount which may be granted under all Performance Awards for any one year for
any one participant shall be Five Million Dollars ($5,000,000). This limit
shall be applied to Performance Shares by multiplying the number of
Performance Shares granted by the fair market value of one common share on
the date of the award. During the term of the Program, no more than 5 million
shares of Abbott common stock may be granted in the form of Performance Units
and no more than 5 million shares of Abbott common stock may be granted in
the form of Performance Shares. This paragraph 11 is intended to comply with
the performance-based compensation requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and shall be interpreted in
accordance with the rules and regulations thereunder.
12. FOREIGN QUALIFIED BENEFITS. Benefits under the Program may be granted to
such employees of the Company and its subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion
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may determine from time to time. The Committee may adopt such supplements to the
Program as may be necessary to comply with the applicable laws of such foreign
jurisdictions and to afford participants favorable treatment under such laws;
provided, however, that no Benefit shall be granted under any such supplement
with terms or conditions which are inconsistent with the provisions as set forth
under the Program.
13. RESTRICTED STOCK AWARDS FOR NON-EMPLOYEE DIRECTORS.
(a) Each year, on the date of the annual shareholders meeting,
each person who is elected a Non-Employee Director at the annual
shareholders meeting shall be awarded both: (i) a Restricted Stock
Award covering a number of common shares with a fair market value on
the date of the award closest to, but not in excess of, an amount
equal to six times the monthly fee in effect under Section 3.1 of the
Abbott Laboratories Non-Employee Director's Fee Plan on the date of
the award and (ii) in the years 1996 through 2005, a Restricted Stock
Award covering a number of common shares with a fair market value on
the date of the award closest to, but not in excess of, Twenty-Two
Thousand Dollars ($22,000) for awards made in years 1996 through 2000
and Twenty-Five Thousand Dollars ($25,000) for awards made in years
2001 through 2005.
(b) ISSUANCE OF CERTIFICATES. As soon as practicable following
the date of the award the Company shall issue certificates
("Certificates") to the Non-Employee Director receiving the award,
representing the number of common shares covered by the award. Each
Certificate shall bear a legend describing the restrictions on such
shares imposed by this paragraph 13.
(c) RIGHTS. Upon issuance of the Certificates, the directors in
whose names they are registered shall, subject to the restrictions of
this paragraph 13, have all of the rights of a shareholder with
respect to the shares represented by the Certificates, including the
right to vote such shares and receive cash dividends and other
distributions thereon.
(d) RESTRICTED PERIOD. The shares covered by awards granted
under this paragraph 13 may not be sold or otherwise disposed of
within six (6) months following their grant date (unless such sale
would not affect the exemption under Rule 16b-3 of the Securities and
Exchange Commission) and in addition shall be subject to the
restrictions of this paragraph 13 for a period (the "Restricted
Period") commencing with the date of the award and ending on the
earliest of the following events:
(i) The date the director terminates or retires from the
Board;
(ii) The date the director dies; or
(iii) The date of occurrence of a Change in Control (as
defined in paragraph 20(c)).
(e) RESTRICTIONS. All shares covered by awards granted under
this paragraph 13 shall be subject to the following restrictions
during the Restricted Period:
(i) The shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of.
(ii) Any additional common shares of the Company or other
securities or property issued with respect to shares covered by
awards granted under this paragraph 13 as a result of any stock
dividend, stock split or reorganization, shall be subject to the
restrictions and other provisions of this paragraph 13.
(iii) A director shall not be entitled to receive any shares
prior to completion of
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all actions deemed appropriate by the Company to comply with
federal or state securities laws and stock exchange requirements.
(f) Except in the event of conflict, all provisions of the
Program shall apply to this paragraph 13. In the event of any conflict
between the provisions of the Program and this paragraph 13, this
paragraph 13 shall control. Those provisions of paragraph 17 which
authorize the Committee to declare outstanding restricted stock awards
to be vested and to amend or modify the terms of Benefits shall not
apply to awards granted under this paragraph 13. Restricted Stock
Awards granted under this paragraph 13 shall be satisfied from the
Company's available treasury shares.
14. NON-QUALIFIED STOCK OPTIONS FOR NON-EMPLOYEE DIRECTORS.
(a) Each Non-Employee Director may elect to receive any or all
of his or her fees earned during the second half of 1996 and each
subsequent calendar year under Section 3 of the Abbott Laboratories
Non-Employee Directors' Fee Plan (the "Directors' Fee Plan") in the
form of Non-qualified Stock Options under this Section 14. Each such
election shall be irrevocable, and must be made in writing and filed
with the Secretary of the Company by December 31, 1995 (for fees
earned in the second half of 1996) and (for fees earned in subsequent
calendar years) by June 30 of the calendar year preceding the calendar
year in which such fees are earned (or such later date as may be
permissible under Rule 16b-3 of the Securities and Exchange
Commission, but in no event later than December 31 of such preceding
calendar year).
(b) A Non-Employee Director may file a new election each
calendar year applicable to fees earned in the immediately succeeding
calendar year. If no new election or revocation of a prior election is
received by June 30 of any calendar year (or such later date as may be
permissible under paragraph (a)), the election, if any, in effect for
such calendar year shall continue in effect for the immediately
succeeding calendar year. Any election made under this Section 14
shall take precedence over any election made by the director for the
same period, under the Directors' Fee Plan, to the extent necessary to
resolve any conflict between such elections. If a director does not
elect to receive his or her fees in the form of Non-qualified Stock
Options, the fees due such director shall be paid or deferred as
provided in the Directors' Fee Plan and any applicable election
thereunder by the director.
(c) The number of common shares covered by each Non-qualified
Stock Option granted in any year under this Section 14 shall be
determined based on an independent appraisal for such year of the
intrinsic value of options granted hereunder and the amount of fees
covered by the director's election for such year. The number of common
shares covered by options granted in 1996 (as determined under this
procedure) shall be the number of whole shares equal to (i) the
product of three (3) times the amount of fees which the director has
elected under paragraph (a) to receive in the form of Non-qualified
Stock Options, divided by (ii) One Hundred percent (100%) of the Fair
Market Value of one common share on the grant date. Any fraction of a
share shall be disregarded, and the remaining amount of the fees
corresponding to such option shall be paid as provided in the
Directors' Fee Plan and any applicable election thereunder by the
director.
(d) Effective on October 10, 1997, each Non-qualified Stock
Option due a director under this Section 14 prior to the 1998 annual
shareholders meeting shall be granted on October 10, 1997 at a
purchase price equal to One Hundred percent (100%) of the Fair Market
Value of the common shares covered by such option on the grant date.
Effective with the 1998 Annual Shareholders Meeting, each
Non-qualified Stock Option due a director under this Section 14 shall
be granted annually, on the date of the annual shareholders meeting,
at a purchase price equal to One Hundred percent (100%) of the Fair
Market Value of the common shares covered by such option on the grant
date. Each such option shall be immediately exercisable and
nonforfeitable, and shall not be
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exercisable after the expiration of ten (10) years from the date it is
granted. Each such option shall contain provisions allowing payment of
the purchase price and, to the extent permitted, any taxes due on
exercise, by delivery of other common shares of the Company (or, in
the case of the payment of taxes, by withholding of shares).
(e) All Non-qualified Stock Options granted under this Section
14 prior to October 10, 1997, shall be immediately exercisable and
nonforfeitable, and shall not be exercisable after the expiration of
ten (10) years from the date granted.
15. NONTRANSFERABILITY. Except as provided by the Committee, each stock option
and stock appreciation right granted under this Program shall not be
transferable other than by will or the laws of descent and distribution, and
shall be exercisable, during the participant's lifetime, only by the participant
or the participant's guardian or legal representative.
16. OTHER PROVISIONS. The award of any Benefit under the Program may also be
subject to other provisions (whether or not applicable to the Benefit awarded to
any other participant) as the Committee determines appropriate, including,
without limitation, provisions for the purchase of common shares under stock
options in installments, provisions for the payment of the purchase price of
shares under stock options by delivery of other common shares of the Company
having a then market value equal to the purchase price of such shares,
restrictions on resale or other disposition, such provisions as may be
appropriate to comply with federal or state securities laws and stock exchange
requirements and understandings or conditions as to the participant's employment
in addition to those specifically provided for under the Program.
In the case of a participant who is subject to Section 16(a) and 16(b)
of the Securities Exchange Act of 1934, the Committee may, at any time, add such
conditions and limitations to any Benefit granted to such participant, or any
feature of any such Benefit, as the Committee, in its sole discretion, deems
necessary or desirable to comply with Section 16(a) or 16(b) and the rules and
regulations thereunder or to obtain any exemption therefrom.
A participant may pay the purchase price of shares under stock options
by delivery of a properly executed exercise notice together with a copy of
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the purchase price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
The Committee may, in its discretion and subject to such rules as it
may adopt, permit or require a participant to pay all or a portion of the
federal, state and local taxes, including FICA and medicare withholding tax,
arising in connection with the following transactions: (a) the exercise of a
Non-qualified Stock Option; (b) the lapse of restrictions on common shares
received as a Restricted Stock Award; or (c) the receipt or exercise of any
other Benefit; by (i) having the Company withhold common shares, (ii) tendering
back common shares received in connection with such Benefit or (iii) delivering
other previously acquired common shares of the Company having a fair market
value approximately equal to the amount to be withheld.
The Committee may grant stock options under the Program (and, for
stock options granted prior to shareholder approval of this Program, under the
Company's 1991 Incentive Stock Program) that provide for the grant of
replacement stock options if all or any portion of the purchase price or taxes
incurred in connection with the exercise, are paid by delivery (or, in the case
of payment of taxes, by withholding of shares) of other common shares of the
Company. The replacement stock option shall cover the number of common shares
surrendered to pay the purchase price, plus the number of shares surrendered or
withheld to satisfy the participant's tax liability, shall have an exercise
price equal to One Hundred percent (100%) of the Fair Market Value of such
common shares on the date such replacement stock option is granted, shall first
be exercisable six months from the date of grant of the replacement stock option
and shall have an expiration date equal to the expiration date of the original
stock option.
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17. TERM OF PROGRAM AND AMENDMENT, MODIFICATION, CANCELLATION OR ACCELERATION OF
BENEFITS. The Program shall continue in effect until terminated by the Board of
Directors of the Company, except that no Incentive Stock Option shall be granted
more than ten (10) years after the date of adoption of this Program. The terms
and conditions applicable to any Benefits may at any time be amended, modified
or canceled by mutual agreement between the Committee and the participant or
such other persons as may then have an interest therein, so long as any
amendment or modification does not increase the number of common shares issuable
under this Program; and provided further, that the Committee may, at any time
and in its sole discretion, declare any or all stock options and stock
appreciation rights then outstanding under this Program or the Prior Programs to
be exercisable and any or all then outstanding Restricted Stock Awards to be
vested, whether or not such options, rights or awards are then otherwise
exercisable or vested. Notwithstanding the foregoing, except as provided in
paragraph 22, the Committee shall neither lower the purchase price of any
option granted under the Program nor grant any option under the Program in
replacement of a cancelled option which had previously been granted at a
higer purchase price, without shareholder approval.
18. AMENDMENT TO PRIOR PROGRAMS. No options or other Benefits shall be granted
under the Prior Programs on or after the date of shareholder approval of this
Program.
19. INDIVIDUAL LIMIT ON OPTIONS AND STOCK APPRECIATION RIGHTS; AGGREGATE LIMIT
ON INCENTIVE STOCK OPTIONS. The maximum number of shares with respect to which
Incentive Stock Options, Non-qualified Stock Options, Stock Appreciation Rights
and Limited Stock Appreciation Rights may be granted to any one participant, in
aggregate in any one calendar year, shall be One Million (1,000,000) shares.
Incentive Stock Options with respect to no more than the lesser of (i)
Seventy-Five Million (75,000,000) shares (plus any shares acquired by the
Company pursuant to payment of the purchase price of shares under incentive
stock options by delivery of other common shares of the Company), or (ii) the
total number of shares reserved under paragraph 5 may be issued under the Plan.
20. TAXES. The Company shall be entitled to withhold the amount of any tax
attributable to any amount payable or shares deliverable under the Program after
giving the person entitled to receive such amount or shares notice as far in
advance as practicable, and the Company may defer making payment or delivery if
any such tax may be pending unless and until indemnified to its satisfaction.
21. DEFINITIONS.
(a) FAIR MARKET VALUE. The Fair Market Value of the Company's
common shares shall be the average of the highest and lowest sales
prices of such shares as reported on the New York Stock Exchange
Composite Reporting System for the date as of which the determination
is to be made or in the absence of reported sales on that date, the
average of such reported highest and lowest sales prices for the next
preceding date on which reported sales occurred; provided that, in the
case of any Limited Stock Appreciation Right (other than a right
related to an Incentive Stock Option), the Fair Market Value shall be
the higher of:
(i) The highest daily closing price of the Company's common
shares during the sixty (60) day period following the Change in
Control; or
(ii) The highest gross price paid or to be paid for the
Company's common shares in any of the transactions described in
paragraphs 21(c)(i) and 21(c)(ii).
(b) SUBSIDIARY. The term "subsidiary" for all purposes other
than the Incentive Stock Option provisions in paragraph 6, shall mean
any corporation, partnership, joint venture or business trust, fifty
percent (50%) or more of the control of which is owned, directly or
indirectly, by the Company. For Incentive Stock Option purposes the
term "subsidiary" shall be defined as provided in Internal Revenue
Code Section 424(f).
(c) CHANGE IN CONTROL. A "Change in Control" shall be deemed to
have occurred on the earliest of the following dates:
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(i) The date any entity or person (including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934 (the "Exchange Act")) shall have become the beneficial owner
of, or shall have obtained voting control over, thirty percent
(30%) or more of the outstanding common shares of the Company;
(ii) The date the shareholders of the Company approve a
definitive agreement (A) to merge or consolidate the Company with
or into another corporation, or to merge another corporation into
the Company, in which the Company is not the continuing or
surviving corporation or pursuant to which any common shares of
the Company would be converted into cash, securities of another
corporation, or other property, other than a merger or
consolidation of the Company in which holders of common shares
immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation or its
parent corporation immediately after the merger as immediately
before, or (B) to sell or otherwise dispose of substantially all
the assets of the Company; or
(iii) The date there shall have been a change in a majority
of the Board of Directors of the Company within a twelve (12)
month period unless the nomination for election by the Company's
shareholders of each new director was approved by the vote of
two-thirds of the directors then still in office who were in
office at the beginning of the twelve (12) month period.
(d) DISABILITY. The term "disability" for all purposes of the Program shall mean
the participant's disability as defined in subsection 4.1(a) of the Abbott
Laboratories Extended Disability Plan for twelve (12) consecutive months.
22. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of
issued common shares without new consideration to the Company
(such as by stock dividends or stock splits), the total number of
shares reserved for issuance under this Program, the individual
and aggregate limits described in paragraphs 11 and 19, and the
number of shares that may be granted or issued (as the case may
be), and the number of shares covered by each outstanding Benefit
shall be adjusted so that the aggregate consideration payable to
the Company and the value of each such Benefit shall not be
changed. The Committee shall also have the right to provide for
the continuation of Benefits or for other equitable adjustments
after changes in the Company or in the common shares resulting
from reorganization, sale, merger, consolidation, spin-off or
similar occurrence.
(b) Notwithstanding any other provision of this Program, and
without affecting the number of shares otherwise reserved or available
hereunder, the Committee may authorize the issuance or assumption of
Benefits in connection with any merger, consolidation, acquisition of
property or stock, or reorganization upon such terms and conditions as
it may deem appropriate.
(c) Subject to the six month holding requirements of paragraphs
6, 7, 8(c), 9(c), 10 and 13(d) but notwithstanding any other provision
of this Program or the Prior Programs, upon the occurrence of a Change
in Control:
(i) All stock options then outstanding under this Program
or the Prior Programs shall become fully exercisable as of the
date of the Change in Control, whether or not then otherwise
exercisable;
(ii) All Stock Appreciation Rights and Limited Stock
Appreciation Rights then outstanding shall become fully
exercisable as of the date of the Change in Control, whether or
not then otherwise exercisable;
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(iii) All terms and conditions of all Restricted Stock
Awards then outstanding shall be deemed satisfied as of the date
of the Change in Control; and
(iv) All Performance Awards then outstanding shall be deemed
to have been fully earned and to be immediately payable, in cash,
as of the date of the Change in Control.
23. AMENDMENT AND TERMINATION OF PROGRAM. The Board of Directors of the
Company may amend the Program from time to time or terminate the Program at
any time, but no such action shall reduce the then existing amount of any
participant's Benefit or adversely change the terms and conditions thereof
without the participant's consent. Notwithstanding the foregoing, except as
provided in paragraph 22, the Company shall neither lower the purchase price
of any option granted under the Program nor grant any option under the
Program in replacement of a cancelled option which had previously been
granted at a higher purchase price, without shareholder approval. To the
extent required for compliance with Rule 16b-3 of the Securities and Exchange
Commission, paragraph 13 of the Program may not be amended more frequently
than once every six months other than to comport with changes in the Internal
Revenue Code of 1986, as amended, or the rules thereunder, and no amendment
of the Program shall result in any Committee member losing his or her status
as a "disinterested person" as defined in Rule 16b-3 of the Securities and
Exchange Commission with respect to any employee benefit plan of the Company
or result in the Program or awards thereunder losing their exempt status
under said Rule 16b-3.
24. SHAREHOLDER APPROVAL. The Program was adopted by the Board of Directors of
the Company on October 13, 1995. The Program and any Benefit granted thereunder
shall be null and void if shareholder approval is not obtained by October 12,
1996.