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Exhibit 10.1
As amended, effective 9/7/01
ABBOTT LABORATORIES
1996 INCENTIVE STOCK PROGRAM
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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
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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
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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 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.
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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
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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 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.
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(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
(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
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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
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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 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.
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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
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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 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
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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
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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 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
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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.
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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.
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
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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.
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. Except as provided below, the Fair Market
Value of the Company's common shares shall be determined by such
methods or procedures as shall be established by the Committee;
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
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(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:
(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.
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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 on 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;
(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,
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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.