ABBOTT LABORATORIES 1996 INCENTIVE STOCK PROGRAM EXHIBIT 10.1
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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 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")
from and including 1996, 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; 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
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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 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.
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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 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. 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 person elected a Non-Employee Director at an annual shareholders
meeting in any of the years 1996 through 2005 shall receive a Restricted Stock
Award on the dates of their election 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 21(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 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.
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(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) Each Non-qualified Stock Option due a director under this Section 14
shall be issued as of the date the corresponding fees otherwise due the
director would have been paid under the Directors' Fee Plan and 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 fully exercisable after six (6) months from the grant date, and shall not
be exercisable after the expiration of ten (10) years from the grant date.
Each such option shall contain provisions allowing payment of the purchase
price, and any taxes due on the exercise, by delivery of other common shares
of the Company (or, in the case of payment of taxes, by withholding of
shares).
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.
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
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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.
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:
(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 paragraph 19, 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. 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.
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