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EXHIBIT 10.2
ABBOTT LABORATORIES
1996 INCENTIVE STOCK PROGRAM
(as amended and restated June 20, 2003)
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 (the "Board of Directors") 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, as amended (the "Exchange Act"). 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)
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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 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
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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:
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(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 Exchange Act 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
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which is so surrendered.
(c) A Limited Stock Appreciation Right granted to a participant who is
subject to Section 16 of the Exchange Act 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 Exchange Act 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
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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.
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.
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(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 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.
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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
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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
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 Exchange Act, 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,
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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, 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 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,
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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
(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 Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person
any securities acquired directly from the Company or its
Affiliates) representing 20% or more of the combined voting
power of the Company's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection
with a transaction described in
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clause (a) of paragraph (iii) below; or
(ii) the date the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board of
Directors and any new director (other than a director whose
initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board of
Directors or nomination for election by the Company's
shareholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved
or recommended; or
(iii) the date on which there is consummated a merger or
consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation or other
entity, other than (a) a merger or consolidation (I)
immediately following which the individuals who comprise the
Board of Directors immediately prior thereto constitute at
least a majority of the Board of Directors of the Company, the
entity surviving such merger or consolidation or, if the
Company or the entity surviving such merger or consolidation
is then a subsidiary, the ultimate parent thereof and (II)
which results in the voting securities of the Company
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity
or any parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the
Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned by such
Person any securities acquired directly from the Company or
its Affiliates) representing 20% or more of the combined
voting power of the Company's then outstanding securities; or
(iv) the date the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the
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Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at
least 50% of the combined voting power of the voting
securities of which are owned by shareholders of the Company,
in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, in substantially
the same proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not
be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions
immediately following which the record holders of the common
stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions.
For purposes of this Program: "Affiliate" shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12
of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; and "Person"
shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock
of the Company.
(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 on the number of shares that may be
granted or
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issued (as the case may be), the number of shares covered by each
outstanding Benefit and the purchase price of such shares shall be
adjusted so that the aggregate consideration payable to the Company
and the value of each such Benefit shall not be changed.
(b) Subject to paragraph 22(c), 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) Notwithstanding any other provision of this Program or the Prior
Programs including the terms of any Benefit granted hereunder, if the
outstanding common shares of the Company shall be combined, or be
changed into, or exchanged for, another kind of stock of the Company,
into securities of another corporation, or into property (including
cash) whether through recapitalization, reorganization, sale, merger,
consolidation, spin-off, business combination or a similar transaction
(a "Transaction"), the Company shall cause its successor, acquiror (or
ultimate parent of any successor or acquiror), as applicable, to
assume each stock option, Stock Appreciation Right and Limited Stock
Appreciation Right outstanding immediately prior to the Transaction
(or to cause new options or rights to be substituted therefor).
Pursuant to such assumed or substituted option or rights, participants
shall thereafter be entitled to receive, upon due exercise of any
portion of the option or right, (a) in the event of a Transaction in
which the outstanding common shares of the Company are combined, or
changed into, or exchanged for, solely another kind of stock of the
Company or securities of another corporation (disregarding, for this
purpose, cash paid in lieu of fractional shares), the securities which
that person would have been entitled to receive for common shares
acquired through exercise of the same portion of such option or right
immediately prior to the effective date of such Transaction, and (b)
in the event of a Transaction in which the outstanding common shares
of the Company are changed into, or exchanged for, property (including
cash) other than solely stock of the Company or securities of another
corporation (disregarding, for this purpose, cash paid in lieu of
fractional shares), securities the fair market value of which
immediately following the effective date of such Transaction (as
determined by the Committee) equals the fair market value (as
determined by the Committee) of the property which that person would
have been entitled to receive for common shares acquired through
exercise of the same portion of such option or right immediately prior
to the effective date of such Transaction. In each case such assumed
or substituted option or right shall continue to be subject to the
same terms and conditions (including, without limitation, with respect
to any right to receive "replacement options" upon option exercise) to
which it was subject immediately prior to the Transaction.
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Notwithstanding the immediately preceding paragraph, upon a
Transaction in which the outstanding common shares of the Company are
changed into, or exchanged for, property (including cash) other than
solely stock of the Company or securities of another corporation
(disregarding, for this purpose, cash paid in lieu of fractional
shares) and which constitutes a Change in Control, each participant
may elect to receive, immediately following such Transaction in
exchange for cancellation of any stock option (other than an Incentive
Stock Option granted prior to June 20, 2003, Stock Appreciation Right
or Limited Appreciation Right held by such participant immediately
prior to the Transaction, a cash payment, with respect to each common
share subject to such option or right, equal to the difference between
the value of consideration (as determined by the Committee) received
by the shareholders for a common share of the Company in the
Transaction, less any applicable purchase price.
(d) Notwithstanding any other provision of this Program or the Prior
Programs including the terms of any Benefit granted hereunder, 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 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
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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. EFFECTIVE DATE. The Program was originally adopted by the Board of
Directors on October 13, 1995.