Exhibit 10.11


 


ABBOTT
LABORATORIES


1996
INCENTIVE STOCK PROGRAM


(as
amended and restated through the


6th
Amendment February 20, 2009)


 


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 (the “Code”), 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 grant Benefits under the
Program other than to persons subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect
to transactions involving equity securities of the Company at the time that
delegated authority is exercised. All such grants by the Chief Executive
Officer shall be reported annually to the Committee, however, the Committee is
not required to take any action with respect to such grants.


 


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 and Restricted Stock Units 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 of 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) Restricted
Stock Units; (g) Performance Awards; and (h) 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 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 


 


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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:


 


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(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 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:


 


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(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 AND
RESTRICTED STOCK UNITS


 


(a)                                  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).


 


(b)                                 RESTRICTED STOCK UNITS. 
Restricted Stock Units will consist of an unfunded promise to deliver
shares of stock at some future date to participants without other payment
therefor as additional compensation for their services to the Company or any of
its subsidiaries.  Stock delivered under
this paragraph 10(b) shall be satisfied from the Company’s available
treasury shares.  Restricted Stock Units
granted under this paragraph 10(b) 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 stock units,
the rights of the Company to provide for the forfeiture of such stock units
upon termination of the participant’s employment within specified periods and
the right to receive dividend equivalent payments.


 


(c)                                  No more than ten percent (10%) of the total number of shares
available for grant in any calendar year may be granted as Restricted Stock
Units or Restricted Stock Awards (in the aggregate) under paragraphs 10 and 13
in that year.


 


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11.           PERFORMANCE AWARDS. 
Performance Awards in the form of Performance Units or Performance
Shares may be granted to any participant in the Program.  Performance Units shall consist of monetary
awards which may be earned in whole or in part if the Company achieves certain
goals established by the Committee over a designated period of time.  Performance Shares shall consist of common
shares or awards denominated in common shares which may be earned in whole or
in part if the Company achieves certain goals established by the Committee over
a designated period of time.  The goals
established by the Committee shall be based on any one, or combination of,
earnings per share, return on equity, return on assets, total shareholder
return, net operating income, cash flow, increase in revenue, economic value
added, increase in share price or cash flow return on investment. Partial
achievement of the goal(s) may result in a payment or vesting
corresponding to the degree of achievement. Payment of an award earned may be
in cash or in common shares or in a combination of both, and may be made when
earned, or may be vested and deferred, as the Committee in its sole discretion
determines.  The maximum amount which may
be granted under all Performance Awards for any one year for any one
participant shall be Five Million Dollars ($5,000,000).  This limit shall be applied to Performance
Shares by multiplying the number of Performance Shares granted by the fair
market value of one common share on the date of the award.  During the term of the Program, no more than
5 million shares of Abbott common stock may be granted in the form of Performance
Units and no more than 5 million shares of Abbott common stock may be granted
in the form of Performance Shares.  This
paragraph 11 is intended to comply with the performance-based compensation
requirements of Code Section 162(m), 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 UNIT 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) Restricted
Stock Units 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) Restricted
Stock Units covering a number of common shares with a Fair Market Value on the
date of the award closest to, but not in excess of, Fifty Thousand Dollars
($50,000).


 


(b)                                 VESTING AND PAYMENT. 
The Restricted Stock Units granted under this paragraph 13 shall be
fully vested on the date of the award. 
The Non-Employee Director receiving the Restricted Stock Units shall be
entitled to 


 


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receive one
common share for each common share subject to the award upon the earliest of
the following events (the “Termination Event”):


 


(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 2(c)) which also qualifies as a “change in control event,” as such
term is defined in Treasury Regulation §1.409A-3(i)(5).


 


(c)                                  DIVIDENDS.  The
Non-Employee Director receiving the Restricted Stock Units shall be entitled to
receive cash payments equal to the dividends and distributions paid on shares
of stock (other than dividends or distributions of securities of the Company
which may be issued with respect to its shares by virtue of any stock split,
combination, stock dividend or recapitalization) to the same extent as if each
Restricted Stock Unit was a share of stock, and those shares were not subject
to the restrictions imposed by this Program, provided that the record date with
respect to such dividend or distribution occurs within the period commencing
with the date of the award and ending upon the date of the Termination Event
(the “Restricted Period”).


 


(d)                                 RESTRICTIONS.  All
Restricted Stock Units granted under this paragraph 13 shall be subject to the
following restrictions during the Restricted Period:


 


(i)            The Restricted Stock Units 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 split, combination, stock
dividend or recapitalization, 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.


 


(e)                                  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.  Restricted Stock Units 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 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 


 


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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, 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.


 


To the extent applicable, it
is intended that the Program comply with the provisions of Code Section 409A.  The Program will be administered and
interpreted in a manner consistent with this intent, and any provision that
would cause the Program to fail to satisfy Code Section 409A will have no
force and effect until amended to comply therewith (which amendment may be
retroactive to the extent permitted by Code Section 409A).  Notwithstanding anything contained herein to
the contrary, for all purposes of the Program, a participant shall not be
deemed to have had a termination of employment until the participant has
incurred a separation from service as defined in Treasury Regulation §1.409A-1(h) and,
to the extent required to avoid accelerated taxation and/or tax penalties under
Code Section 409A and applicable guidance issued thereunder, payment of
the amounts payable under the Program that would otherwise be payable during
the six-month period after the date of termination shall instead be paid on the
first business day after the expiration of such six-month period.  In addition, for purposes of the Program,
each amount to be paid and each installment payment shall be construed as a
separate identified payment for purposes of Code Section 409A.


 


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 after October 13, 2005 and that no other Benefits shall
be granted after April 27, 2010. 
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 the Program or the Prior Programs to
be exercisable and any or all the then outstanding Restricted Stock Awards or
Restricted Stock Units 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.


 


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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 Two Million
(2,000,000) shares. Incentive Stock Options with respect to no more than the
lesser of (i) One Hundred and Fifty Million (150,000,000) 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 


 


11

















 


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 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 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 


 


12

















 


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 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.  Subject to paragraph
22(c), 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.


 


13

















 


(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.


 


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 


 


14

















 


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;


 


(iv)          All
terms and conditions of all Restricted Stock Units then outstanding shall be
deemed satisfied and all restrictions on those Restricted Stock Units will
lapse as of the date of the Change in Control; and


 


(v)           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.


 


Notwithstanding the
foregoing, with respect to each Benefit that is subject to Code Section 409A,
if a Change in Control would have occurred under the Program but such Change in
Control does not also qualify as a “change in control event” (within the
meaning of Treasury Regulation Section 1.409A-3(i)(5)), then each such
Benefit shall become vested and non-forfeitable; provided, however, that the
holder of such Benefit shall not be able to exercise the Benefit, and the
Benefit shall not become payable, except in accordance with the terms of such
Benefit or until such earlier time as the exercise and/or payment complies with
Code Section 409A.


 


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 


 


15

















 


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 Code 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.


 


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