Exhibit 10.9


ABBOTT
LABORATORIES


1996
INCENTIVE STOCK PROGRAM


(as
amended and restated through the


5th
Amendment January 1, 2008)


 


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, on behalf of the Committee, grant stock options, restricted
stock awards, and restricted stock units 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) 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


 


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granted. In the event of
termination of employment for any reason other than retirement, disability or
death, the right of the optionee to exercise an Incentive Stock Option shall
terminate upon the earlier of the end of the original term of the option or
three (3) months after the optionee’s last day of work for the Company and
its subsidiaries. In the event of termination of employment due to retirement
or disability, or if the optionee should die while employed, the right of the
optionee or his or her successor in interest to exercise an Incentive Stock
Option shall terminate upon the end of the original term of the option. If the
optionee should die within three (3) months after termination of
employment for any reason other than retirement or disability, the right of his
or her successor in interest to exercise an Incentive Stock Option shall
terminate upon the earlier of the end of the original term of the option or
three (3) months after the date of such death. To the extent the aggregate
fair market value (determined as of the time the Option is granted) of the
common shares with respect to which any Incentive Stock Option is exercisable
for the first time by any individual during any calendar year (under all option
plans of the Company and its subsidiary corporations) exceeds $100,000, the
excess shall be treated as a Non-qualified Stock Option. An Incentive Stock
Option shall be exercisable as determined by the Committee, but in no event
earlier than six (6) months from its grant date.


 


7.             NON-QUALIFIED STOCK OPTIONS.  Non-qualified Stock Options will consist of
options to purchase common shares at purchase prices not less than One Hundred
percent (100%) of the Fair Market Value of such common shares on the date of
grant. A Non-qualified Stock Option will not be exercisable after the
expiration of ten (10) years from the date such option is granted. In the
event of termination of employment for any reason other than retirement,
disability or death, the right of the optionee to exercise a Non-qualified
Stock Option shall terminate upon the earlier of the end of the original term
of the option or three (3) months after the optionee’s last day of work
for the Company and its subsidiaries. In the event of termination of employment
due to retirement or disability, or if the optionee should die while employed,
the right of the optionee or his or her successor in interest to exercise a
Non-qualified Stock Option shall terminate upon the end of the original term of
the option. If the optionee should die within three (3) months after
termination of employment for any reason other than retirement or disability,
the right of his or her successor in interest to exercise a Non-qualified Stock
Option shall terminate upon the earlier of the end of the original term of the
option or three (3) months after the date of such death. A Non-qualified
Stock Option shall be exercisable as determined by the Committee, but in no
event earlier than six (6) months from its grant date.


 


8.             STOCK APPRECIATION RIGHTS.  The Committee may, in its discretion, grant a
Stock Appreciation Right to the holder of any stock option granted hereunder or
under the Prior Programs. Such Stock Appreciation Rights shall be subject to
such terms and conditions consistent with the Program as the Committee shall
impose from time to time, including the following:


 


(a)                                  A Stock Appreciation Right may be granted with respect to a
stock option at the time of its grant or at any time thereafter up to six (6) months
prior to its expiration.


 


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(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 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 


 


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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 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 


 


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Restricted Stock Awards (in the aggregate) under
paragraphs 10 and 13 in that year.


 


11.           PERFORMANCE AWARDS. 
Performance Awards in the form of Performance Units or Performance
Shares may be granted to any participant in the Program.  Performance Units shall consist of monetary
awards which may be earned in whole or in part if the Company achieves certain
goals established by the Committee over a designated period of time.
Performance Shares shall consist of common shares or awards denominated in
common shares which may be earned in whole or in part if the Company achieves
certain goals established by the Committee over a designated period of time.
The goals established by the Committee shall be based on any one, or
combination of, earnings per share, return on equity, return on assets, total
shareholder return, net operating income, cash flow, increase in revenue,
economic value added, increase in share price or cash flow return on
investment. Partial achievement of the goal(s) may result in a payment or
vesting corresponding to the degree of achievement. Payment of an award earned
may be in cash or in common shares or in a combination of both, and may be made
when earned, or may be vested and deferred, as the Committee in its sole
discretion determines.  The maximum
amount which may be granted under all Performance Awards for any one year for
any one participant shall be Five Million Dollars ($5,000,000). This limit
shall be applied to Performance Shares by multiplying the number of Performance
Shares granted by the fair market value of one common share on the date of the
award.  During the term of the Program,
no more than 5 million shares of Abbott common stock may be granted in the form
of Performance Units and no more than 5 million shares of Abbott common stock
may be granted in the form of Performance Shares. This paragraph 11 is intended
to comply with the performance-based compensation requirements of 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).


 


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(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 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.


 


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(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.


 


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.


 


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(d)                                 Effective on October 10, 1997, each Non-qualified Stock
Option due a director under this Section 14 prior to the 1998 annual
shareholders meeting shall be granted on October 10, 1997 at a purchase
price equal to One Hundred percent (100%) of the Fair Market Value of the
common shares covered by such option on the grant date.  Effective with the 1998 Annual Shareholders
Meeting, each Non-qualified Stock Option due a director under this Section 14
shall be granted annually, on the date of the annual shareholders meeting, at a
purchase price equal to One Hundred percent (100%) of the Fair Market Value of
the common shares covered by such option on the grant date.  Each such option shall be immediately
exercisable and nonforfeitable, and shall not be 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.


 


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The Committee may, in its
discretion and subject to such rules as it may adopt, permit or require a
participant to pay all or a portion of the federal, state and local taxes,
including FICA and medicare withholding tax, arising in connection with the
following transactions: (a) the exercise of a Non-qualified Stock Option; (b) the
lapse of restrictions on common shares received as a Restricted Stock Award; or
(c) the receipt or exercise of any other Benefit; by (i) having the
Company withhold common shares, (ii) tendering back common shares received
in connection with such Benefit or (iii) delivering other previously
acquired common shares of the Company having a fair market value approximately
equal to the amount to be withheld.


 


The Committee may grant
stock options under the Program (and, for stock options granted prior to
shareholder approval of this Program, under the Company’s 1991 Incentive Stock
Program) that provide for the grant of replacement stock options if all or any
portion of the purchase price or taxes incurred in connection with the
exercise, are paid by delivery (or, in the case of payment of taxes, by
withholding of shares) of other common shares of the Company.  The replacement stock option shall cover the
number of common shares surrendered to pay the purchase price, plus the number
of shares surrendered or withheld to satisfy the participant’s tax liability,
shall have an exercise price equal to One Hundred percent (100%) of the Fair
Market Value of such common shares on the date such replacement stock option is
granted, shall first be exercisable six months from the date of grant of the
replacement stock option and shall have an expiration date equal to the
expiration date of the original stock option.


 


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 


 


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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.


 


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 


 


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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 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) 


 


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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 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.


 


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22.           ADJUSTMENT PROVISIONS.


 


(a)                                  If the Company shall at any time change the number of issued
common shares without new consideration to the Company (such as by stock
dividends or stock splits), the total number of shares reserved for issuance
under this Program, the individual and aggregate limits described in paragraphs
11 and 19 on the number of shares that may be granted or issued (as the case
may be), 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.


 


(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 


 


14

















 


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 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.


 


15

















 


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 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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