Document:

Exhibit
10.1

 

Amendment No. RIE539A

 

AMENDMENT

 

THIS AMENDMENT is entered into as of December 1, 2004, between CoBANK, ACB (“CoBank”) and DAKOTA
GROWERS PASTA COMPANY, INC., Carrington, North Dakota (the “Company”).

 

BACKGROUND

 

CoBank and the Company are parties to a Master Loan
Agreement dated February 24, 2004 (such agreement, as previously amended,
is hereinafter referred to as the “MLA”). 
CoBank and the Company now desire to amend the MLA.  For that reason, and
for valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), CoBank and the Company agree as follows:

 

1.               Section 10(A) of the MLA is hereby amended and
restated to read as follows:

 

SECTION 10.  Financial Covenants. 
Unless otherwise agreed to in writing, while this agreement is in
effect:

 

(A) 
Current Ratio.  The Company and its consolidated
Subsidiaries will have at the end of each period for which financial statements
are required to be furnished pursuant to Section 8(H) hereof, a ratio of
consolidated current assets to consolidated current liabilities (both as
determined in accordance with GAAP consistently applied) of not less than 1.10
to 1.0 through and including April 30, 2005, and of not less than 1.25 to
1.0 thereafter.

 

2.               Except as set forth in this amendment,
the MLA, including all amendments thereto, shall continue in full force and
effect as written.

 

IN WITNESS WHEREOF, the parties have caused this amendment to be
executed by their duly authorized officers as of the date shown above.

 

 

	
  CoBANK, ACB

  	
  DAKOTA GROWERS PASTA COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Thomas Friezen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  CFOExhibit 4.1

 

The Pep Boys – Manny, Moe & Jack, as Issuer

 

and

 

Wachovia Bank, National Association, Trustee

 

 

SUPPLEMENTAL INDENTURE

 

Dated as of December 10, 2004

 

 

Supplementing the Indenture Dated
as of June 12, 1995

 

 

$100,000,000

7% Notes due 2005

 

 

SUPPLEMENTAL
INDENTURE (this “Supplemental Indenture”), dated as of December 10, 2004,
between The Pep Boys – Manny, Moe & Jack, a Pennsylvania corporation (the “Company”),
and Wachovia Bank, National Association (as successor to First Fidelity Bank,
National Association), as trustee (the “Trustee”).

 

WHEREAS,
the Company and the Trustee executed and delivered an Indenture dated as of June 12,
1995 (the “Indenture”) regarding the Company’s 7% Notes due 2005 (the “Notes”);

 

WHEREAS,
in connection with a public offering of up to $150 million aggregate principal
amount of new notes (the “New Notes Offering”), the Company has commenced a
tender offer (the “Tender Offer”) for the Notes and, in connection therewith, a
solicitation of consents (the “Solicitation”) from the holders of the Notes
(the “Holders”) to certain amendments to the Indenture as set forth in the
Offer to Purchase and Consent Solicitation Statement of dated November 29,
2004 and as set forth herein (the “Amendments”);

 

WHEREAS,
consummation of the Tender Offer is conditioned upon the completion of the New
Notes Offering whereby the Company has received sufficient proceeds to purchase
the Notes tendered pursuant to the Tender Offer;

 

WHEREAS,
pursuant to the Solicitation, the Holders of at least a majority in aggregate
principal amount of the Notes outstanding have consented to the Amendments
effected by this Supplemental Indenture in accordance with the provisions of
the Indenture;

 

WHEREAS,
the execution and delivery of this Supplemental Indenture has been authorized
by resolutions of the Board of Directors of the Company; and

 

WHEREAS, (1) the Company has received the
consent of the Holders of more than a majority in principal amount of the
outstanding Notes, all as certified by an Officers’ Certificate delivered to
the Trustee simultaneously with the execution and delivery of this Supplemental
Indenture, and (2) the Company has delivered to the Trustee simultaneously
with the execution and delivery of this Supplemental Indenture an Opinion of Counsel
relating to this Supplemental Indenture as contemplated by Article 9 of
the Indenture.

 

NOW
THEREFORE, in consideration of the foregoing and the mutual premises and
covenants contained herein and for other good and valuable consideration, the
parties hereto agree as follows:

 

1

 

ARTICLE 1

 

DEFINITIONS; AMENDMENTS
TO INDENTURE; WAIVER

 

SECTION 1.01 DEFINITIONS.

 

Capitalized
terms used but not defined in this Supplemental Indenture shall have the
specified meanings therefor set forth in the Indenture.

 

SECTION 1.02 AMENDMENTS TO
INDENTURE.

 

(a)                                  The
Amendments shall become operative on the date that the Company notifies the
Trustee that the Notes tendered are accepted for purchase and payment pursuant
to the Tender Offer.  If the Notes are
not accepted for payment by the Company for any reason, the Amendments will not
become operative.

 

(b)                                 Section 101
of the Indenture shall be amended by deleting the following definitions: “Exempted
Debt,” “Net Tangible Assets,” “Operating Assets,” “Operating Property,” and “Senior
Funded Debt.”

 

(c)                                  Sections
704, 801, 1007, 1008, and 1009 of the Indenture shall be deleted.

 

(d)                                 Section 501
of the Indenture shall be amended by deleting paragraphs (3), (4), (5), and (6)
thereof.

 

(e)                                  Section 802
of the Indenture shall be amended by deleting “in accordance with Section 801”
from the third and fourth line of that section.

 

ARTICLE 2

MISCELLANEOUS

 

SECTION 2.01 INSTRUMENTS TO
BE READ TOGETHER.

 

This
Supplemental Indenture is an indenture supplemental to the Indenture, and the
Indenture and this Supplemental Indenture shall henceforth be read together.

 

SECTION 2.02 CONFIRMATION.

 

The
Indenture as amended and supplemented by this Supplemental Indenture is in all
respects confirmed and preserved.

 

SECTION 2.03 HEADINGS.

 

The
headings of the Articles and Sections of this Supplemental Indenture have been
inserted for convenience of reference only, and are not to be considered a part
hereof and shall in no way modify or restrict any of the terms and provisions
hereof.

 

2

 

SECTION 2.04 GOVERNING LAW.

 

This
Supplemental Indenture shall be governed by, construed, interpreted, and the
rights of the parties determined in accordance with the laws of the State of
New York without regard to principles of conflicts of laws.

 

SECTION 2.05 COUNTERPARTS.

 

This
Supplemental Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

 

SECTION 2.06 EFFECTIVENESS.

 

The
provisions of this Supplemental Indenture will take effect immediately upon its
execution and delivery by the Trustee.

 

SECTION 2.07 ACCEPTANCE BY
TRUSTEE; TRUSTEE DISCLAIMER.

 

The
Trustee has accepted the Amendments to the Indenture effected by this
Supplemental Indenture and agrees to execute the trust created by the Indenture
as hereby amended, but only upon the terms and conditions set forth in the Indenture,
including the terms and provisions defining and limiting the liabilities and
responsibilities of the Trustee, and without limiting the generality of the
foregoing, the Trustee shall not be responsible in any manner whatsoever for or
with respect to any of the recitals or statements contained herein, all of
which recitals or statements are made solely by the Company, or for or with
respect to (a) the validity or sufficiency of this Supplemental Indenture or
any of the terms or provisions hereof; (b) the proper authorization hereof by
the Company by corporate action or otherwise; (c) the due execution hereof by
the Company; (d) the consequences (direct or indirect and whether deliberate or
inadvertent) of any Amendment herein provided for, and the Trustee makes no
representation with respect to any such matters; and (e) the validity or
sufficiency of the Solicitation or the consent solicitation materials or
procedure in connection therewith.

 

SECTION 2.08 TIA CONTROLS.

 

If any
provision of this Supplemental Indenture limits, qualifies or conflicts with
another provision that is required to be included in this Supplemental
Indenture by the TIA, the required provision of the TIA shall control.

 

[Remainder of Page
Intentionally Left Blank]

 

3

 

IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to
be duly executed, all as of the date first written above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  THE PEP BOYS –
  MANNY, MOE & JACK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bernard K.
  McElroy

  	
   

  
	
   

  	
   

  	
  Name: Bernard K.
  McElroy

  
	
   

  	
   

  	
  Title: Vice President – Chief Accounting Officer
  &

  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRUSTEE:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK,
  NATIONAL ASSOCIATION

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan G. Finn

  	
   

  
	
   

  	
   

  	
  Name: Alan G.
  Finn

  
	
   

  	
   

  	
  Title: Vice
  PresidentExhibit
10.1

ABBOTT LABORATORIES

1996 INCENTIVE STOCK PROGRAM

(as amended and restated through the

3rd Amendment December 10, 2004)

 

1.             PURPOSE.  The purpose of the Abbott Laboratories 1996
Incentive Stock Program (the “Program”) is to attract and retain outstanding
directors, officers and other employees of Abbott Laboratories (the “Company”)
and its subsidiaries, and to furnish incentives to such persons by providing
opportunities to acquire common shares of the Company, or monetary payments
based on the value of such shares or the financial performance of the Company,
or both, on advantageous terms as herein provided and to further align such
persons’ interests with those of the Company’s other shareholders through
compensation that is based on the value of the Company’s common shares.

2.             ADMINISTRATION.  The Program will be administered by a
committee (the “Committee”) of at least two persons which shall be either the
Compensation Committee of the Board of Directors of the Company (the “Board of
Directors”) or such other committee comprised entirely of persons who are both:
(i) “disinterested persons” as defined in Rule 16b-3 of the Securities and
Exchange Commission; and (ii) “outside directors” as defined under Section
162(m) of the Internal Revenue Code of 1986, as amended, or any successor
provision; as the Board of Directors may from time to time designate.  The Committee shall interpret the Program,
prescribe, amend and rescind rules and regulations relating thereto and make
all other determinations necessary or advisable for the administration of the
Program. A majority of the members of the Committee shall constitute a quorum
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Program may be made
without notice of meeting of the Committee by a writing signed by all of the
Committee members.  The Committee may,
from time to time, delegate any or all of its duties, powers and authority to
any officer or officers of the Company, except to the extent such delegation
would be inconsistent with Rule 16b-3 of the Securities and Exchange Commission
or other applicable law, rule or regulation. 
The Chief Executive Officer of the Company may, on behalf of the
Committee, grant stock options, 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 

1

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 

2

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.

3

(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 

4

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 

 

5

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 Section
162(m) of the Internal Revenue Code of 1986, as amended, and shall be
interpreted in accordance with the rules and regulations thereunder.

12.           FOREIGN QUALIFIED BENEFITS.  Benefits under the Program may be granted to
such employees of the Company and its subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time
to time.  The Committee may adopt such
supplements to the Program as may be necessary to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable
treatment under such laws; provided, however, that no Benefit shall be granted
under any such supplement with terms or conditions which are inconsistent with
the provisions as set forth under the Program.

13.           RESTRICTED STOCK 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, Twenty-Five
Thousand Dollars ($25,000).

6

(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 21(c)).

(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 

7

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.

(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 

8

(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.

 

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) 

 

9

the exercise of a Non-qualified Stock Option; (b) the lapse of
restrictions on common shares received as a Restricted Stock Award; or (c) the
receipt or exercise of any other Benefit; by (i) having the Company withhold
common shares, (ii) tendering back common shares received in connection with
such Benefit or (iii) delivering other previously acquired common shares of the
Company having a fair market value approximately equal to the amount to be
withheld.

 

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

 

17.           TERM OF PROGRAM AND AMENDMENT,
MODIFICATION, CANCELLATION OR ACCELERATION OF BENEFITS.  The Program shall continue in effect until
terminated by the Board of Directors, except that no Incentive Stock Option
shall be granted 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.

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 

10

shares
of the Company), or (ii) the total number of shares reserved under paragraph 5
may be issued under the Plan.

20.           TAXES.  The Company shall be entitled to withhold the
amount of any tax attributable to any amount payable or shares deliverable
under the Program after giving the person entitled to receive such amount or
shares notice as far in advance as practicable, and the Company may defer
making payment or delivery if any such tax may be pending unless and until
indemnified to its satisfaction.

21.           DEFINITIONS.

(a)                                  FAIR MARKET VALUE. 
Except as provided below, the Fair Market Value of the Company’s common
shares shall be determined by such methods or procedures as shall be
established by the Committee; provided that, in the case of any Limited Stock
Appreciation Right (other than a right related to an Incentive Stock Option),
the Fair Market Value shall be the higher of:

(i)                                     The highest daily closing price of the Company’s common
shares during the sixty (60) day period following the Change in Control; or

(ii)                                  The highest gross price paid or to be paid for the Company’s
common shares in any of the transactions described in paragraphs 21(c)(i) and
21(c)(ii).

(b)                                 SUBSIDIARY.  The term
“subsidiary” for all purposes other than the Incentive Stock Option provisions
in paragraph 6, shall mean any corporation, partnership, joint venture or
business trust, fifty percent (50%) or more of the control of which is owned,
directly or indirectly, by the Company. For Incentive Stock Option  purposes the term “subsidiary” shall be
defined as provided in Internal Revenue Code Section 424(f).

(c)                                  CHANGE IN CONTROL.  A
“Change in Control” shall be deemed to have occurred on the earliest of the
following dates:

(i)                                     the date any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities ac­quired directly
from the Company or its Affiliates) representing 20% or more of the combined
voting power of the Company’s then out­standing securities, excluding any
Person who becomes such a Bene­ficial Owner in connection with a transaction
described in 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 

11

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 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 

12

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.

(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.

13

(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 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 

14

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.

23.           AMENDMENT AND TERMINATION OF
PROGRAM.  The Board of Directors may
amend the Program from time to time or terminate the Program at any time, but
no such action shall reduce the then existing amount of any participant’s
Benefit or adversely change the terms and conditions thereof without the
participant’s consent. Notwithstanding the foregoing, except as provided in
paragraph 22, the Company shall neither lower the purchase price of any option
granted under the Program nor grant any option under the Program in replacement
of a cancelled option which had previously been granted at a higher purchase
price, without shareholder approval.  To
the extent required for compliance with Rule 16b-3 of the Securities and
Exchange Commission, paragraph 13 of the Program may not be amended more
frequently than once every six months other than to comport with changes in the
Internal Revenue Code of 1986, as amended, or the rules thereunder, and no
amendment of the Program shall result in any Committee member losing his or her
status as a “disinterested person” as defined in Rule 16b-3 of the Securities
and Exchange Commission with respect to any employee benefit plan of the
Company or result in the Program or awards thereunder losing their exempt
status under said Rule 16b-3.

24.           EFFECTIVE DATE.  The Program was originally adopted by the
Board of Directors on October 13, 1995.

15

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