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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549


FORM 10-K

(MARK ONE)    
ý   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2013   Commission file number 1-2189

Abbott Laboratories

An Illinois Corporation   36-0698440
100 Abbott Park Road
Abbott Park, Illinois 60064-6400		   (I.R.S. employer identification number)
 (847) 937-6100
(telephone number)

Securities Registered Pursuant to Section 12(b) of the Act:

 
Title of Each Class
   Name of Each Exchange on Which Registered
 
Common Shares, Without Par Value
  		   New York Stock Exchange
Chicago Stock Exchange
 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ý            No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes o            No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý            No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ý            No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ý   Accelerated Filer o   Non-accelerated Filer o   Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o            No ý

The aggregate market value of the 1,516,025,819 shares of voting stock held by nonaffiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of Abbott Laboratories' most recently completed second fiscal quarter (June 30, 2013), was $52,878,980,567. Abbott has no non-voting common equity.

Number of common shares outstanding as of January 31, 2014: 1,543,070,300

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2014 Abbott Laboratories Proxy Statement are incorporated by reference into Part III. The Proxy Statement will be filed on or about March 14, 2014.


PART I

ITEM 1.    BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

        Abbott Laboratories is an Illinois corporation, incorporated in 1900. Abbott's* principal business is the discovery, development, manufacture, and sale of a broad and diversified line of health care products.


FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS, GEOGRAPHIC AREAS, AND CLASSES OF SIMILAR PRODUCTS

        Incorporated herein by reference is Note 14 entitled "Segment and Geographic Area Information" of the Notes to Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data."


NARRATIVE DESCRIPTION OF BUSINESS

        Abbott has four reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. Prior to January 1, 2013, Abbott had five reportable segments, which included Proprietary Pharmaceutical Products.

        On January 1, 2013, Abbott completed the separation of its research-based proprietary pharmaceuticals business through the distribution of the issued and outstanding common stock of AbbVie Inc. (AbbVie) to Abbott's shareholders. AbbVie was formed to hold Abbott's research-based proprietary pharmaceuticals business and, as a result of the distribution, is now an independent public company trading under the symbol "ABBV" on the New York Stock Exchange.

        The historical operating results of the research-based proprietary pharmaceuticals business prior to separation are excluded from Earnings from Continuing Operations and are presented on the Earnings from Discontinued Operations line in Abbott's Consolidated Statement of Earnings. The assets, liabilities, and cash flows of the research-based proprietary pharmaceuticals business are included in Abbott's Consolidated Balance Sheet and its Consolidated Statements of Cash Flows for periods prior to January 1, 2013.

   

*
As used throughout the text of this report on Form 10-K, the term "Abbott" refers to Abbott Laboratories, an Illinois corporation, or Abbott Laboratories and its consolidated subsidiaries, as the context requires.

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Established Pharmaceutical Products

        These products include a broad line of branded generic pharmaceuticals manufactured worldwide and marketed and sold outside the United States, and are generally sold directly to wholesalers, distributors, government agencies, health care facilities, pharmacies, and independent retailers from Abbott-owned distribution centers and public warehouses, depending on the market served. Certain products are co-marketed or co-promoted with other companies.

        The principal products included in the broad therapeutic area portfolios of the Established Pharmaceutical Products segment are:

        The Established Pharmaceutical Products segment directs its primary marketing efforts toward building a strong brand with key stakeholders, including, in certain markets, consumers, as well as securing the prescription, or recommendation, of Abbott's brand of products by physicians, pharmacists and other healthcare providers. Government agencies are also important customers.

        Competition in the Established Pharmaceutical Products segment is generally from other health care and pharmaceutical companies. Changes to government tenders and reimbursement schemes are significant factors with respect to pricing. In addition, the substitution of generic drugs for the brand prescribed and introduction of additional forms of already marketed established products by generic or branded competitors have increased competitive pressures.

Diagnostic Products

        These products include a broad line of diagnostic systems and tests manufactured, marketed, and sold worldwide to blood banks, hospitals, commercial laboratories, clinics, physicians' offices, government agencies, alternate-care testing sites, and plasma protein therapeutic companies. In the United States, the segment's products are generally marketed and sold directly from Abbott-owned distribution centers, public warehouses and third-party distributors. Outside the United States, sales are made either directly to customers or through distributors, depending on the market served.

        The principal products included in the Diagnostic Products segment are:

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        The Diagnostic Products segment's products are subject to competition in technological innovation, price, convenience of use, service, instrument warranty provisions, product performance, long-term supply contracts, and product potential for overall cost-effectiveness and productivity gains. Some products in this segment can be subject to rapid product obsolescence or regulatory changes. Although Abbott has benefited from technological advantages of certain of its current products, these advantages may be reduced or eliminated as competitors introduce new products.

Nutritional Products

        These products include a broad line of pediatric and adult nutritional products manufactured, marketed, and sold worldwide. These products are generally marketed and sold directly to customers and to institutions, wholesalers, retailers, health care facilities, government agencies, and third-party distributors from Abbott-owned distribution centers or third-party distributors.

        The principal products included in the Nutritional Products segment are:

        Primary marketing efforts for nutritional products are directed toward securing the recommendation of Abbott's brand of products by physicians or other health care professionals. In addition, certain nutritional products sold as Gain™, Grow™, PediaSure®, PediaSure Sidekicks®, Pedialyte®, Ensure®, Zone Perfect®, EAS®/Myoplex®, and Glucerna® are also promoted directly to the public by consumer marketing efforts in select markets.

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        Competition for nutritional products in the segment is generally from other diversified consumer and health care manufacturers. Competitive factors include consumer advertising, formulation, packaging, scientific innovation, intellectual property, price, retail distribution, and availability of product forms. A significant aspect of competition is the search for ingredient innovations. The introduction of new products by competitors, changes in medical practices and procedures, and regulatory changes can result in product obsolescence. In addition, private label and local manufacturers' products may increase competitive pressure.

Vascular Products

        These products include a broad line of coronary, endovascular, vessel closure, and structural heart devices for the treatment of vascular disease manufactured, marketed and sold worldwide. In the United States, the segment's products are generally marketed and sold directly to hospitals from Abbott-owned distribution centers and public warehouses. Outside the United States, sales are made either directly to customers or through distributors, depending on the market served.

        The principal products included in the Vascular Products segment are:

        The Vascular Products segment's products are subject to competition in technological innovation, price, convenience of use, service, product performance, long-term supply contracts, and product potential for overall cost-effectiveness and productivity gains. Some products in this segment can be subject to rapid product obsolescence or regulatory changes. Although Abbott has benefited from technological advantages of certain of its current products, these advantages may be reduced or eliminated as competitors introduce new products.

Other Products

        The principal products in Abbott's other businesses include blood glucose and continuous glucose monitoring systems, test strips, data management software and accessories for people with diabetes, including the FreeStyle® product line, and medical devices for the eye, including cataract surgery, LASIK surgery, contact lens care products, and dry eye products. These products are marketed worldwide and generally sold directly to wholesalers, government agencies, health care facilities, mail order pharmacies, and independent retailers from Abbott-owned distribution centers and public warehouses. Some of these products are marketed and distributed through distributors. Blood glucose monitoring systems, contact lens care products, and dry eye products are also marketed and sold over-the-counter to consumers. These

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products are subject to regulatory changes and competition in technological innovation, price, convenience of use, service, and product performance.


INFORMATION WITH RESPECT TO ABBOTT'S BUSINESS IN GENERAL

Sources and Availability of Raw Materials

        Abbott purchases, in the ordinary course of business, raw materials and supplies essential to Abbott's operations from numerous suppliers in the United States and abroad. There have been no recent significant availability problems or supply shortages for raw materials or supplies.

Patents, Trademarks, and Licenses

        Abbott is aware of the desirability for patent and trademark protection for its products. Accordingly, where possible, patents and trademarks are sought and obtained for Abbott's products in the United States and countries of interest to Abbott. Abbott owns and is licensed under a substantial number of patents and patent applications. Principal trademarks and the products they cover are discussed in the Narrative Description of Business on pages 1 through 4. These, and various patents which expire during the period 2014 to 2034, in the aggregate, are believed to be of material importance in the operation of Abbott's business. Abbott believes that no single patent, license, or trademark is material in relation to Abbott's business as a whole. Patent-related litigation is discussed in Legal Proceedings on pages 17 through 18.

Seasonal Aspects, Customers, Backlog, and Renegotiation

        There are no significant seasonal aspects to Abbott's business. Abbott has no single customer that, if the customer were lost, would have a material adverse effect on Abbott. Orders for Abbott's products are generally filled on a current basis, and order backlog is not material to Abbott's business. No material portion of Abbott's business is subject to renegotiation of profits or termination of contracts at the election of a government.

Research and Development

        Abbott spent approximately $1.5 billion per year in 2013, 2012, and 2011 on research to discover and develop new products and processes and to improve existing products and processes.

Environmental Matters

        Abbott believes that its operations comply in all material respects with applicable laws and regulations concerning environmental protection. Regulations under federal and state environmental laws impose stringent limitations on emissions and discharges to the environment from various manufacturing operations. Abbott's capital and operating expenditures for pollution control in 2013 were approximately $9 million and $35 million, respectively. Capital and operating expenditures for pollution control in 2014 are estimated to be $11 million and $36 million, respectively.

        Abbott has been identified as one of many potentially responsible parties in investigations and/or remediations at several locations in the United States, including Puerto Rico, under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund. Abbott is also engaged in remediation at several other sites, some of which are owned by Abbott, in cooperation with the Environmental Protection Agency (EPA) or similar agencies. While it is not feasible to predict with certainty the final costs related to those investigations and remediation activities, Abbott believes that such costs, together with other expenditures to maintain compliance with applicable laws and regulations concerning environmental protection, should not have a material adverse effect on Abbott's financial position, cash flows, or results of operations.

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Employees

        Abbott employed approximately 69,000 persons as of December 31, 2013.

Regulation

        The development, manufacture, marketing, sale, promotion, and distribution of Abbott's products are subject to comprehensive government regulation by the U.S. Food and Drug Administration and similar international regulatory agencies. Government regulation by various international, supranational, federal and state agencies addresses (among other matters) the development and approval to market Abbott's products, as well as the inspection of, and controls over, research and laboratory procedures, clinical investigations, product approvals and manufacturing, labeling, packaging, supply chains, marketing and promotion, pricing and reimbursement, sampling, distribution, quality control, post-market surveillance, record keeping, storage, and disposal practices. Abbott's international operations are also affected by trade and investment regulations in many countries. These may require local investment, restrict Abbott's investments, or limit the import of raw materials and finished products. In addition, Abbott is subject to laws and regulations pertaining to health care fraud and abuse, including state and federal anti-kickback and false claims laws in the United States. Prescription drug, nutrition, and medical device manufacturers such as Abbott are also subject to taxes, as well as application, product, user, establishment, and other fees. Governmental agencies can also invalidate intellectual property rights.

        Compliance with these laws and regulations is costly and materially affects Abbott's business. Among other effects, health care regulations substantially increase the time, difficulty, and costs incurred in obtaining and maintaining approval to market newly developed and existing products. Abbott expects this regulatory environment will continue to require significant technical expertise and capital investment to ensure compliance. Failure to comply can delay the release of a new product or result in regulatory and enforcement actions, the seizure or recall of a product, the suspension or revocation of the authority necessary for a product's production and sale, and other civil or criminal sanctions, including fines and penalties.

        Abbott's business can also be affected by ongoing studies of the utilization, safety, efficacy, and outcomes of health care products and their components that are regularly conducted by industry participants, government agencies, and others. These studies can call into question the utilization, safety, and efficacy of previously marketed products. In some cases, these studies have resulted, and may in the future result, in the discontinuance of marketing of such products in one or more countries, and may give rise to claims for damages from persons who believe they have been injured as a result of their use.

        Access to human health care products continues to be a subject of investigation and action by governmental agencies, legislative bodies, and private organizations in many countries. A major focus is cost containment. Efforts to reduce health care costs are also being made in the private sector, notably by health care payors and providers, which have instituted various cost reduction and containment measures. Abbott expects insurers and providers to continue attempts to reduce the cost of health care products. Many countries control the price of health care products directly or indirectly, through reimbursement, payment, pricing, coverage limitations, or compulsory licensing. Budgetary pressures on health care payors may also heighten the scope and severity of pricing pressures on Abbott's products for the foreseeable future.

        In the United States, the federal government follows a diagnosis-related group (DRG) payment system for certain institutional services provided under Medicare or Medicaid and has implemented a prospective payment system (PPS) for services delivered in hospital outpatient, nursing home, and home health settings. DRG and PPS entitle a health care facility to a fixed reimbursement based on the diagnosis and/or procedure rather than actual costs incurred in patient treatment, thereby increasing the incentive for the facility to limit or control expenditures for many health care products. The Centers for Medicare and Medicaid Services have announced plans to reevaluate reimbursement levels to diagnostic

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laboratories. Under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (together, the Affordable Care Act), Abbott must pay an excise tax on sales of certain medical devices. Medicare also implemented a competitive bidding system for durable medical equipment (including diabetes products), enteral nutrition products, and supplies.

        In the United States, governmental cost containment efforts also affect Abbott's nutrition business. Under regulations governing the federally funded Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), all states must have a cost containment program for infant formula. As a result, through competitive bidding states obtain rebates from manufacturers of infant formula whose products are used in the program.

        The Affordable Care Act also includes provisions known as the Physician Payments Sunshine Act, which require manufacturers of drugs, devices, and medical supplies covered under Medicare and Medicaid to record any transfers of value to physicians and teaching hospitals and to report this data, beginning in 2014, to the Centers for Medicare and Medicaid Services for subsequent public disclosure. Similar reporting requirements have also been enacted on the state level domestically, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with health care professionals. Failure to report appropriate data may result in civil or criminal fines and/or penalties.

        The regulation of data privacy and security and the protection of the confidentiality of certain patient health information, is increasing. For example, the European Union continues to contemplate enacting stricter laws with enhanced financial penalties for noncompliance. Similarly, in 2013, the U.S. Department of Health and Human Services issued stricter rules governing the use, disclosure, and security of protected health information. Failure to comply with data privacy and security regulations can result in enforcement actions, which could include civil or criminal penalties. Transferring and managing protected health information will become more challenging as new laws and regulations are enacted, and Abbott expects there will be increasing regulatory complexity in this area.

        Abbott expects debate to continue during 2014 at all government levels worldwide over the marketing, availability, method of delivery, and payment for health care products and services, as well as data privacy and security. Abbott believes that future legislation and regulation in the markets it serves could affect access to health care products and services, increase rebates, reduce prices or reimbursements or the rate of price increases for health care products and services, change health care delivery systems, create new fees and obligations for the pharmaceutical, nutrition, diagnostic, and medical device industries, or require additional reporting and disclosure. It is not possible to predict the extent to which Abbott or the health care industry in general might be affected by the matters discussed above.


INTERNATIONAL OPERATIONS

        As discussed in greater detail in the section captioned, "Narrative Description of Business," Abbott markets products worldwide through affiliates and distributors. Most of the products discussed in the preceding sections of this report are also sold outside the United States. In addition, certain products of a local nature and variations of product lines to meet local regulatory requirements and marketing preferences are manufactured and marketed to customers outside the United States. International operations are subject to certain additional risks inherent in conducting business outside the United States, including price and currency exchange controls, changes in currency exchange rates, limitations on foreign participation in local enterprises, expropriation, nationalization, and other governmental action.


INTERNET INFORMATION

        Copies of Abbott's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through Abbott's investor relations website

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(www.abbottinvestor.com) as soon as reasonably practicable after Abbott electronically files the material with, or furnishes it to, the Securities and Exchange Commission.

        Abbott's corporate governance guidelines, outline of directorship qualifications, code of business conduct and the charters of Abbott's audit committee, compensation committee, nominations and governance committee, and public policy committee are all available on Abbott's investor relations website (www.abbottinvestor.com).

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ITEM 1A.    RISK FACTORS

        In addition to the other information in this report, the following risk factors should be considered before deciding to invest in any of Abbott's securities. Additional risks and uncertainties not presently known to Abbott, or risks Abbott currently considers immaterial, could also affect Abbott's actual results. Abbott's business, financial condition, results of operations, or prospects could be materially adversely affected by any of these risks.

Abbott may acquire other businesses, license rights to technologies or products, form alliances, or dispose of or spin-off businesses, which could cause it to incur significant expenses and could negatively affect profitability.

        Abbott may pursue acquisitions, licensing arrangements, and strategic alliances, or dispose of or spin-off some of its businesses, as part of its business strategy. Abbott may not complete these transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits. If Abbott is successful in making an acquisition, the products and technologies that are acquired may not be successful or may require significantly greater resources and investments than originally anticipated. Abbott may not be able to integrate acquisitions successfully into its existing business and could incur or assume significant debt and unknown or contingent liabilities. Abbott could also experience negative effects on its reported results of operations from acquisition or disposition-related charges, amortization of expenses related to intangibles and charges for impairment of long-term assets. These effects could cause a deterioration of Abbott's credit rating and result in increased borrowing costs and interest expense.

Abbott is subject to cost containment efforts that could cause a reduction in future revenues and operating income.

        In the United States and other countries, Abbott's businesses have experienced downward pressure on product pricing. Cost containment efforts by governments and private organizations are described in greater detail in the section captioned "Regulation." To the extent these cost containment efforts are not offset by greater patient access to health care or other factors, Abbott's future revenues and operating income will be reduced.

Abbott is subject to numerous governmental regulations and it can be costly to comply with these regulations and to develop compliant products and processes.

        Abbott's products are subject to rigorous regulation by the U.S. Food and Drug Administration (FDA) and numerous international, supranational, federal, and state authorities. The process of obtaining regulatory approvals to market a drug or medical device can be costly and time-consuming, and approvals might not be granted for future products, or additional indications or uses of existing products, on a timely basis, if at all. Delays in the receipt of, or failure to obtain approvals for, future products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues, and in substantial additional costs.

        In addition, no assurance can be given that Abbott will remain in compliance with applicable FDA and other regulatory requirements once approval or marketing authorization has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, and advertising and postmarketing reporting, including adverse event reports and field alerts due to manufacturing quality concerns. Many of Abbott's facilities and procedures and those of Abbott's suppliers are subject to ongoing regulation, including periodic inspection by the FDA and other regulatory authorities. Abbott must incur expense and spend time and effort to ensure compliance with these complex regulations. Possible regulatory actions for non-compliance could include warning letters, fines, damages, injunctions, civil penalties, recalls, seizures of Abbott's products, and criminal prosecution. These actions could result in, among other things, substantial modifications to Abbott's business practices

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and operations; refunds, recalls, or seizures of Abbott's products; a total or partial shutdown of production in one or more of Abbott's facilities while Abbott or Abbott's suppliers remedy the alleged violation; the inability to obtain future pre-market approvals or marketing authorizations; and withdrawals or suspensions of current products from the market. Any of these events could disrupt Abbott's business and have a material adverse effect on Abbott's revenues, profitability and financial condition.

Laws and regulations affecting government benefit programs could impose new obligations on Abbott, require Abbott to change its business practices, and restrict its operations in the future.

        Abbott's industry is subject to various international, supranational, federal, and state laws and regulations pertaining to government benefit program reimbursement, price reporting and regulation, and health care fraud and abuse, including anti-kickback and false claims laws, and international and individual state laws relating to pricing and sales and marketing practices. Violations of these laws may be punishable by criminal and/or civil sanctions, including, in some instances, substantial fines, imprisonment, and exclusion from participation in government health care programs, including Medicare, Medicaid, and Veterans Administration health programs in the U.S. These laws and regulations are broad in scope and they are subject to evolving interpretations, which could require Abbott to incur substantial costs associated with compliance or to alter one or more of its sales or marketing practices. In addition, violations of these laws, or allegations of such violations, could disrupt Abbott's business and result in a material adverse effect on Abbott's revenues, profitability, and financial condition.

Changes in the health care regulatory environment may adversely affect Abbott's business.

        A number of the provisions of the U.S. Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 change access to health care products and services and establish new fees for the medical device industry. Future rulemaking could increase rebates, reduce prices or the rate of price increases for health care products and services, or require additional reporting and disclosure. Abbott cannot predict the timing or impact of any future rulemaking.

The expiration or loss of patent protection and licenses may affect Abbott's future revenues and operating income.

        Many of Abbott's businesses rely on patent and trademark and other intellectual property protection. Although most of the challenges to Abbott's intellectual property have come from other businesses, governments may also challenge intellectual property protections. To the extent Abbott's intellectual property is successfully challenged, invalidated, or circumvented or to the extent it does not allow Abbott to compete effectively, Abbott's business will suffer. To the extent that countries do not enforce Abbott's intellectual property rights or to the extent that countries require compulsory licensing of its intellectual property, Abbott's future revenues and operating income will be reduced. Litigation regarding Abbott's patents and trademarks is described in the section captioned "Legal Proceedings."

Competitors' intellectual property may prevent Abbott from selling its products or have a material adverse effect on Abbott's future profitability and financial condition.

        Competitors may claim that an Abbott product infringes upon their intellectual property. Resolving an intellectual property infringement claim can be costly and time consuming and may require Abbott to enter into license agreements. Abbott cannot guarantee that it would be able to obtain license agreements on commercially reasonable terms. A successful claim of patent or other intellectual property infringement could subject Abbott to significant damages or an injunction preventing the manufacture, sale or use of affected Abbott products. Any of these events could have a material adverse effect on Abbott's profitability and financial condition.

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Abbott's research and development efforts may not succeed in developing commercially successful products and technologies, which may cause Abbott's revenue and profitability to decline.

        To remain competitive, Abbott must continue to launch new products and technologies. To accomplish this, Abbott commits substantial efforts, funds, and other resources to research and development. A high rate of failure is inherent in the research and development of new products and technologies. Abbott must make ongoing substantial expenditures without any assurance that its efforts will be commercially successful. Failure can occur at any point in the process, including after significant funds have been invested.

        Promising new product candidates may fail to reach the market or may only have limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, limited scope of approved uses, excessive costs to manufacture, the failure to establish or maintain intellectual property rights, or infringement of the intellectual property rights of others. Even if Abbott successfully develops new products or enhancements or new generations of Abbott's existing products, they may be quickly rendered obsolete by changing customer preferences, changing industry standards, or competitors' innovations. Innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursement. Abbott cannot state with certainty when or whether any of its products under development will be launched, whether it will be able to develop, license, or otherwise acquire compounds or products, or whether any products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause Abbott's products to become obsolete, causing Abbott's revenues and operating results to suffer.

New products and technological advances by Abbott's competitors may negatively affect Abbott's results of operations.

        Abbott's products face intense competition from its competitors' products. Competitors' products may be safer, more effective, more effectively marketed or sold, or have lower prices or superior performance features than Abbott's products. Abbott cannot predict with certainty the timing or impact of the introduction of competitors' products.

The manufacture of many of Abbott's products is a highly exacting and complex process, and if Abbott or one of its suppliers encounters problems manufacturing products, Abbott's business could suffer.

        The manufacture of many of Abbott's products is a highly exacting and complex process, due in part to strict regulatory requirements. Problems may arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials, natural disasters, and environmental factors. In addition, single suppliers are currently used for certain products and materials. If problems arise during the production of a batch of product, that batch of product may have to be discarded. This could, among other things, lead to increased costs, lost revenue, damage to customer relations, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products. If problems are not discovered before the product is released to the market, recall and product liability costs may also be incurred. To the extent Abbott or one of its suppliers experiences significant manufacturing problems, this could have a material adverse effect on Abbott's revenues and profitability.

Significant safety concerns could arise for Abbott's products, which could have a material adverse effect on Abbott's revenues and financial condition.

        Health care products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients. Investigators may also conduct additional, and perhaps more extensive,

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studies. If new safety issues are reported, Abbott may be required to amend the conditions of use for a product. For example, Abbott may be required to provide additional warnings on a product's label or narrow its approved intended use, either of which could reduce the product's market acceptance. If serious safety issues arise with an Abbott product, sales of the product could be halted by Abbott or by regulatory authorities. Safety issues affecting suppliers' or competitors' products also may reduce the market acceptance of Abbott's products.

        In addition, in the ordinary course of business, Abbott is the subject of product liability claims and lawsuits alleging that its products or the products of other companies that Abbott promotes have resulted or could result in an unsafe condition for or injury to patients. Product liability claims and lawsuits, safety alerts or product recalls, and other allegations of product safety or quality issues, regardless of their validity or ultimate outcome, may have a material adverse effect on Abbott's business and reputation and on Abbott's ability to attract and retain customers. Consequences may also include additional costs, a decrease in market share for the products, lower income or exposure to other claims. Product liability losses are self-insured. Product liability claims could have a material adverse effect on Abbott's profitability and financial condition.

Deterioration in the economic position and credit quality of certain countries may negatively affect Abbott's results of operations.

        Unfavorable economic conditions in certain countries may increase the time it takes to collect outstanding trade receivables. Financial instability and fiscal deficits in these countries may result in additional austerity measures to reduce costs, including health care. Deterioration in the quality of sovereign debt, including credit downgrades, could increase Abbott's collection risk where a significant amount of Abbott's receivables in these countries are with governmental health care systems.

Abbott depends on sophisticated information technology systems to operate its business and a cyber attack or other breach of these systems could have a material adverse effect on Abbott's results of operations.

        Similar to other large multi-national companies, the size and complexity of Abbott's information technology systems makes them vulnerable to a cyber attack, malicious intrusion, breakdown, destruction, loss of data privacy, or other significant disruption. Abbott's systems have been and are expected to continue to be the target of malware and other cyber attacks. Abbott has invested in its systems and the protection of its data to reduce the risk of an invasion or interruption and monitors its systems on an ongoing basis for any current or potential threats. There can be no assurance that these measures and efforts will prevent future interruptions or breakdowns that could have a significant effect on Abbott's business.

Abbott may incur operational difficulties or be exposed to claims and liabilities as a result of the separation.

        AbbVie and Abbott entered into a separation and distribution agreement and various other agreements to govern the separation of AbbVie from Abbott and the relationship between the two companies going forward. Certain of these agreements provide for the performance of services by each company for the benefit of the other for a period of time. If AbbVie is unable to satisfy its obligations under these agreements, including its indemnification obligations, Abbott could incur operational difficulties or losses. These arrangements could also lead to disputes between Abbott and AbbVie over Abbott's rights to certain shared property and rights and over the allocation of costs and revenues for products and operations.

        The separation and distribution agreement also provides for, among other things, indemnification obligations designed to make AbbVie financially responsible for substantially all liabilities that may exist relating to its business activities, whether incurred prior to or after AbbVie's separation from Abbott, as well as those obligations of Abbott assumed by AbbVie pursuant to the separation and distribution

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agreement. It is possible that a court would disregard the allocation agreed to between Abbott and AbbVie and require Abbott to assume responsibility for obligations allocated to AbbVie. Third parties could also seek to hold Abbott responsible for any of these liabilities or obligations. The indemnity rights Abbott has under the separation agreement may not be sufficient to protect Abbott. Even if Abbott is successful in obtaining indemnification, Abbott may have to bear losses temporarily. In addition, Abbott's indemnity obligations to AbbVie may be significant. These risks could negatively affect Abbott's results of operations.

There could be significant liability if the distribution of AbbVie common stock to Abbott shareholders is determined to be a taxable transaction.

        Abbott received a private letter ruling from the Internal Revenue Service (IRS) to the effect that, among other things, the separation and the distribution of AbbVie qualifies as a transaction that is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code (the Code). In addition, Abbott received an opinion from outside tax counsel to the effect that the separation and distribution qualifies as a transaction that is described in Sections 355(a) and 368(a)(1)(D) of the Code. The ruling and the opinion rely on certain facts, assumptions, representations and undertakings from Abbott and AbbVie regarding the past and future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations or undertakings are incorrect or not satisfied, Abbott and its shareholders may not be able to rely on the ruling or the opinion of tax counsel and could be subject to significant tax liabilities. Notwithstanding the receipt by Abbott of the private letter ruling from the IRS and opinion of tax counsel, the IRS could determine on audit that the separation is taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion that are not covered by the private letter ruling, or for other reasons, including as a result of certain significant changes in the share ownership of Abbott or AbbVie after the separation. If the separation is determined to be taxable for U.S. federal income tax purposes, Abbott and its shareholders that are subject to U.S. federal income tax could incur significant U.S. federal income tax liabilities.

The international nature of Abbott's business subjects it to additional business risks that may cause its revenue and profitability to decline.

        Abbott's business is subject to risks associated with doing business internationally. Sales outside of the United States make up approximately 70 percent of Abbott's net sales. Additional risks associated with Abbott's international operations include:

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Events contemplated by these risks may, individually or in the aggregate, have a material adverse effect on Abbott's revenues and profitability.

Other factors can have a material adverse effect on Abbott's future profitability and financial condition.

        Many other factors can affect Abbott's profitability and its financial condition, including:


 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This Form 10-K contains forward-looking statements that are based on management's current expectations, estimates, and projections. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "forecasts," variations of these words, and similar expressions are intended to identify these forward-looking statements. Certain factors, including but not limited to those identified under "Item 1A. Risk Factors" of this Form 10-K, may cause actual results to differ materially from current expectations, estimates, projections, forecasts, and from past results. No assurance can be made that any expectation, estimate, or projection contained in a forward-looking statement will be

14

achieved or will not be affected by the factors cited above or other future events. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments, except as required by law.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None.

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ITEM 2.    PROPERTIES

        Abbott's corporate offices are located at 100 Abbott Park Road, Abbott Park, Illinois 60064. The locations of Abbott's principal plants, as of December 31, 2013, are listed below.

Location   Segments of Products Produced
Abbott Park, Illinois   Diagnostic Products
Alajuela, Costa Rica   Vascular Products
Alcobendas, Spain   Non-Reportable
Altavista, Virginia   Nutritional Products
Anasco, Puerto Rico*   Non-Reportable
Baddi, India   Established Pharmaceutical Products
Barceloneta, Puerto Rico*   Established Pharmaceutical and Vascular Products
Beringen, Switzerland*   Vascular Products
Buenos Aires, Argentina   Established Pharmaceutical Products
Casa Grande, Arizona   Nutritional Products
Chatillon, France   Established Pharmaceutical Products
Clonmel, Ireland   Vascular Products
Columbus, Ohio   Nutritional Products
Cootehill, Ireland   Nutritional Products
Dartford, England   Diagnostic Products
Des Plaines, Illinois   Diagnostic Products
Donegal, Ireland   Non-Reportable
Fairfield, California*   Nutritional Products
Goa, India   Established Pharmaceutical Products
Granada, Spain   Nutritional Products
Hangzhou, China   Non-Reportable
Irving, Texas   Diagnostic Products
Karachi, Pakistan   Established Pharmaceutical Products
Katsuyama, Japan   Established Pharmaceutical Products
Longford, Ireland   Diagnostic Products
Menlo Park, California   Vascular Products
Milpitas, California*   Non-Reportable
Murrieta, California   Vascular Products
Neustadt, Germany   Established Pharmaceutical Products
Olst, the Netherlands   Established Pharmaceutical Products
Ottawa, Canada*   Diagnostic Products
Princeton, New Jersey*   Diagnostic Products
Redwood City, California*   Vascular Products
Rio de Janeiro, Brazil   Established Pharmaceutical Products
Singapore   Nutritional Products
Sligo, Ireland   Nutritional and Diagnostic Products
Sturgis, Michigan   Nutritional Products
Temecula, California   Vascular Products
Tlalpan, Mexico   Established Pharmaceutical Products
Uppsala, Sweden   Non-Reportable
Weesp, the Netherlands   Established Pharmaceutical Products
Wiesbaden, Germany   Diagnostic Products
Witney, England   Non-Reportable
Zwolle, the Netherlands   Nutritional Products
*
Leased property

        In addition to the above, as of December 31, 2013, Abbott had manufacturing facilities in four other locations in the United States and in six countries outside the United States. Abbott's facilities are deemed suitable and provide adequate productive capacity.

        Abbott's research and development facilities in the United States are primarily located in California, Illinois, New Jersey, and Ohio. Abbott also has research and development facilities in various other countries including China, India, Singapore, Spain, and Switzerland.

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        Except as noted, the corporate offices, and those principal plants in the United States listed above, are owned by Abbott or subsidiaries of Abbott. The remaining manufacturing plants and all other facilities are owned or leased by Abbott or subsidiaries of Abbott. There are no material encumbrances on the properties.

ITEM 3.    LEGAL PROCEEDINGS

        Abbott is involved in various claims, legal proceedings and investigations, including (as of January 31, 2014, except where noted below) those described below. While it is not feasible to predict the outcome of such pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate resolution should not have a material adverse effect on Abbott's financial position, cash flows, or results of operations.

        Seven shareholder derivative lawsuits are pending in a consolidated proceeding, In Re Abbott-Depakote Shareholder Derivative Litigation, in the United States District Court for the Northern District of Illinois against certain of Abbott's current and former directors and members of senior management. The lawsuits allege a breach of fiduciary duty in relation to certain business practices regarding the sales and marketing of Depakote. In each case, the plaintiffs request damages nominally on behalf of Abbott, attorneys' fees, and other forms of relief. In Re Abbott-Depakote Shareholder Derivative Litigation includes: Chester County Employees' Retirement Fund, Warren Pinchuck and Roy Sapir, and Jacksonville Police & Fire Pension Fund, all filed in November 2011; Louisiana Municipal Police Employees' Retirement System and Pipefitters Local Union 537 Pension Fund, both filed in December 2011; Public School Retirement System of the School District of Kansas City, Missouri, filed in January 2012; and Pipefitters Local Union No. 120 Pension Fund, filed in April 2012. On January 21, 2014, Abbott and the lead plaintiff entered into a Memorandum of Understanding in which they reached an agreement to settle. The agreement to settle is subject to court approval of a final settlement agreement. In November 2013, the Montini Family Trust and West Virginia Pipe Trades Health & Welfare Fund filed a related shareholder derivative action in the United States District Court for the Northern District of Illinois.

        In January 2008, Cordis Corporation and Wyeth filed suit against Abbott in the United States District Court for the District of New Jersey alleging that the Xience V stent infringes three patents and seeking an injunction, damages, and a determination of willful infringement. In January 2012, the court issued an order invalidating the plaintiff's patents and dismissing the case against Abbott. Cordis and Wyeth withdrew one patent from the case and in June 2012 appealed the court's order invalidating the remaining two patents. On June 26, 2013, the appeals court affirmed the district court's order invalidating the two patents, and on October 11, 2013, the appeals court denied Cordis and Wyeth's petition for rehearing or rehearing en banc. The time for further appeals has expired. In a separate action, in September 2009, Wyeth, Cordis Corporation, and Cordis LLC filed suit against Abbott in the United States District Court for the District of New Jersey alleging the Xience V (and later the Xience Prime) stent systems infringe an additional patent, and in August 2010 the plaintiffs amended their lawsuit to add a second related patent to this case. The plaintiffs in this case seek an injunction and damages. In February 2012, the court stayed the litigation pending the completion of inter partes reexamination of the two patents at issue by the United States Patent and Trademark Office and any resulting appeals.

        In December 2008, Medinol Limited (Medinol) sued Abbott in the Netherlands and in Germany asserting that certain of Abbott's coronary bare metal and all of its metal-based drug eluting stent products infringe one or more of Medinol's European and German stent design patents. In December 2009, the Dutch court found that Abbott's stents do not infringe the only patent asserted in The Netherlands. In October 2012, the Dutch appeals court affirmed. In January 2013, Medinol appealed its loss to the Dutch Supreme Court. In March 2010, a German court, which assesses questions of patent infringement, issued mixed infringement/non-infringement rulings, which both Abbott and Medinol have appealed. The infringement cases have been stayed pending further developments with respect to other Abbott-initiated actions relating to patent validity. In January 2011, a different German court, which assesses questions of

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patent invalidity, found two of the Medinol patents invalid, but concluded that the modified claims of one of Medinol's German patents were valid. The question of validity of these patents has been appealed to the Federal Supreme Court. In June 2011, Medinol asserted another, related European patent against Abbott. The question of validity of this additional patent, along with other validity questions, is subject to continued lower court proceedings. Medinol seeks damages and injunctions in The Netherlands and seeks damages in Germany.

        As previously mentioned, the Texas State Attorney General is investigating the sales and marketing activities of Abbott's biliary stent products and United States Attorney's Office for the District of Maryland is investigating the sales and marketing activities for Abbott's coronary stents products. The government is seeking to determine whether any of these activities violated civil and/or criminal laws, including the Federal False Claims Act, the Food and Drug Cosmetic Act, and the Anti-Kickback Statute in connection with Medicare and/or Medicaid reimbursement paid to third parties. An investigation by the United States Department of Justice through the United States Attorney's Office for the Eastern District of Tennessee relating to the sales and marketing activities for Abbott's biliary and carotid stents and stent related products was closed and a related qui tam case was settled and dismissed in December 2013.

        Pursuant to the separation and distribution agreement, AbbVie is responsible for certain investigations, claims and litigation matters relating to Abbott's former research-based pharmaceuticals business. In some cases, AbbVie has been substituted for Abbott, and Abbott is no longer a party to such investigations, claims and litigation matters. In addition, AbbVie has assumed the liabilities associated with, and has agreed to indemnify Abbott for any damages incurred in connection with, certain investigations, claims and litigation matters, including the following:

        Several cases are pending that generally allege that Abbott and numerous other pharmaceutical companies reported false pricing information in connection with certain drugs that are reimbursable under Medicare and Medicaid. These cases, brought by state Attorneys General, generally seek monetary damages and/or injunctive relief and attorneys' fees. The following previously reported cases have been settled: Commonwealth of Kentucky, filed in September 2003 in the Circuit Court of Franklin County, Kentucky; and State of Louisiana, filed in October 2010 in the Nineteenth Judicial District, Parish of Baton Rouge, Louisiana. The following cases are pending in state courts: State of Wisconsin, filed in June 2004 in the Circuit Court of Dane County, Wisconsin; and State of Illinois, filed in February 2005 in the Circuit Court of Cook County, Illinois. These cases are no longer material to Abbott, and Abbott will no longer report on these cases.

        In April 2012, Roxane Laboratories, Inc. (Roxane) filed a declaratory judgment action in the United States District Court for the Southern District of Ohio alleging that two Abbott patents (which were contributed to AbbVie in connection with the separation of the research-based pharmaceuticals business) relating to ritonavir tablets (a drug AbbVie sells under the trademark Norvir®) are invalid and not infringed by Roxane proposed generic product. In November 2012, Roxane filed an amended declaratory judgment complaint in the United States District Court for the Southern District of Ohio, naming AbbVie as a defendant along with Abbott. This case is no longer material to Abbott, and Abbott will no longer report on this case.

ITEM 4.    MINE SAFETY DISCLOSURES

        Not applicable.

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 EXECUTIVE OFFICERS OF THE REGISTRANT

        Executive officers of Abbott are elected annually by the board of directors. All other officers are elected by the board or appointed by the chairman of the board. All officers are either elected at the first meeting of the board of directors held after the annual shareholder meeting or appointed by the chairman after that board meeting. Each officer holds office until a successor has been duly elected or appointed and qualified or until the officer's death, resignation, or removal. Vacancies may be filled at any time by the board. Any officer may be removed by the board of directors when, in its judgment, removal would serve the best interests of Abbott. Any officer appointed by the chairman of the board may be removed by the chairman whenever, in the chairman's judgment, removal would serve the best interests of Abbott. A vacancy in any office appointed by the chairman of the board may be filled by the chairman.

        Abbott's executive officers, their ages as of February 21, 2014, and the dates of their first election as officers of Abbott are listed below. The executive officers' principal occupations and employment for the past five years and the year of appointment to the earliest reported office are also shown. Unless otherwise stated, employment was by Abbott. There are no family relationships between any corporate officers or directors.

Miles D. White, 58

Hubert L. Allen, 48

Richard W. Ashley, 70

Brian J. Blaser, 49

John M. Capek, 52

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Thomas C. Freyman, 59

Stephen R. Fussell, 56

John C. Landgraf, 61

Michael J. Warmuth, 51

Jaime Contreras, 57

Georges H. De Vos, 54

Katherine C. Doyle, 46

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Charles D. Foltz, 53

Heather L. Mason, 53

Jean-Yves F. Pavee, 50

Murthy V. Simhambhatla, 48

J. Scott White, 46

Robert E. Funck, 52

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 PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Principal Market

        The principal market for Abbott's common shares is the New York Stock Exchange. Shares are also listed on the Chicago Stock Exchange and traded on various regional and electronic exchanges. Outside the United States, Abbott's shares are listed on the London Stock Exchange and the SIX Swiss Exchange.

 
   Market Price Per Share   Adjusted Market
Price Per
Share (1) 		 
 
   2013   2012   2012  
 
   high   low   high   low   high   low  

First Quarter

   $ 35.34   $ 31.64   $ 61.49   $ 53.96   $ 29.42   $ 25.82  

Second Quarter

     38.77     34.69     64.47     59.04     30.85     28.25  

Third Quarter

     37.16     32.70     70.41     63.51     33.69     30.39  

Fourth Quarter

     38.81     32.75     72.47     62.62     34.67     29.96  
(1)
The 2012 adjusted market prices per share reflect historical share prices that have been adjusted to reflect the separation of AbbVie.

Shareholders

        There were 57,854 shareholders of record of Abbott common shares as of December 31, 2013.

Dividends

        Abbott declared quarterly dividends of $.14 per share on common shares in the first, second, and third quarters of 2013. In the fourth quarter of 2013, Abbott declared a quarterly dividend of $.22 per share on common shares.

        Abbott declared quarterly dividends of $.51 per share on common shares in the first, second, and third quarters of 2012. In the fourth quarter of 2012, Abbott declared a quarterly dividend of $.14 per share on common shares, reflecting the impact of the separation of AbbVie. On January 4, 2013, AbbVie reported that its board of directors had declared a quarterly dividend of $.40 per share of AbbVie common stock.

        On January 1, 2013, Abbott distributed the issued and outstanding common stock of AbbVie to Abbott's shareholders. Abbott's shareholders of record as of the close of business on December 12, 2012, the record date for the distribution, received one share of AbbVie common stock for each Abbott common share held as of the record date. Abbott shareholders received cash in lieu of any fractional shares of AbbVie common stock.

Tax Information for Shareholders

        In 2001, the Illinois Department of Commerce and Economic Opportunity designated Abbott as an Illinois High Impact Business ("HIB") for a period not to exceed twenty years. Dividends paid by a corporation that is designated as a HIB and conducts business in a foreign trade zone may be eligible for a subtraction from base income for Illinois income tax purposes. Abbott certified that the HIB requirements were met for the calendar year ending December 31, 2013.

        If you have any questions, please contact your tax advisor.

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Issuer Purchases of Equity Securities

Period
  (a) Total Number
of Shares
(or Units)
Purchased 		  (b) Average Price
Paid per Share
(or Unit) 		  (c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs 		  (d) Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under the
Plans or Programs 		 

October 1, 2013 — October 31, 2013

     97,509 (1) $ 37.080     0   $ 2,650,000,001 (2)

November 1, 2013 — November 30, 2013

     49,986 (1) $ 38.100     0   $ 2,650,000,001 (2)

December 1, 2013 — December 31, 2013

     1,065,953 (1) $ 38.310     1,000,000   $ 2,611,604,501 (2)

Total

     1,213,448 (1) $ 38.203     1,000,000   $ 2,611,604,501 (2)
(1)
These shares include:

(i)
the shares deemed surrendered to Abbott to pay the exercise price in connection with the exercise of employee stock options — 97,509 in October, 16,756 in November, and 22,729 in December; and

(ii)
the shares purchased on the open market for the benefit of participants in the Abbott Laboratories, Limited Employee Stock Purchase Plan — 0 in October, 33,230 in November, and 43,224 in December.

    These shares do not include the shares surrendered to Abbott to satisfy tax withholding obligations in connection with the vesting of restricted stock or restricted stock units.

(2)
On June 14, 2013, Abbott announced that its board of directors approved the purchase of up to $3 billion of its common shares, from time to time.

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ITEM 6.    SELECTED FINANCIAL DATA

 
   Year Ended December 31  
 
   2013   2012   2011   2010   2009  
 
   (dollars in millions, except per share data)
  

Net sales (1)

   $ 21,848   $ 21,494   $ 21,407   $ 19,529   $ 16,551  

Earnings from continuing operations

     2,383     579     1,126     281     975  

Net earnings

     2,576     5,963     4,728     4,626     5,746  

Basic earnings per common share from continuing operations

     1.52     0.36     0.72     0.18     0.63  

Basic earnings per common share

     1.64     3.76     3.03     2.98     3.71  

Diluted earnings per common share from continuing operations

     1.50     0.36     0.72     0.18     0.63  

Diluted earnings per common share

     1.62     3.72     3.01     2.96     3.69  

Total assets

     42,953     67,235     60,277     60,574     52,582  

Long-term debt, including current portion

     3,397     18,394     13,067     14,568     11,477  

Cash dividends declared per common share

     0.64     1.67 (2)   1.92     1.76     1.60  
(1)
Net sales for 2012 and prior years have been adjusted to reflect the presentation of Abbott's former research-based pharmaceuticals business as a discontinued operation.

(2)
The $1.67 dividend for 2012 reflects a quarterly dividend of $.14 per share in the fourth quarter of 2012, which contemplated the impact of the separation of AbbVie. On January 4, 2013, AbbVie reported that its board of directors had declared a quarterly dividend of $.40 per share of AbbVie common stock.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Review

        Abbott's revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Patent protection and licenses, technological and performance features, and inclusion of Abbott's products under a contract most impact which products are sold; price controls, competition and rebates most impact the net selling prices of products; and foreign currency translation impacts the measurement of net sales and costs. Abbott's primary products are nutritional products, branded generic pharmaceuticals, diagnostic testing products and vascular products. Sales in international markets comprise approximately 70 percent of consolidated net sales.

        In October 2011, Abbott announced a plan to separate into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals. To accomplish the separation, Abbott created a new company, AbbVie Inc. ("AbbVie") for its research-based pharmaceuticals business which consists primarily of Abbott's historical Proprietary Pharmaceutical Products segment. On January 1, 2013, Abbott distributed all of the outstanding shares of AbbVie to Abbott's shareholders and AbbVie became an independent company trading under the symbol "ABBV". The historical operating results of the research-based proprietary pharmaceuticals business prior to separation are excluded from Earnings from Continuing Operations and are presented on the Earnings from Discontinued Operations line in Abbott's Consolidated Statement of Earnings. The assets, liabilities, and cash flows of the research-based proprietary pharmaceuticals business are included in Abbott's Consolidated Balance Sheet and its Consolidated Statements of Cash Flows for periods prior to January 1, 2013.

        Sales growth and margin improvement in the nutritional and diagnostics businesses and the challenging economic and fiscal environment in many countries around the world have impacted Abbott's sales, costs and financial position over the last three years. Sales in emerging markets increased 11 percent per year in 2013 and 2012, excluding foreign exchange, despite the slowdown in several emerging economies and a weakening of key emerging market currencies in 2013. (Emerging markets include all countries except the United States, Western Europe, Japan, Canada, and Australia.)

        In Abbott's worldwide nutritional products business, sales over the last three years were positively impacted by demographics such as an aging population and an increasing rate of chronic disease in developed markets and the rise of a middle class in many emerging markets, as well as by numerous new product introductions that leveraged Abbott's strong brands. At the same time, manufacturing and distribution process changes and other cost reductions drove margin improvements across the business. Operating margins for this business increased from 13.2 percent in 2011 to 18.7 percent in 2013.

        In 2013 sales growth in International Pediatric Nutrition was affected by a product recall initiated in August 2013 in China and two other markets for certain pediatric nutritional products supplied to Abbott by a third-party manufacturer. While there were no health issues associated with the recalled products, and the supplier subsequently determined that the products had been safe for consumption, the recall created significant disruption in these markets. As a result, International Pediatric Nutrition sales were significantly lower than Abbott's previous expectations for this business for the second half of 2013. While Abbott initiated investments in the third quarter of 2013 in these markets to rebuild consumer confidence, Abbott expects the recall to continue to have a negative impact on sales in the first half of 2014.

        In Abbott's worldwide diagnostics business, margin improvement continued to be a key focus in 2013. Operating margins increased from 19.2 percent of sales in 2011 to 22.2 percent in 2013 as the business continued to execute on efficiency initiatives in the manufacturing and supply chain functions. In addition to continued margin improvement, unit growth across geographical regions positively impacted worldwide

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diagnostic sales. Worldwide sales for this business increased 8.3 percent in 2013 and 7.3 percent in 2012, excluding foreign exchange.

        In the Established Pharmaceutical Products segment, macroeconomic and market pressures in certain emerging markets impacted this business in 2013. Nevertheless, sales in this segment's 14 key emerging markets increased 6.3 percent in 2013 excluding the effect of foreign exchange. However, the growth in emerging markets was largely offset by declines in developed markets where austerity measures have continued to impact performance.

        Over the last three years in the vascular business, Abbott continued to build its Xience drug-eluting stent franchise with the receipt of approval to market Xience Xpedition in various countries, including Japanese approval in the third quarter of 2013 and U.S. approval in the fourth quarter of 2012. Xience Pro received CE Mark approval in the second quarter of 2012. Abbott's market share also benefited from the U.S. launches of Xience nano and Xience PRIME in 2011, and the Japanese launches of Xience PRIME small vessel DES in 2013 and Xience PRIME in April 2012. Xience, which includes Xience V, PRIME, nano, Pro, and Xpedition, ended 2013 as the market-leading drug eluting stent globally. In 2013, ABSORB and MitraClip also contributed to sales growth. In 2011, the third party distributor of the Promus product began transitioning away from the product and that supply agreement ended in 2012. The effect of the winding down of the agreement continued into the first quarter of 2013.

        Abbott's short- and long-term debt totaled $6.6 billion at December 31, 2013. At December 31, 2013, Abbott's long-term debt rating was A+ by Standard and Poor's Corporation and A1 by Moody's Investors Service. In the fourth quarter of 2012, Abbott extinguished $7.7 billion of long-term debt and incurred a charge of $1.35 billion related to the early repayment, net of gains from the unwinding of interest rate swaps related to the debt. In October 2013 Abbott announced a 57 percent increase in Abbott's quarterly dividend to $0.22 per share from $0.14 per share, effective with the dividend paid in February 2014.

        In 2014, Abbott will focus on several key initiatives. In the nutritional business, Abbott will continue to build its product portfolio with the introduction of new science-based products, expand in high-growth emerging markets and implement additional margin improvement initiatives. In the established pharmaceuticals business, Abbott will continue to focus on obtaining additional product approvals across numerous countries and expanding its presence in emerging markets. In the diagnostics business, Abbott will focus on the development of next-generation instrument platforms and other advanced technologies, expansion in emerging markets, and further improvements in the segment's operating margin. In the vascular business, Abbott will continue to focus on marketing products in the Xience and endovascular franchises, and increasing MitraClip sales, as well as further clinical development of ABSORB, its bioresorbable vascular scaffold (BVS) device and a further penetration of ABSORB in numerous countries. In Abbott's other segments, Abbott will focus on developing differentiated technologies in higher growth markets.

Critical Accounting Policies

        Sales Rebates —  In 2013, approximately 49 percent of Abbott's consolidated gross revenues were subject to various forms of rebates and allowances that Abbott recorded as reductions of revenues at the time of sale. Most of these rebates and allowances are in the Established Pharmaceuticals and Nutritional Products segments. Abbott provides rebates to state agencies that administer the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), wholesalers, group purchasing organizations, and other government agencies and private entities. Rebate amounts are usually based upon the volume of purchases using contractual or statutory prices for a product. Factors used in the rebate calculations include the identification of which products have been sold subject to a rebate, which customer or government agency price terms apply, and the estimated lag time between sale and payment of a rebate. Using historical trends, adjusted for current changes, Abbott estimates the amount of the rebate that will be paid, and records the liability as a reduction of gross sales when Abbott records its sale of the product.

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Settlement of the rebate generally occurs from one to six months after sale. Abbott regularly analyzes the historical rebate trends and makes adjustments to reserves for changes in trends and terms of rebate programs. Rebates and chargebacks charged against gross sales in 2013, 2012 and 2011 amounted to approximately $2.0 billion, $1.9 billion and $1.7 billion, respectively, or 16.1 percent, 16.0 percent and 16.8 percent, respectively, based on gross sales of approximately $12.5 billion, $11.8 billion and $10.1 billion, respectively, subject to rebate. A one-percentage point increase in the percentage of rebates to related gross sales would decrease net sales by approximately $125 million in 2013. Abbott considers a one-percentage point increase to be a reasonably likely increase in the percentage of rebates to related gross sales. Other allowances charged against gross sales were approximately $150 million, $149 million and $117 million for cash discounts in 2013, 2012 and 2011, respectively, and $208 million, $199 million and $170 million for returns in 2013, 2012 and 2011, respectively. Cash discounts are known within 15 to 30 days of sale, and therefore can be reliably estimated. Returns can be reliably estimated because Abbott's historical returns are low, and because sales returns terms and other sales terms have remained relatively unchanged for several periods.

        Management analyzes the adequacy of ending rebate accrual balances each quarter. In the domestic nutritional business, management uses both internal and external data available to estimate the level of inventory in the distribution channel. Management has access to several large customers' inventory management data, and for other customers, utilizes data from a third party that measures time on the retail shelf. These sources allow management to make reliable estimates of inventory in the distribution channel. Except for a transition period before or after a change in the supplier for the WIC business in a state, inventory in the distribution channel does not vary substantially. Management also estimates the states' processing lag time based on claims data. In addition, internal processing time is a factor in estimating the accrual. In the WIC business, the state where the sale is made, which is the determining factor for the applicable price, is reliably determinable. Estimates are required for the amount of WIC sales within each state where Abbott has the WIC business. External data sources utilized for that estimate are participant data from the U.S. Department of Agriculture (USDA), which administers the WIC program, participant data from some of the states, and internally administered market research. The USDA has been making its data available for many years. Internal data includes historical redemption rates and pricing data. At December 31, 2013, Abbott had WIC business in 23 states.

        Historically, adjustments to prior years' rebate accruals have not been material to net income. Abbott employs various techniques to verify the accuracy of claims submitted to it, and where possible, works with the organizations submitting claims to gain insight into changes that might affect the rebate amounts. For government agency programs, the calculation of a rebate involves interpretations of relevant regulations, which are subject to challenge or change in interpretation.

        Income Taxes —  Abbott operates in numerous countries where its income tax returns are subject to audits and adjustments. Because Abbott operates globally, the nature of the audit items are often very complex, and the objectives of the government auditors can result in a tax on the same income in more than one country. Abbott employs internal and external tax professionals to minimize audit adjustment amounts where possible. In accordance with the accounting rules relating to the measurement of tax contingencies, in order to recognize an uncertain tax benefit, the taxpayer must be more likely than not of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more than 50 percent likely to be realized upon resolution of the benefit. Application of these rules requires a significant amount of judgment. In the U.S., Abbott's federal income tax returns through 2010 are settled except for three items, and the income tax returns for years after 2010 are open. Abbott does not record deferred income taxes on earnings reinvested indefinitely in foreign subsidiaries.

        Pension and Post-Employment Benefits —  Abbott offers pension benefits and post-employment health care to many of its employees. Abbott engages outside actuaries to assist in the determination of the obligations and costs under these programs. Abbott must develop long-term assumptions, the most significant of which are the health care cost trend rates, discount rates and the expected return on plan

27

assets. The discount rates used to measure liabilities were determined based on high-quality fixed income securities that match the duration of the expected retiree benefits. The health care cost trend rates represent Abbott's expected annual rates of change in the cost of health care benefits and is a forward projection of health care costs as of the measurement date. A difference between the assumed rates and the actual rates, which will not be known for decades, can be significant in relation to the obligations and the annual cost recorded for these programs. Low interest rates have significantly increased actuarial losses for these plans. At December 31, 2013, pretax net actuarial losses and prior service costs and (credits) recognized in Accumulated other comprehensive income (loss) for Abbott's defined benefit plans and medical and dental plans were losses of $1.8 billion and $82 million, respectively. Actuarial losses and gains are amortized over the remaining service attribution periods of the employees under the corridor method, in accordance with the rules for accounting for post-employment benefits. Differences between the expected long-term return on plan assets and the actual annual return are amortized over a five-year period. Note 12 to the consolidated financial statements describes the impact of a one-percentage point change in the health care cost trend rate; however, there can be no certainty that a change would be limited to only one percentage point.

        Valuation of Intangible Assets —  Abbott has acquired and continues to acquire significant intangible assets that Abbott records at fair value. Transactions involving the purchase or sale of intangible assets occur with some frequency between companies in the health care field and valuations are usually based on a discounted cash flow analysis. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, the cost of capital, terminal values and market participants. Each of these factors can significantly affect the value of the intangible asset. Abbott engages independent valuation experts who review Abbott's critical assumptions and calculations for acquisitions of significant intangibles. Abbott reviews definite-lived intangible assets for impairment each quarter using an undiscounted net cash flows approach. If the undiscounted cash flows of an intangible asset are less than the carrying value of an intangible asset, the intangible asset is written down to its fair value, which is usually the discounted cash flow amount. Where cash flows cannot be identified for an individual asset, the review is applied at the lowest group level for which cash flows are identifiable. Goodwill and indefinite-lived intangible assets, which relate to in-process research and development acquired in a business combination, are reviewed for impairment annually or when an event that could result in an impairment occurs. At December 31, 2013, goodwill amounted to $9.8 billion and intangibles amounted to $5.7 billion, and amortization expense for intangible assets amounted to $791 million in 2013, $795 million in 2012 and $884 million in 2011. There were no impairments of goodwill in 2013, 2012 or 2011. In 2012 and 2011, Abbott recorded impairment charges of $69 million and $125 million, respectively, for certain research and development assets due to changes in the projected development and regulatory timelines for the projects.

        Litigation —  Abbott accounts for litigation losses in accordance with FASB Accounting Standards Codification No. 450, "Contingencies." Under ASC No. 450, loss contingency provisions are recorded for probable losses at management's best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. These estimates are often initially developed substantially earlier than the ultimate loss is known, and the estimates are refined each accounting period as additional information becomes known. Accordingly, Abbott is often initially unable to develop a best estimate of loss, and therefore the minimum amount, which could be zero, is recorded. As information becomes known, either the minimum loss amount is increased, resulting in additional loss provisions, or a best estimate can be made, also resulting in additional loss provisions. Occasionally, a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected. Abbott estimates the range of possible loss to be from approximately $70 million to $90 million for its legal proceedings and environmental exposures. Accruals of approximately $80 million have been recorded at December 31, 2013 for these proceedings and exposures. These accruals represent management's best estimate of probable loss, as defined by FASB ASC No. 450, "Contingencies."

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Results of Operations

Sales

        The following table details the components of sales growth by reportable segment for the last two years:

 
    
   Components of % Change  
 
   Total
% Change 		 
 
   Price   Volume   Exchange  

Total Net Sales

                          

2013 vs. 2012

    
1.6		    
(0.8
)		  
4.5		    
(2.1
)

2012 vs. 2011

     0.4     (0.4 )   4.0     (3.2 )

Total U.S.

    
 		    
 		    
 		    
 		  

2013 vs. 2012

    
(0.8
)		  
(1.0
)		  
0.2		    
—		  

2012 vs. 2011

     0.7     0.8     (0.1 )   —  

Total International

    
 		    
 		    
 		    
 		  

2013 vs. 2012

    
2.7		    
(0.8
)		  
6.5		    
(3.0
)

2012 vs. 2011

     0.3     (0.9 )   5.7     (4.5 )

Established Pharmaceutical Products Segment

    
 		    
 		    
 		    
 		  

2013 vs. 2012

    
(2.9
)		  
(0.4
)		  
1.1		    
(3.6
)

2012 vs. 2011

     (4.4 )   (1.3 )   3.4     (6.5 )

Nutritional Products Segment

    
 		    
 		    
 		    
 		  

2013 vs. 2012

    
4.3		    
3.2		    
2.2		    
(1.1
)

2012 vs. 2011

     7.9     4.5     4.4     (1.0 )

Diagnostic Products Segment

    
 		    
 		    
 		    
 		  

2013 vs. 2012

    
5.9		    
(2.5
)		  
10.8		    
(2.4
)

2012 vs. 2011

     4.0     (1.4 )   8.7     (3.3 )

Vascular Products Segment

    
 		    
 		    
 		    
 		  

2013 vs. 2012

    
(1.9
)		  
(6.2
)		  
6.2		    
(1.9
)

2012 vs. 2011

     (7.9 )   (5.2 )   (0.4 )   (2.3 )

        The increases in Total Net Sales in 2013 and 2012 reflect unit growth, partially offset by the impact of unfavorable foreign exchange. The price declines related to Vascular Products sales in 2013 and 2012 primarily reflect pricing pressure on drug eluting stents and other coronary products as a result of market competition in major markets.

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        A comparison of significant product and product group sales is as follows. Percent changes are versus the prior year and are based on unrounded numbers.

 
   2013   Percent
Change 		  2012   Percent
Change 		 
 
   (dollars in millions)
  

Total Established Pharmaceuticals

                          

Key Emerging Markets

  
$
2,358		    
1		  
$
2,324		    
4		  

Other Markets

     2,616     (7 )   2,797     (10 )

Nutritionals —

    
 		    
 		    
 		    
 		  

International Pediatric Nutritionals

    
2,257		    
9		    
2,075		    
8		  

U.S. Pediatric Nutritionals

     1,508     —     1,505     14  

International Adult Nutritionals

     1,601     8     1,489     4  

U.S. Adult Nutritionals

     1,374     (1 )   1,392     6  

Diagnostics —

    
 		    
 		    
 		    
 		  

Immunochemistry

    
3,458		    
5		    
3,279		    
4		  

Vascular Products (1) —

    
 		    
 		    
 		    
 		  

Drug Eluting Stents (DES) and Bioresorbable Vascular Scaffold (BVS) products

     1,563     (2 )   1,599     3  

Other Coronary Products

     579     (3 )   598     (1 )

Endovascular

     475     5     452     1  
(1)
Other Coronary Products include primarily guidewires and balloon catheters. Endovascular includes vessel closure, carotid stents and other peripheral products.

        Excluding the unfavorable effect of exchange, total Established Pharmaceutical Products sales increased 0.7 percent in 2013 and 2.1 percent in 2012. The Established Pharmaceutical Products segment is focused on 14 key emerging markets including India, Russia, China and Brazil. Excluding the effect of exchange, sales in these 14 key emerging markets increased 6.3 percent in 2013 and 12.8 percent in 2012 as macroeconomic and market pressures in various emerging markets negatively affected 2013 growth. Excluding the effect of exchange, sales in Established Pharmaceuticals' other markets decreased 4 percent in 2013 and 5.6 percent in 2012. These declines in the Other Markets category reflect unfavorable market conditions, including the continued effects of European austerity measures and 2012 Japanese pricing actions.

        Excluding the unfavorable effect of exchange, total Nutritional Products sales increased 5.4 percent in 2013 and 8.9 percent in 2012. International Pediatric Nutritional sales increased in 2013 and 2012 due primarily to volume growth in developing countries. A supplier's recall of product in August 2013 in certain international markets negatively impacted International Pediatric Nutritional sales in the third and fourth quarters of 2013. While there were no health issues associated with this supplier recall and the supplier subsequently determined that the product had been safe for consumption, this event created significant disruption in these markets. Abbott expects this sales disruption to continue to negatively impact International Pediatric Nutritional growth in the first half of 2014. U.S. Pediatric sales were flat in 2013 due to lower formula share, partially offset by higher shipments of toddler products. U.S. Pediatric Nutritional sales in 2012 reflect market share gains for Similac and unit growth for PediaSure.

        The 2013 and 2012 increases in International Adult Nutritional sales are due primarily to volume growth in developing countries and were negatively impacted by the effect of the relatively stronger U.S. dollar. The 1 percent decline in 2013 U.S. Adult Nutritional sales reflects Abbott's exit from certain non-core business lines as part of the business' margin improvement initiative; most of the sales decline

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resulting from this exit was offset by higher Ensure revenues. The increase in 2012 U.S. Adult Nutritional sales reflects unit growth for the Ensure and Glucerna products.

        Excluding the unfavorable effect of exchange, total Diagnostic Products sales increased 8.3 percent in 2013 and 7.3 percent in 2012. The sales increases reflect unit growth across geographical regions. 2013 and 2012 sales of immunochemistry products, the largest category in this segment, reflect continued execution of Abbott's strategy to deliver integrated solutions to large healthcare customers.

        Excluding the unfavorable effect of exchange, total Vascular Products sales were flat in 2013 and decreased 5.6 percent in 2012. In 2013, growth in international markets, driven by continued share gains in key geographies of XIENCE Xpedition and Absorb, was offset by declines in the U.S. market due to the negative impact of pricing pressure and a decline in procedures due to market conditions, as well as the expected decline of certain royalty revenues. In 2012, the decrease in Vascular Products sales was due to pricing pressure, as well as the expected winding down of royalty and supply agreements related to certain third-party products, including Promus. Excluding this royalty and supply agreement revenue in both periods and the unfavorable effect of exchange, Vascular Products sales increased 3.4 percent in 2012.

        Abbott has periodically sold product rights to non-strategic products and has recorded the related gains in net sales in accordance with Abbott's revenue recognition policies as discussed in Note 1 to the consolidated financial statements. Related net sales were not significant in 2013, 2012 and 2011.

        The expiration of licenses and patent protection can affect the future revenues and operating income of Abbott. There are currently no significant patent or license expirations in the next three years that are expected to affect Abbott.

Operating Earnings

        Gross profit margins were 50.4 percent of net sales in 2013, 50.6 percent in 2012 and 49.1 percent in 2011. The gross profit margin in 2013 remained relatively unchanged versus the prior year as improved margins in the Nutritional and Diagnostics Products segments were offset by margin declines in Established Pharmaceuticals and Vascular Products due to pricing pressures and unfavorable product mix as well as the impact of unfavorable foreign exchange across segments. The increase in the gross profit margin in 2012 was impacted by improved gross margins across all reportable segments as a result of cost reduction initiatives, the impact of exchange and favorable product mix.

        In the U.S., states receive price rebates from manufacturers of infant formula under the federally subsidized Special Supplemental Nutrition Program for Women, Infants, and Children. There are also rebate programs for pharmaceutical products in numerous countries. These rebate programs continue to have a negative effect on the gross profit margins of the Nutritional and Established Pharmaceutical Products segments.

        Research and development expense was $1.452 billion in 2013, $1.544 billion in 2012 and $1.512 billion in 2011 and represented a 6.0 percent decrease in 2013, and a 2.1 percent increase in 2012. The 2013 decrease primarily reflects the incurrence of restructuring and asset impairment charges in 2012 which did not recur in 2013. In 2013, research and development expenditures totaled $336 million for the Vascular Products segment, $416 million for the Diagnostics Products segment, $239 million for the Established Pharmaceutical Products segment and $188 million for the Nutritional Products segment.

        Selling, general and administrative expenses decreased 6.8 percent in 2013 and increased 1.1 percent in 2012. The 2013 decrease reflects the transfer of certain 2012 corporate costs to AbbVie in the separation as well as certain information technology and other back office support costs that are being charged to AbbVie in 2013 under transition services agreements. Prudent cost management and a reduction in restructuring costs also contributed to the decrease. The 2012 increase primarily reflects increased selling and marketing support for new products and geographical expansion, largely offset by prudent cost management.

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Business Acquisitions

        In August 2013, Abbott acquired 100 percent of IDEV Technologies, net of debt, for $310 million, in cash. The acquisition of IDEV Technologies expands Abbott's endovascular portfolio. The allocation of the fair value of the acquisition resulted in non-deductible acquired in-process research and development of approximately $170 million which is accounted for as an indefinite-lived intangible asset until regulatory approval or discontinuation, non-deductible definite-lived intangible assets of approximately $66 million, non-deductible goodwill of approximately $123 million and net deferred tax liabilities of $56 million. Acquired intangible assets consist of developed technology and are being amortized over 11 years.

        In August 2013, Abbott acquired 100 percent of OptiMedica for $260 million, in cash, plus additional payments up to $150 million to be made upon completion of certain development, regulatory and sales milestones. The acquisition of OptiMedica provides Abbott with an immediate entry point into the laser assisted cataract surgery market. The allocation of the fair value of the acquisition resulted in non-deductible definite-lived intangible assets of approximately $160 million, non-deductible acquired in-process research and development of approximately $60 million which is accounted for as an indefinite-lived intangible asset until regulatory approval or discontinuation, non-deductible goodwill of approximately $151 million, net deferred tax liabilities of $70 million and contingent consideration of approximately $70 million. The fair value of the contingent consideration was determined based on an independent appraisal. Acquired intangible assets consist primarily of developed technology that is being amortized over 18 years.

        The preliminary allocations of the fair value of these acquisitions will be finalized when valuations are completed. Had the above acquisitions taken place on January 1 of the previous year, consolidated net sales and income would not have been significantly different from reported amounts.

Restructurings

        In 2013, Abbott management approved a plan to reduce costs and improve efficiencies across various functional areas as well as a plan to streamline certain manufacturing operations in order to reduce costs and improve efficiencies in Abbott's established pharmaceuticals business. In 2012, Abbott management approved plans to streamline various commercial operations in order to reduce costs and improve efficiencies in Abbott's core diagnostics, established pharmaceutical and nutritionals businesses. Abbott recorded employee related severance charges of approximately $78 million in 2013 and $167 million in 2012. Additional charges of approximately $4 million and $22 million were also recorded in 2013 and 2012, respectively, primarily for asset impairments. Approximately $35 million in 2013 and $70 million in 2012 is recorded in Cost of products sold and approximately $47 million in 2013 and $119 million in 2012 is recorded as Selling, general and administrative expense.

        In 2013 and prior years, Abbott management approved plans to realign its worldwide pharmaceutical and vascular manufacturing operations and selected domestic and international commercial and research and development operations in order to reduce costs. In 2013, Abbott recorded employee severance charges of approximately $11 million. In 2011, Abbott recorded charges of approximately $194 million reflecting the impairment of manufacturing facilities and other assets, employee severance and other related charges. Approximately $11 million in 2013 and $18 million in 2011 is classified as Cost of products sold. The remaining 2011 charge of $176 million related to businesses transferred to AbbVie and is being recognized in the results of discontinued operations. An additional $41 million, $110 million and $25 million were recorded in 2013, 2012 and 2011, respectively, relating to these restructurings, primarily for accelerated depreciation.

        In 2012, Abbott recorded a charge of approximately $150 million for employee severance and contractual obligations, primarily related to the exit from a research and development facility. These charges related to businesses transferred to AbbVie and have been recognized in the results of discontinued operations.

32

        In 2011, Abbott management approved plans to streamline global manufacturing operations, reduce overall costs, and improve efficiencies in Abbott's core diagnostic business. In 2011, a charge of $28 million was recorded in Cost of products sold. In addition, charges of approximately $16 million and $42 million were recorded in 2012 and 2011, primarily for accelerated depreciation and product transfer costs.

Interest expense

        In 2013, interest expense decreased due to a lower level of borrowings, which resulted from the transfer of approximately $14.6 billion of debt to AbbVie as part of the separation. In 2012, interest expense included bridge facility fees related to the separation of AbbVie from Abbott.

Change in Accounting Principle and Other (income) expense, net

        Prior to January 1, 2011, the accounts of foreign subsidiaries were consolidated based on a fiscal year ended November 30 due to the time needed to consolidate these subsidiaries. Effective January 1, 2011, the one month lag in the consolidation of the accounts of foreign subsidiaries was eliminated and the year-end of foreign subsidiaries was changed to December 31. Abbott believes that the change in accounting principle related to the elimination of the one month reporting lag is preferable because it results in more contemporaneous reporting of the results of foreign subsidiaries. In accordance with applicable accounting literature, a change in subsidiaries' year-end is treated as a change in accounting principle and requires retrospective application. A charge of $100 million was recorded to Other (income) expense, net in 2011 to recognize the cumulative immaterial impacts to 2009 and 2010.

        Other (income) expense, net, for 2013 includes gains on sales of investments; 2012 includes income of approximately $40 million from the resolution of a contractual agreement.

Net Loss on Extinguishment of Debt

        In 2012, Abbott extinguished $7.7 billion of long-term debt and incurred a cost of $1.35 billion to extinguish this debt, net of gains from the unwinding of interest rate swaps related to the debt.

Taxes on Earnings

        The income tax rates on earnings from continuing operations were 5.5 percent in 2013, (89.7) percent in 2012 and 8.9 percent in 2011. 2013 taxes on earnings from continuing operations include $234 million of tax benefit related to the resolution of various tax positions from previous years. In addition, as a result of the American Taxpayer Relief Act of 2012 signed into law in January 2013, Abbott recorded a tax benefit to taxes on continuing operations of approximately $103 million in 2013 for the retroactive extension of the research tax credit and the look-through rules of section 954(c)(6) of the Internal Revenue Code to the beginning of 2012. Taxes on earnings from continuing operations in 2012 reflect the $472 million effect of the tax rate applied to Abbott's net debt extinguishment loss, as well as the recognition of $212 million of tax benefits as a result of the favorable resolution of various tax positions pertaining to a prior year. Taxes on earnings from continuing operations in 2011 reflect the recognition of $168 million of tax benefits as a result of the favorable resolution of various tax positions pertaining to prior years. Exclusive of these discrete items, the effective rates are lower than the U.S. federal statutory rate of 35 percent due primarily to the benefit of lower tax rates and tax exemptions on foreign income that reduced the tax rates by 18.0, 75.7, and 14.9 percentage points in 2013, 2012 and 2011, respectively. The tax rate reductions are primarily derived from operations in Puerto Rico, Switzerland, Ireland and Singapore where Abbott benefits from a combination of favorable statutory tax rules, tax rulings, grants, and exemptions. See Note 13 to the consolidated financial statements for a full reconciliation of the effective tax rate to the U.S. federal statutory rate.

        In 2014 Abbott expects to repatriate approximately $2 billion of 2014 earnings generated outside the U.S. Abbott also expects to be able to accelerate the utilization of deferred tax assets and thereby reduce

33

the cash taxes due in the U.S. on this repatriation to no more than $150 million. This repatriation is projected to result in approximately $550 to $600 million of additional tax expense in Abbott's 2014 Statement of Earnings. Excluding the tax effect of this repatriation, Abbott expects to apply an annual effective rate of approximately 19 percent to 2014 results.

Separation of AbbVie Inc.

        On November 28, 2012, Abbott's board of directors declared a special dividend distribution of all of the outstanding shares of common stock of AbbVie Inc. (AbbVie), the company formed to hold Abbott's research-based proprietary pharmaceuticals business. For each Abbott common share held at the close of business on December 12, 2012, Abbott shareholders received one share of AbbVie stock on January 1, 2013. Abbott has received a ruling from the Internal Revenue Service that the separation qualifies as a tax-free distribution to Abbott and its U.S. shareholders for U.S. federal income tax purposes.

        The historical operating results of the research-based proprietary pharmaceuticals business prior to separation are excluded from Earnings from Continuing Operations and are presented on the Earnings from Discontinued Operations line. Discontinued operations include the results of AbbVie's business except for certain corporate overhead costs and certain costs associated with transition services that will be provided by Abbott to AbbVie. Discontinued operations also include other costs incurred by Abbott to separate AbbVie as well as an allocation of interest assuming a uniform ratio of consolidated debt to equity for all of Abbott's historical operations. The assets, liabilities, and cash flows of the research-based proprietary pharmaceuticals business are included in Abbott's Consolidated Balance Sheet and its Consolidated Statements of Cash Flows for periods prior to January 1, 2013.

        The following is a summary of the assets and liabilities transferred to AbbVie as part of the separation on January 1, 2013: (in billions)

Assets:

        

Cash and cash equivalents

   $ 5.9  

Investments

     2.2  

Trade receivables, less allowances

     3.2  

Inventories

     0.7  

Prepaid expenses, deferred income taxes, and other current receivables

     2.9  

Net property and equipment

     2.2  

Intangible assets, net of amortization

     2.3  

Goodwill

     6.1  

Deferred income taxes and other assets

     1.1  
       
​ ​ ​ ​ ​

    26.6  
       
​ ​ ​ ​ ​

Liabilities:

        

Short-term borrowings

     1.0  

Trade accounts payable and other current liabilities

     5.2  

Long-term debt

     14.6  

Post-employment obligations, deferred income taxes and other long-term liabilities

     3.1  
       
​ ​ ​ ​ ​

    23.9  
       
​ ​ ​ ​ ​

Net Assets Transferred to AbbVie Inc. 

   $ 2.7  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        In addition, approximately $1 billion of accumulated other comprehensive losses, net of income taxes, primarily related to the pension and other benefit plan net liabilities as well as foreign translation was transferred to AbbVie.

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        In 2013, discontinued operations includes a favorable adjustment to tax expense of $193 million as a result of the resolution of various tax positions pertaining to 2010 related to AbbVie's operations. Summarized financial information for discontinued operations for 2012 and 2011 is as follows:

 
   Year Ended December 31  
(in millions)
   2012   2011  

Net sales

   $ 18,380   $ 17,444  

Earnings before taxes

     5,958     3,963  

Taxes on earnings

     574     361  

Net earnings

     5,384     3,602  

        Abbott and AbbVie entered into transitional services agreements prior to the separation pursuant to which Abbott and AbbVie are providing various services to each other on an interim transitional basis. Transition services may be provided for up to 24 months with an option for a one-year extension by the recipient. Services being provided by Abbott include certain information technology and back office support. Billings by Abbott under these transitional services agreements are recorded as a reduction of the costs to provide the respective service in the applicable expense category in the Consolidated Statement of Earnings. This transitional support will enable AbbVie to establish its stand-alone processes for various activities that were previously provided by Abbott and does not constitute significant continuing support of AbbVie's operations.

        For a small portion of AbbVie's operations, the legal transfer of AbbVie's assets (net of liabilities) did not occur with the separation of AbbVie on January 1, 2013 due to the time required to transfer marketing authorizations and other regulatory requirements in each of these countries. Under the terms of the separation agreement with Abbott, AbbVie is subject to the risks and entitled to the benefits generated by these operations and assets. The majority of these operations were transferred to AbbVie in 2013 with the remainder expected to be transferred in 2014. These assets and liabilities have been presented as held for disposition in the Consolidated Balance Sheet. At December 31, 2013, the assets and liabilities held for disposition consist of inventories of $243 million, trade accounts receivable of $163 million, other current assets of $32 million, equipment of $28 million, other assets of $38 million, trade accounts payable and accrued liabilities of $386 million and other liabilities of $7 million. Abbott's obligation to transfer the net assets held for disposition to AbbVie of $111 million is included in Other accrued liabilities.

        Abbott has retained all liabilities for all U.S. federal and foreign income taxes on income prior to the separation, as well as certain non-income taxes attributable to AbbVie's business. AbbVie generally will be liable for all other taxes attributable to its business. In connection with the separation, Abbott has adjusted its employee stock compensation awards and separated its defined benefit programs for pensions and post-employment medical and dental benefit plans. See notes 8 and 12 for additional information.

Research and Development Programs

        Abbott currently has numerous pharmaceutical, medical device, diagnostic and nutritional products in development.

Research and Development Process

        In the Established Pharmaceuticals segment, the development process focuses on the geographic expansion and continuous improvement of the segment's existing products to provide benefits to patients and customers. As Established Pharmaceuticals does not actively pursue primary research, development usually begins with work on existing products or after the acquisition of an advanced stage licensing opportunity.

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        Depending upon the product, the phases of development may include:

        The specific requirements (e.g. scope of clinical trials) for obtaining regulatory approval vary across different countries and geographic regions. The process may range from one year for a bioequivalence study project to 6 or more years for complex formulations, new indications, or geographic expansion in specific countries such as China.

        In the Diagnostics segment, the phases of the research and development process include:

        The regulatory requirements for diagnostic products vary across different countries and geographic regions. In the U.S., the FDA classifies diagnostic products into classes (I, II, or III) and the classification determines the regulatory process for approval. While the Diagnostics segment has products in all three classes, the vast majority of its products are categorized as Class I or Class II. Submission of a separate regulatory filing is not required for Class I products. Class II devices typically require pre-market notification to the FDA through a regulatory filing known as a 510(k) submission. Most Class III products are subject to the FDA's Pre-Marketing Approval (PMA) requirements. Other Class III products, such as those used to screen blood, require the submission and approval of a Biological License Application (BLA).

        In the EU, diagnostic products are also categorized into different categories and the regulatory process, which is governed by the European InVitro Diagnostic Medical Device Directive, depends upon the category. Certain product categories require review and approval by an independent company, known as a Notified Body, before the manufacturer can affix a CE mark to the product to show compliance with the Directive. Other products only require a self-certification process.

        In the Vascular segment, the research and development process begins with research on a specific technology that is evaluated for feasibility and commercial viability. If the research program passes that hurdle, it moves forward into development. The development process includes evaluation and selection of a product design, completion of clinical trials to test the product's safety and efficacy, and validation of the manufacturing process to demonstrate its repeatability and ability to consistently meet pre-determined specifications.

        Similar to the diagnostic products discussed above, in the U.S., vascular products are classified as Class I, II, or III. Most of Abbott's vascular products are classified as Class II devices that follow the 510(k) regulatory process or Class III devices that are subject to the PMA process.

36

        In the EU, vascular products are also categorized into different classes and the regulatory process, which is governed by the European Medical Device Directive, varies by class. Each product must bear a CE mark to show compliance with the Directive. Some products require submission of a design dossier to the appropriate regulatory authority for review and approval prior to CE marking of the device. For other products, the company is required to prepare a technical file which includes testing results and clinical evaluations but can self-certify its ability to apply the CE mark to the product. Outside the U.S. and the EU, the regulatory requirements vary across different countries and regions.

        After approval and commercial launch of some vascular products, post-market trials may be conducted either due to a conditional requirement of the regulatory market approval or with the objective of proving product superiority.

        In the Nutritional segment, the research and development process generally focuses on identifying and developing ingredients and products that address the nutritional needs of particular populations (e.g., infants, athletes) or patients (e.g., people with diabetes). Depending upon the country and/or region, if claims regarding a product's efficacy will be made, clinical studies typically must be conducted. Most other product development, such as a product form change from liquid to powder, generally does not necessitate clinical studies.

        In the U.S., the FDA requires that it be notified of proposed new formulations and formulation or packaging changes related to infant formula products. Prior to the launch of an infant formula or product packaging change, the company is required to obtain the FDA's confirmation that it has no objections to the proposed product or packaging. For other nutrition products, notification or pre-approval from the FDA is not required unless the product includes a new food additive. In some countries, regulatory approval may be required for certain nutritional products, including infant formula and medical nutritional products.

Areas of Focus

        In 2014 and beyond, Abbott's significant areas of therapeutic focus will include the following:

Established Pharmaceuticals — Abbott is actively working on development plans for about 20 - 30 key brands. Depending on the product, the development activities focus on new data, markets, formulations, combinations, or indications. Abbott focuses on building country-specific portfolios made up of global and local pharmaceutical brands that best meet each local market's needs. Over the next several years, Established Pharmaceuticals will work to expand its product portfolio in its key markets through further geographic expansion of existing brands, new product enhancements, and strategic licensing activities.

Vascular — Ongoing projects in the pipeline include:

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Medical Optics — Abbott is developing a number of new products for patients undergoing cataract surgery, which are designed to improve physician efficiency and patient outcomes. In 2013 Abbott's Tecnis Toric monofocal intraocular lens, which combines the optical qualities of the Tecnis design with astigmatism correction, was approved in the U.S., China and Japan. In addition, a preloaded version of the Tecnis 1 piece monofocal IOL was approved in the U.S., Canada and India and a preloaded version of the Tecnis 1 piece multifocal IOL was approved in Canada, Europe and Japan. Preloaded technology enables insertion of the Tecnis 1 piece IOL with an easy to use, disposable insertion system. Other products that received regulatory approval in Japan included the Tecnis OptiBlue monofocal IOL in a standard cartridge insertion system as well as the preloaded version. The iDesign advanced vision diagnostic and LASIK treatment planning system, previously approved in Europe in 2012, received approval in Canada and a number of Latin American and Asian countries. In 2014, Abbott plans to continue to work to introduce new products, including the launch of new pre-loaded IOLs, which are designed to improve the ease of use for the cataract surgeon.

Molecular Diagnostics — Various new molecular in vitro diagnostic (IVD) products, including oncology and infectious disease assays and a next generation instrument system are in various stages of development and commercialization. Abbott's companion diagnostic test for an ALK gene rearrangement test for non-small-cell lung cancer has been approved in more than 69 countries around the world and now includes options for automated processing and image analysis. Abbott's companion diagnostic program continues to expand and includes collaborative efforts with multiple major pharmaceutical companies. An automated assay to genotype HCV-infected patients to aid in the choice of an appropriate therapy was approved by the FDA. In addition, automated IVD assays for Flu A/B/RSV, C.difficle, and VanR were launched in many countries around the world. Assays for infectious diseases including MTB and MTB drug resistance and for oncology including KRAS and BRAF mutation detection are in development.

Core Laboratory Diagnostics — Abbott is working on the development of next-generation blood screening, hematology, and immunochemistry instrument systems, as well as assays in various areas including infectious disease, cardiac care, metabolics, oncology, and automation solutions to increase efficiency in laboratories.

Diabetes Care — In the third quarter of 2013, Abbott received CE Mark in Europe for its FreeStyle Precision Neo monitoring system, a new icon-driven system with visual glucose trend indicators and insulin

38

logging. In the second half of 2013, Abbott received both CE Mark in Europe and FDA approval for Precision Pro, a hospital glucose monitoring system which provides improved accuracy and dual-band wireless access to immediate test results. Abbott is also developing a new sensor based system that it expects to submit for approval in Europe in 2014.

Nutrition — Abbott is focusing its research and development spend on six benefit platforms that span the pediatric, adult and performance nutrition areas: immunity, cognition, lean body mass, inflammation, metabolism and tolerance. Numerous new products that build on advances in these benefit platforms are currently under development, including clinical outcome testing, and are expected to be launched over the coming years.

        Given the diversity of Abbott's business, its intention to remain a broad-based healthcare company and the numerous sources for potential future growth, no individual project is expected to be material to cash flows or results of operations over the next five years. Factors considered included research and development expenses projected to be incurred for the project over the next year relative to Abbott's total research and development expenses as well as qualitative factors, such as marketplace perceptions and impact of a new product on Abbott's overall market position. There were no delays in Abbott's 2013 research and development activities that are expected to have a material impact on operations.

        While the aggregate cost to complete the numerous projects currently in development is expected to be material, the total cost to complete will depend upon Abbott's ability to successfully complete each project, the rate at which each project advances, and the ultimate timing for completion. Given the potential for significant delays and the high rate of failure inherent in the development of pharmaceutical and medical device products and technologies, it is not possible to accurately estimate the total cost to complete all projects currently in development. Abbott plans to manage its portfolio of projects to achieve research and development spend equal to approximately 6 percent to 7 percent of sales each year. Abbott does not regularly accumulate or make management decisions based on the total expenses incurred for a particular development phase in a given period.

Goodwill

        At December 31, 2013, goodwill recorded as a result of business combinations totaled $9.8 billion. Goodwill is reviewed for impairment annually in the third quarter or when an event that could result in an impairment occurs. The results of the last impairment test indicated that the fair value of each reporting unit was substantially in excess of its carrying value except for the Medical Optics unit. While the fair value of the Medical Optics business exceeds its carrying value, extended economic pressure on government-reimbursed cataract procedures in Europe and on the global LASIK surgery business as well as longer regulatory approval timelines for products currently under development, the integration of OptiMedica and the negative impact of foreign currency movements could result in a valuation in the future where the fair value of the Medical Optics unit has declined below its carrying value, thereby triggering the requirement to estimate the implied fair value of the goodwill and measure for impairment.

Financial Condition

Cash Flow

        Net cash from operating activities amounted to $3.3 billion, $9.3 billion and $9.0 billion in 2013, 2012 and 2011, respectively. The decrease in Net cash from operating activities in 2013 was due to the separation of AbbVie on January 1, 2013. Net cash from operating activities in 2013 reflects approximately $435 million of one-time net cash outflows related to the separation of AbbVie and $724 million of contributions to defined benefit pension plans. The income tax component of operating cash flow in 2013, 2012 and 2011 includes $427 million, $408 million and $580 million, respectively, of noncash tax benefits related to the favorable resolution of various tax positions pertaining to prior years and 2013 also includes a $103 million tax benefit for the retroactive impact of U.S. tax law changes, which is expected to be

39

realized in future years. Trade accounts payable and other liabilities in Net cash from operating activities in 2012 includes the payment of approximately $1.5 billion related to a litigation accrual recorded in 2011 related to the business operations of AbbVie. This was partially offset by increases in other liabilities, primarily restructuring reserves.

        While substantially all cash and cash equivalents at December 31, 2013, 2012 and 2011 is considered reinvested indefinitely in foreign subsidiaries, Abbott does not expect such reinvestment to affect its liquidity and capital resources. If these funds were needed for operations in the U.S., Abbott would be required to accrue and pay U.S. income taxes to repatriate these funds. Abbott believes that it has sufficient sources of liquidity to support its assumption that the disclosed amount of undistributed earnings at December 31, 2013 can be considered to be reinvested indefinitely.

        Abbott funded $724 million in 2013, $379 million in 2012 and $394 million in 2011 to defined benefit pension plans. Abbott expects pension funding of approximately $400 million in 2014 for its pension plans, of which approximately $300 million relates to its main domestic pension plans. Abbott expects annual cash flow from operating activities to continue to exceed Abbott's capital expenditures and cash dividends.

Debt and Capital

        At December 31, 2013 Abbott's long-term debt rating was A+ by Standard & Poor's Corporation and A1 by Moody's Investors Service. Abbott has readily available financial resources, including unused lines of credit of $5.0 billion that support commercial paper borrowing arrangements which expire in 2017.

        In 2012, Abbott redeemed $7.7 billion of long-term notes in preparation for the separation of AbbVie from Abbott and repaid $1 billion of long-term notes that were due in 2012. In addition, AbbVie Inc., a wholly owned subsidiary of Abbott, issued $14.7 billion of long-term notes that were guaranteed by Abbott until AbbVie's separation from Abbott on January 1, 2013. In 2011, Abbott repaid $2.0 billion of long-term notes using primarily short-term borrowings.

        In October 2008, the board of directors authorized the purchase of up to $5 billion of Abbott's common shares from time to time. Under this authorization, 33.0 million and 37.0 million shares were purchased in 2013 and 2012 at a cost of approximately $1.2 billion and $2.2 billion, respectively. No additional purchases of common shares will be made from this authorization. In June 2013, the board of directors authorized the purchase of up to $3.0 billion of Abbott's common shares from time to time and 10.5 million shares were purchased under this authorization at a cost of $388 million in 2013. Abbott has indicated that it plans to purchase over $2 billion of additional shares from time to time in 2014.

        Abbott declared dividends of $0.64 per share in 2013 compared to $1.67 per share in 2012. Dividends paid were $882 million in 2013 compared to $3.2 billion in 2012. The year-over-year change in dividends reflects the impact of the separation of AbbVie in January 2013. In October 2013, Abbott announced an increase in the company's quarterly dividend to $0.22 per share from $0.14 per share, representing an increase of 57 percent. This increase took effect with the dividend paid in February 2014 to shareholders of record at the close of business on January 15, 2014.

Working Capital

        The reduction of cash and cash equivalents from $10.8 billion at December 31, 2012 to $3.5 billion at December 31, 2013 reflects the transfer of $5.9 billion of cash and cash equivalents to AbbVie as part of the separation on January 1, 2013. Working capital was $9.7 billion at December 31, 2013 and $18.0 billion at December 31, 2012. The decrease in working capital in 2013 was due to the transfer of approximately $9 billion of working capital to AbbVie on January 1, 2013 as part of the separation. See note 2 — Separation of AbbVie for additional information.

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        Substantially all of Abbott's trade receivables in Italy, Spain, Portugal, and Greece are with governmental health systems. The collection of outstanding receivables in these countries held steady or improved in 2013 depending upon the country. As a result, governmental receivables in these four countries accounted for approximately 1 percent of Abbott's total assets and 12 percent of total net trade receivables as of December 31, 2013. The latter is down from 16 percent as of December 31 2012.

        With the exception of Greece, Abbott historically has collected almost all of the outstanding receivables in these countries. Abbott continues to monitor the credit worthiness of customers located in these and other geographic areas and establishes an allowance against a trade receivable when it is probable that the balance will not be collected. In addition to closely monitoring economic conditions and budgetary and other fiscal developments in these countries, Abbott regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables. Abbott also monitors the potential for and periodically has utilized factoring arrangements to mitigate credit risk although the receivables included in such arrangements have historically not been a material amount of total outstanding receivables. If government funding were to become unavailable in these countries or if significant adverse changes in their reimbursement practices were to occur, Abbott may not be able to collect the entire balance.

Capital Expenditures

        Capital expenditures of $1.1 billion in 2013, $1.8 billion in 2012 and $1.5 billion in 2011 were principally for upgrading and expanding manufacturing and research and development facilities and equipment in various segments, investments in information technology, and laboratory instruments placed with customers. The 2013 decrease reflects the separation of AbbVie at the beginning of 2013.

Contractual Obligations

        The table below summarizes Abbott's estimated contractual obligations as of December 31, 2013.

 
   Payments Due By Period  
 
   Total   2014   2015-2016   2017-2018   2019 and
Thereafter 		 
 
   (in millions)
  

Long-term debt, including current maturities

   $ 3,397   $ 9   $ 13   $ 2   $ 3,373  

Interest on debt obligations

     2,977     181     350     349     2,097  

Operating lease obligations

     628     140     219     131     138  

Capitalized auto lease obligations

     40     13     27     —     —  

Purchase commitments (a)

     2,295     2,118     158     15     4  

Other long-term liabilities

     1,272     —     771     354     147  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total (b)

   $ 10,609   $ 2,461   $ 1,538   $ 851   $ 5,759  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       
(a)
Purchase commitments are for purchases made in the normal course of business to meet operational and capital expenditure requirements.

(b)
Unrecognized tax benefits totaling $1.3 billion are excluded from the table above as Abbott is unable to reasonably estimate the period of cash settlement with the respective taxing authorities on such items. See Note 13 — Taxes on Income for further details. The company has employee benefit obligations consisting of pensions and other postemployment benefits, including medical and life, which have been excluded from the table. A discussion of the company's pension and postretirement plans, including funding matters is included in Note 12 — Post-employment Benefits.

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Contingent Obligations

        Abbott has periodically entered into agreements in the ordinary course of business, such as assignment of product rights, with other companies, which has resulted in Abbott becoming secondarily liable for obligations that Abbott was previously primarily liable. Since Abbott no longer maintains a business relationship with the other parties, Abbott is unable to develop an estimate of the maximum potential amount of future payments, if any, under these obligations. Based upon past experience, the likelihood of payments under these agreements is remote. In addition, Abbott periodically acquires a business or product rights in which Abbott agrees to pay contingent consideration based on attaining certain thresholds or based on the occurrence of certain events.

Legislative Issues

        Abbott's primary markets are highly competitive and subject to substantial government regulations throughout the world. Abbott expects debate to continue over the availability, method of delivery, and payment for health care products and services. It is not possible to predict the extent to which Abbott or the health care industry in general might be adversely affected by these factors in the future. A more complete discussion of these factors is contained in Item 1, Business, and Item 1A, Risk Factors, to the Annual Report on Form 10-K.

Private Securities Litigation Reform Act of 1995 — A Caution Concerning Forward-Looking Statements

        Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Abbott cautions investors that any forward-looking statements or projections made by Abbott, including those made in this document, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, Risk Factors, to the Annual Report on Form 10-K.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial Instruments and Risk Management

Market Price Sensitive Investments

        Abbott holds available-for-sale equity securities from strategic technology acquisitions. The market value of these investments was approximately $26 million and $76 million as of December 31, 2013 and 2012, respectively. The decrease is due to the sale of securities. Abbott monitors these investments for other than temporary declines in market value, and charges impairment losses to income when an other than temporary decline in value occurs. A hypothetical 20 percent decrease in the share prices of these investments would decrease their fair value at December 31, 2013 by approximately $5 million. (A 20 percent decrease is believed to be a reasonably possible near-term change in share prices.)

Non-Publicly Traded Equity Securities

        Abbott holds equity securities from strategic technology acquisitions that are not traded on public stock exchanges. The carrying value of these investments was approximately $67 million and $137 million as of December 31, 2013 and 2012, respectively. The decrease of non-publicly traded securities is due to the separation of AbbVie on January 1, 2013. No individual investment is recorded at a value in excess of $20 million. Abbott monitors these investments for other than temporary declines in market value, and charges impairment losses to income when an other than temporary decline in estimated value occurs.

Interest Rate Sensitive Financial Instruments

        At December 31, 2013 and 2012, Abbott had interest rate hedge contracts totaling $1.5 billion and $9.5 billion, respectively, to manage its exposure to changes in the fair value of debt. $8.0 billion of these contracts related to debt issued by AbbVie Inc. in the fourth quarter of 2012 and were transferred to AbbVie as part of the separation on January 1, 2013. The effect of these hedges is to change the fixed interest rate to a variable rate. Abbott does not use derivative financial instruments, such as interest rate swaps, to manage its exposure to changes in interest rates for its investment securities. At December 31, 2013, Abbott had $2.5 billion of domestic commercial paper outstanding with an average annual interest rate of 0.13% with an average remaining life of 34 days. The fair value of long-term debt at December 31, 2013 and 2012 amounted to $3.9 billion and $19.6 billion, respectively (average interest rates of 5.3% and 2.9% as of December 31, 2013 and 2012, respectively) with maturities through 2040. At December 31, 2013 and 2012, the fair value of current and long-term investment securities amounted to approximately $4.7 billion. A hypothetical 100-basis point change in the interest rates would not have a material effect on cash flows, income or market values. (A 100-basis point change is believed to be a reasonably possible near-term change in rates.)

Foreign Currency Sensitive Financial Instruments

        Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts are designated as cash flow hedges of the variability of the cash flows due to changes in foreign currency exchange rates and are marked-to-market with the resulting gains or losses reflected in Accumulated other comprehensive income (loss). Gains or losses will be included in Cost of products sold at the time the products are sold, generally within the next twelve months. At December 31, 2013 and 2012, Abbott held $137 million and $1.6 billion, respectively, of such contracts, which all mature in the following calendar year. Contracts totaling $1.0 billion were transferred to AbbVie as part of the separation on January 1, 2013.

        Abbott enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated intercompany loans and trade payables and third-party trade payables and

43

receivables. The contracts are marked-to-market, and resulting gains or losses are reflected in income and are generally offset by losses or gains on the foreign currency exposure being managed. At December 31, 2013 and 2012, Abbott held $13.8 billion and $18.2 billion, respectively, of such contracts, which mature in the next twelve months. $4.3 billion of these contracts were transferred to AbbVie as part of the separation on January 1, 2013.

        Abbott has designated foreign denominated short-term debt of approximately $505 million and approximately $615 million as of December 31, 2013 and 2012, respectively, as a hedge of the net investment in a foreign subsidiary. Accordingly, changes in the fair value of this debt due to changes in exchange rates are recorded in Accumulated other comprehensive income (loss), net of tax.

        The following table reflects the total foreign currency forward contracts outstanding at December 31, 2013 and 2012: (dollars in millions)

 
   2013   2012  
 
   Contract
Amount 		  Weighted
Average
Exchange
Rate 		  Fair and
Carrying Value
Receivable/
(Payable) 		  Contract
Amount 		  Weighted
Average
Exchange
Rate 		  Fair and
Carrying Value
Receivable/
(Payable) 		 

Receive primarily U.S. Dollars
in exchange for
the following currencies:

                                      

Euro

   $ 6,208     1.3735   $ (4 ) $ 11,349     1.317   $ (4 )

British Pound

     1,181     1.624     1     1,318     1.621     1  

Japanese Yen

     1,865     99.0     12     2,624     81.2     9  

Canadian Dollar

     191     1.06     1     332     .992     1  

All other currencies

     4,446     N/A     (1 )   4,169     N/A     (33 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 13,891         $ 9   $ 19,792         $ (26 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                               

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 
   Page  

Consolidated Statement of Earnings

     46  

Consolidated Statement of Comprehensive Income

     47  

Consolidated Statement of Cash Flows

     48  

Consolidated Balance Sheet

     49  

Consolidated Statement of Shareholders' Investment

     51  

Notes to Consolidated Financial Statements

     52  

Management Report on Internal Control Over Financial Reporting

     84  

Reports of Independent Registered Public Accounting Firm

     85  

45


Abbott Laboratories and Subsidiaries

Consolidated Statement of Earnings
(in millions except per share data)

 
   Year Ended December 31  
 
   2013   2012   2011  

Net Sales

   $ 21,848   $ 21,494   $ 21,407  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cost of products sold

     10,040     9,817     10,017  

Amortization of intangible assets

     791     795     884  

Research and development

     1,452     1,544     1,512  

Selling, general and administrative

     6,936     7,444     7,365  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Operating Cost and Expenses

     19,219     19,600     19,778  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Operating Earnings

     2,629     1,894     1,629  

Interest expense

     157     347     359  

Interest income

     (67 )   (59 )   (65 )

Net loss on extinguishment of debt

     —     1,351     —  

Net foreign exchange (gain) loss

     50     (25 )   (20 )

Other (income) expense, net

     (32 )   (25 )   119  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Earnings from Continuing Operations Before Taxes

     2,521     305     1,236  

Taxes on Earnings from Continuing Operations

     138     (274 )   110  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Earnings from Continuing Operations

     2,383     579     1,126  

Earnings from Discontinued Operations, net of tax

    
193		    
5,384		    
3,602		  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Earnings

   $ 2,576   $ 5,963   $ 4,728  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Basic Earnings Per Common Share —

                    

Continuing Operations

   $ 1.52   $ 0.36   $ 0.72  

Discontinued Operations

    
0.12		    
3.40		    
2.31		  

Net Earnings

  
$
1.64		  
$
3.76		  
$
3.03		  

Diluted Earnings Per Common Share —

    
 		    
 		    
 		  

Continuing Operations

   $ 1.50   $ 0.36   $ 0.72  

Discontinued Operations

    
0.12		    
3.36		    
2.29		  

Net Earnings

  
$
1.62		  
$
3.72		  
$
3.01		  

Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share

    
1,558		    
1,575		    
1,557		  

Dilutive Common Stock Options and Awards

     16     17     10  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options and Awards

     1,574     1,592     1,567  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Outstanding Common Stock Options Having No Dilutive Effect

     1     1     27  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

The accompanying notes to consolidated financial statements are an integral part of this statement.

46


Abbott Laboratories and Subsidiaries

Consolidated Statement of Comprehensive Income
(in millions)

 
   Year Ended December 31  
 
   2013   2012   2011  

Net Earnings

   $ 2,576   $ 5,963   $ 4,728  

Less: Earnings from Discontinued Operations, net of tax

     193     5,384     3,602  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Earnings from Continuing Operations

     2,383     579     1,126  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Foreign currency translation (loss) adjustments

     (239 )   (181 )   (523 )

Net actuarial gains (losses) and prior service cost and credits and amortization of net actuarial losses and prior service cost and credits, net of taxes of $393 in 2013, $(253) in 2012 and $(380) in 2011

     882     (715 )   (503 )

Unrealized (losses) gains on marketable equity securities, net of taxes of $(10) in 2013, $11 in 2012 and $(1) in 2011

     (18 )   19     (2 )

Net adjustments for derivative instruments designated as cash flow hedges, net of taxes of $(13) in 2013, $(21) in 2012 and $28 in 2011

     (53 )   (91 )   111  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other Comprehensive Income (Loss) from Continuing Operations

     572     (968 )   (917 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Comprehensive Income (Loss) from Continuing Operations

     2,955     (389 )   209  

Comprehensive Income from Discontinued Operations

     193     5,355     3,289  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Comprehensive Income

   $ 3,148   $ 4,966   $ 3,498  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Supplemental Accumulated Other Comprehensive Income Information, net of tax as of December 31:

                    

Cumulative foreign currency translation loss adjustments

   $ (718 ) $ (79 ) $ (72 )

Net actuarial (losses) and prior service (cost) and credits

     (1,312 )   (3,596 )   (2,731 )

Cumulative unrealized gains on marketable equity securities

     13     31     38  

Cumulative gains on derivative instruments designated as cash flow hedges

     5     50     168  

The accompanying notes to consolidated financial statements are an integral part of this statement.

47


Abbott Laboratories and Subsidiaries

Consolidated Statement of Cash Flows
(in millions)

 
   Year Ended December 31  
 
   2013   2012   2011  

Cash Flow From (Used in) Operating Activities:

                    

Net earnings

   $ 2,576   $ 5,963   $ 4,728  

Adjustments to reconcile earnings to net cash from operating activities —

                    

Depreciation

     928     1,363     1,395  

Amortization of intangible assets

     791     1,419     1,649  

Share-based compensation

     262     433     383  

Acquired in-process and collaborations research and development

     —     288     672  

Investing and financing (gains) losses, net

     4     356     142  

Net loss on extinguishment of debt

     —     1,351     —  

Trade receivables

     (113 )   36     (670 )

Inventories

     (154 )   (417 )   (130 )

Prepaid expenses and other assets

     131     (35 )   413  

Trade accounts payable and other liabilities

     (436 )   (134 )   1,790  

Income taxes

     (665 )   (1,309 )   (1,402 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Cash From Operating Activities

     3,324     9,314     8,970  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash Flow From (Used in) Investing Activities:

                    

Acquisitions of property and equipment

     (1,145 )   (1,795 )   (1,491 )

Acquisitions of businesses and technologies, net of cash acquired

     (580 )   (706 )   (273 )

Purchases of investment securities

     (10,064 )   (11,998 )   (5,110 )

Proceeds from sales of investment securities

     7,839     8,936     5,649  

Release of restricted funds

     —     —     1,870  

Other

     21     3     16  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Cash (Used in) From Investing Activities

     (3,929 )   (5,560 )   661  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash Flow From (Used in) Financing Activities:

                    

Proceeds from issuance of (repayments of) short-term debt and other

     2,086     784     (1,965 )

Proceeds from issuance of long-term debt and debt with maturities over 3 months

     9     14,700     1,000  

Repayments of long-term debt and debt with maturities over 3 months

     (303 )   (11,071 )   (3,012 )

Acquisition and contingent consideration payments related to business acquisitions

     (495 )   (521 )   (400 )

Transfer of cash and cash equivalents to AbbVie Inc. 

     (5,901 )   —     —  

Purchases of common shares

     (1,605 )   (2,364 )   (77 )

Proceeds from stock options exercised, including income tax benefit

     395     1,850     969  

Dividends paid

     (882 )   (3,183 )   (2,938 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Cash (Used in) From Financing Activities

     (6,696 )   195     (6,423 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Effect of exchange rate changes on cash and cash equivalents

     (26 )   40     (43 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net (Decrease) Increase in Cash and Cash Equivalents

     (7,327 )   3,989     3,165  

Cash and Cash Equivalents, Beginning of Year

     10,802     6,813     3,648  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash and Cash Equivalents, End of Year

   $ 3,475   $ 10,802   $ 6,813  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Supplemental Cash Flow Information:

                    

Income taxes paid

   $ 1,039   $ 1,367   $ 1,782  

Interest paid

     148     576     545  

The accompanying notes to consolidated financial statements are an integral part of this statement.

48


Abbott Laboratories and Subsidiaries

Consolidated Balance Sheet
(dollars in millions)

 
   December 31  
 
   2013   2012  

Assets

              

Current Assets:

              

Cash and cash equivalents

   $ 3,475   $ 10,802  

Investments, primarily bank time deposits and U.S. treasury bills

     4,623     4,372  

Trade receivables, less allowances of — 2013: $312; 2012: $406

     3,986     7,613  

Inventories:

              

Finished products

     1,866     2,346  

Work in process

     349     629  

Materials

     478     818  
           
​ ​ ​ ​ ​ ​ ​ ​

Total inventories

     2,693     3,793  

Deferred income taxes

     2,528     2,986  

Other prepaid expenses and receivables

     1,504     1,757  

Current assets held for disposition

     438     —  
           
​ ​ ​ ​ ​ ​ ​ ​

Total Current Assets

     19,247     31,323  
           
​ ​ ​ ​ ​ ​ ​ ​

Investments

     119     274  
           
​ ​ ​ ​ ​ ​ ​ ​

Property and Equipment, at Cost:

              

Land

     502     605  

Buildings

     2,994     4,259  

Equipment

     8,506     13,111  

Construction in progress

     868     954  
           
​ ​ ​ ​ ​ ​ ​ ​

    12,870     18,929  

Less: accumulated depreciation and amortization

     6,965     10,866  
           
​ ​ ​ ​ ​ ​ ​ ​

Net Property and Equipment

     5,905     8,063  
           
​ ​ ​ ​ ​ ​ ​ ​

Intangible Assets, net of amortization

     5,735     8,588  

Goodwill

     9,772     15,774  

Deferred Income Taxes and Other Assets

     2,109     3,213  

Non-current Assets Held for Disposition

     66     —  
           
​ ​ ​ ​ ​ ​ ​ ​

  $ 42,953   $ 67,235  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

49


Abbott Laboratories and Subsidiaries

Consolidated Balance Sheet
(dollars in millions)

 
   December 31  
 
   2013   2012  

Liabilities and Shareholders' Investment

              

Current Liabilities:

              

Short-term borrowings

   $ 3,164   $ 2,082  

Trade accounts payable

     1,026     1,797  

Salaries, wages and commissions

     906     1,428  

Other accrued liabilities

     3,500     6,788  

Dividends payable

     341     221  

Income taxes payable

     175     655  

Current portion of long-term debt

     9     309  

Current liabilities held for disposition

     386     —  
           
​ ​ ​ ​ ​ ​ ​ ​

Total Current Liabilities

     9,507     13,280  
           
​ ​ ​ ​ ​ ​ ​ ​

Long-term Debt

     3,388     18,085  
           
​ ​ ​ ​ ​ ​ ​ ​

Post-employment Obligations and Other Long-term Liabilities

     4,784     9,057  
           
​ ​ ​ ​ ​ ​ ​ ​

Non-current Liabilities Held for Disposition

     7     —  
           
​ ​ ​ ​ ​ ​ ​ ​

Commitments and Contingencies

              

Shareholders' Investment:

              

Preferred shares, one dollar par value Authorized — 1,000,000 shares, none issued

     —     —  

Common shares, without par value Authorized — 2,400,000,000 shares Issued at stated capital amount — Shares: 2013: 1,685,827,096; 2012: 1,675,930,484;

     12,048     11,755  

Common shares held in treasury, at cost — Shares: 2013: 137,728,810; 2012: 99,262,992

     (6,844 )   (5,591 )

Earnings employed in the business

     21,979     24,151  

Accumulated other comprehensive income (loss)

     (2,012 )   (3,594 )
           
​ ​ ​ ​ ​ ​ ​ ​

Total Abbott Shareholders' Investment

     25,171     26,721  

Noncontrolling Interests in Subsidiaries

     96     92  
           
​ ​ ​ ​ ​ ​ ​ ​

Total Shareholders' Investment

     25,267     26,813  
           
​ ​ ​ ​ ​ ​ ​ ​

  $ 42,953   $ 67,235  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

The accompanying notes to consolidated financial statements are an integral part of this statement.

50


Abbott Laboratories and Subsidiaries

Consolidated Statement of Shareholders' Investment
(in millions except shares and per share data)

 
   Year Ended December 31  
 
   2013   2012   2011  

Common Shares:

                    

Beginning of Year

                    

Shares: 2013: 1,675,930,484; 2012: 1,638,870,201; 2011: 1,619,689,876

   $ 11,755   $ 9,817   $ 8,745  

Issued under incentive stock programs

                    

Shares: 2013: 9,896,612; 2012: 37,060,283; 2011: 19,180,325

     393     1,854     954  

Share-based compensation

     261     435     382  

Issuance of restricted stock awards

     (361 )   (351 )   (264 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

End of Year

                    

Shares: 2013: 1,685,827,096; 2012: 1,675,930,484; 2011: 1,638,870,201

   $ 12,048   $ 11,755   $ 9,817  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Common Shares Held in Treasury:

                    

Beginning of Year

                    

Shares: 2013: 99,262,992; 2012: 68,491,382; 2011: 72,705,928

   $ (5,591 ) $ (3,688 ) $ (3,917 )

Issued under incentive stock programs

                    

Shares: 2013: 5,718,575; 2012: 6,691,748; 2011: 4,638,841

     310     363     250  

Purchased

                    

Shares: 2013: 44,184,393; 2012: 37,463,358; 2011: 424,295

     (1,563 )   (2,266 )   (21 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

End of Year

                    

Shares: 2013: 137,728,810; 2012: 99,262,992; 2011: 68,491,382

   $ (6,844 ) $ (5,591 ) $ (3,688 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Earnings Employed in the Business:

                    

Beginning of Year

   $ 24,151   $ 20,907   $ 19,216  

Net earnings

     2,576     5,963     4,728  

Separation of AbbVie Inc. 

     (3,735 )   —     —  

Cash dividends declared on common shares (per share — 2013: $0.64; 2012: $1.67; 2011: $1.92)

     (1,002 )   (2,650 )   (3,012 )

Effect of common and treasury share transactions

     (11 )   (69 )   (25 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

End of Year

   $ 21,979   $ 24,151   $ 20,907  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Accumulated Other Comprehensive Income (Loss):

                    

Beginning of Year

   $ (3,594 ) $ (2,597 ) $ (1,367 )

Separation of AbbVie Inc. 

     1,010     —     —  

Other comprehensive income (loss)

     572     (997 )   (1,230 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

End of Year

   $ (2,012 ) $ (3,594 ) $ (2,597 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Noncontrolling Interests in Subsidiaries:

                    

Beginning of Year

   $ 92   $ 86   $ 88  

Noncontrolling Interests' share of income, business combinations, net of distributions and share repurchases

     4     6     (2 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

End of Year

   $ 96   $ 92   $ 86  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

The accompanying notes to consolidated financial statements are an integral part of this statement.

51


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

        NATURE OF BUSINESS — Abbott's principal business is the discovery, development, manufacture and sale of a broad line of health care products.

        CHANGES IN PRESENTATION DUE TO ABBVIE SEPARATION — On January 1, 2013, Abbott completed the separation of AbbVie Inc., which was formed to hold Abbott's research-based proprietary pharmaceuticals business. The historical operating results of the research-based proprietary pharmaceuticals business prior to separation are excluded from Earnings from Continuing Operations and are presented on the Earnings from Discontinued Operations line in Abbott's Consolidated Statement of Earnings. The assets, liabilities, and cash flows of the research-based proprietary pharmaceuticals business are included in Abbott's Consolidated Balance Sheet and its Consolidated Statements of Cash Flows for periods prior to January 1, 2013. See Note 2 for additional information.

        BASIS OF CONSOLIDATION AND CHANGE IN ACCOUNTING PRINCIPLE — The consolidated financial statements include the accounts of the parent company and subsidiaries, after elimination of intercompany transactions. Prior to January 1, 2011, the accounts of foreign subsidiaries were consolidated based on a fiscal year ended November 30 due to the time needed to consolidate these subsidiaries. Effective January 1, 2011, the one month lag in the consolidation of the accounts of foreign subsidiaries was eliminated and the year-end of foreign subsidiaries was changed to December 31. Abbott believes that the change in accounting principle related to the elimination of the one month reporting lag is preferable because it results in more contemporaneous reporting of the results of foreign subsidiaries. In accordance with applicable accounting literature, a change in subsidiaries' year-end is treated as a change in accounting principle and requires retrospective application. The impact of the change was not material to the results of operations for the previously reported annual and interim periods after January 1, 2009, and thus, those results have not been revised. A charge of $137 million was recorded in 2011 to recognize the cumulative immaterial impacts to 2009 and 2010 of which $37 million is recognized in the results of discontinued operations.

        The Consolidated Statements of Cash Flows for 2012 and 2011 have been appropriately revised to reflect acquisition and contingent consideration payments related to certain business acquisitions as cash flow used in financing activities. The amounts had been previously reflected as cash flow used in investing activities.

        USE OF ESTIMATES — The financial statements have been prepared in accordance with generally accepted accounting principles in the United States and necessarily include amounts based on estimates and assumptions by management. Actual results could differ from those amounts. Significant estimates include amounts for sales rebates, income taxes, pension and other post-employment benefits, valuation of intangible assets, litigation, derivative financial instruments, and inventory and accounts receivable exposures.

        FOREIGN CURRENCY TRANSLATION — The statements of earnings of foreign subsidiaries whose functional currencies are other than the U.S. dollar are translated into U.S. dollars using average exchange rates for the period. The net assets of foreign subsidiaries whose functional currencies are other than the U.S. dollar are translated into U.S. dollars using exchange rates as of the balance sheet date. The U.S. dollar effects that arise from translating the net assets of these subsidiaries at changing rates are recorded in the foreign currency translation adjustment account, which is included in equity as a component of accumulated other comprehensive income (loss). Transaction gains and losses are recorded in earnings and were not significant for any of the periods presented.

52


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 1 — Summary of Significant Accounting Policies (Continued)

        REVENUE RECOGNITION — Revenue from product sales is recognized upon passage of title and risk of loss to customers. Provisions for discounts, rebates and sales incentives to customers, and returns and other adjustments are provided for in the period the related sales are recorded. Sales incentives to customers are not material. Historical data is readily available and reliable, and is used for estimating the amount of the reduction in gross sales. Revenue from the launch of a new product, from an improved version of an existing product, or for shipments in excess of a customer's normal requirements are recorded when the conditions noted above are met. In those situations, management records a returns reserve for such revenue, if necessary. In certain of Abbott's businesses, primarily within diagnostics and medical optics, Abbott participates in selling arrangements that include multiple deliverables (e.g., instruments, reagents, procedures, and service agreements). Under these arrangements, Abbott recognizes revenue upon delivery of the product or performance of the service and allocates the revenue based on the relative selling price of each deliverable, which is based primarily on vendor specific objective evidence. Sales of product rights for marketable products are recorded as revenue upon disposition of the rights. Revenue from license of product rights, or for performance of research or selling activities, is recorded over the periods earned.

        INCOME TAXES — Deferred income taxes are provided for the tax effect of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at the enacted statutory rate to be in effect when the taxes are paid. U.S. income taxes are provided on those earnings of foreign subsidiaries which are intended to be remitted to the parent company. Deferred income taxes are not provided on undistributed earnings reinvested indefinitely in foreign subsidiaries as working capital and plant and equipment. Interest and penalties on income tax obligations are included in taxes on income.

        EARNINGS PER SHARE — Unvested restricted stock that contain non-forfeitable rights to dividends are treated as participating securities and are included in the computation of earnings per share under the two-class method. Under the two-class method, net earnings are allocated between common shares and participating securities. Earnings from Continuing Operations allocated to common shares in 2013, 2012 and 2011 were $2.366 billion, $575 million and $1.123 billion, respectively. Net earnings allocated to common shares in 2013, 2012 and 2011 were $2.558 billion, $5.917 billion and $4.714 billion, respectively.

        PENSION AND POST-EMPLOYMENT BENEFITS — Abbott accrues for the actuarially determined cost of pension and post-employment benefits over the service attribution periods of the employees. Abbott must develop long-term assumptions, the most significant of which are the health care cost trend rates, discount rates and the expected return on plan assets. Differences between the expected long-term return on plan assets and the actual return are amortized over a five-year period. Actuarial losses and gains are amortized over the remaining service attribution periods of the employees under the corridor method.

        FAIR VALUE MEASUREMENTS — For assets and liabilities that are measured using quoted prices in active markets, total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are valued by reference to similar assets or liabilities, adjusted for contract restrictions and other terms specific to that asset or liability. For these items, a significant portion of fair value is derived by reference to quoted prices of similar assets or liabilities in active markets. For all remaining assets and liabilities, fair value is derived using a fair value model, such as a discounted cash flow model or Black-Scholes model. Purchased intangible assets are recorded at fair value. The fair value of

53


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 1 — Summary of Significant Accounting Policies (Continued)

significant purchased intangible assets is based on independent appraisals. Abbott uses a discounted cash flow model to value intangible assets. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, the cost of capital, terminal values and market participants. Intangible assets, goodwill and indefinite-lived intangible assets are reviewed for impairment at least on a quarterly and annual basis, respectively.

        SHARE-BASED COMPENSATION — The value of stock options and restricted stock awards and units are amortized over their service period, which could be shorter than the vesting period if an employee is retirement eligible, with a charge to compensation expense.

        LITIGATION — Abbott accounts for litigation losses in accordance with FASB ASC No. 450, "Contingencies." Under ASC No. 450, loss contingency provisions are recorded for probable losses at management's best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. Legal fees are recorded as incurred.

        CASH, CASH EQUIVALENTS AND INVESTMENTS — Cash equivalents consist of bank time deposits and U.S. treasury bills with original maturities of three months or less. Investments in marketable equity securities are classified as available-for-sale and are recorded at fair value with any unrealized holding gains or losses, net of tax, included in Accumulated other comprehensive income (loss). Investments in equity securities that are not traded on public stock exchanges are recorded at cost. Investments in debt securities are classified as held-to-maturity, as management has both the intent and ability to hold these securities to maturity, and are reported at cost, net of any unamortized premium or discount. Income relating to these securities is reported as interest income.

        Abbott reviews the carrying value of investments each quarter to determine whether an other than temporary decline in market value exists. Abbott considers factors affecting the investee, factors affecting the industry the investee operates in and general equity market trends. Abbott considers the length of time an investment's market value has been below carrying value and the near-term prospects for recovery to carrying value. When Abbott determines that an other than temporary decline has occurred, the investment is written down with a charge to Other (income) expense, net.

        TRADE RECEIVABLE VALUATIONS — Accounts receivable are stated at their net realizable value. The allowance against gross trade receivables reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. Accounts receivable are charged off after all reasonable means to collect the full amount (including litigation, where appropriate) have been exhausted.

        INVENTORIES — Inventories are stated at the lower of cost (first-in, first-out basis) or market. Cost includes material and conversion costs.

        PROPERTY AND EQUIPMENT — Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets. The following table shows estimated useful lives of property and equipment:

Classification
  Estimated Useful Lives

Buildings

   10 to 50 years (average 27 years)

Equipment

   3 to 20 years (average 11 years)

54


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 1 — Summary of Significant Accounting Policies (Continued)

        PRODUCT LIABILITY — Abbott accrues for product liability claims when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing information. The liabilities are adjusted quarterly as additional information becomes available. Receivables for insurance recoveries for product liability claims are recorded as assets, on an undiscounted basis, when it is probable that a recovery will be realized. Product liability losses are self-insured.

        RESEARCH AND DEVELOPMENT COSTS — Internal research and development costs are expensed as incurred. Clinical trial costs incurred by third parties are expensed as the contracted work is performed. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone results are achieved.

        ACQUIRED IN-PROCESS AND COLLABORATIONS RESEARCH AND DEVELOPMENT (IPR&D) — The initial costs of rights to IPR&D projects obtained in an asset acquisition are expensed as IPR&D unless the project has an alternative future use. These costs include initial payments incurred prior to regulatory approval in connection with research and development collaboration agreements that provide rights to develop, manufacture, market and/or sell pharmaceutical products. The fair value of IPR&D projects acquired in a business combination are capitalized and accounted for as indefinite-lived intangible assets.

        CONCENTRATION OF RISK AND GUARANTEES — Due to the nature of its operations, Abbott is not subject to significant concentration risks relating to customers, products or geographic locations. Governmental accounts in Italy, Spain, Greece and Portugal accounted for 12 percent and 16 percent of total net trade receivables as of December 31, 2013 and 2012 respectively. Product warranties are not significant.

        Abbott has no material exposures to off-balance sheet arrangements; no special purpose entities; nor activities, that include non-exchange-traded contracts accounted for at fair value. Abbott has periodically entered into agreements in the ordinary course of business, such as assignment of product rights, with other companies, which has resulted in Abbott becoming secondarily liable for obligations that Abbott was previously primarily liable. Since Abbott no longer maintains a business relationship with the other parties, Abbott is unable to develop an estimate of the maximum potential amount of future payments, if any, under these obligations. Based upon past experience, the likelihood of payments under these agreements is remote. Abbott periodically acquires a business or product rights in which Abbott agrees to pay contingent consideration based on attaining certain thresholds or based on the occurrence of certain events.

        RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS — In February 2013, the FASB issued a standard pertaining to the reporting of amounts reclassified out of accumulated other comprehensive income (AOCI). The standard requires that an entity provide, by component, information regarding the amounts reclassified out of AOCI and the line items in the statement of operations to which the amounts were reclassified. This guidance is effective prospectively for reporting periods beginning after December 15, 2012. Abbott's adoption of this guidance in the first quarter of 2013 did not have a material impact on our results of operations or financial position.

Note 2 — Separation of AbbVie Inc.

        On November 28, 2012, Abbott's board of directors declared a special dividend distribution of all of the outstanding shares of common stock of AbbVie Inc. (AbbVie), the company formed to hold Abbott's

55


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 2 — Separation of AbbVie Inc. (Continued)

research-based proprietary pharmaceuticals business. For each Abbott common share held at the close of business on December 12, 2012, Abbott shareholders received one share of AbbVie stock on January 1, 2013. Abbott has received a ruling from the Internal Revenue Service that the separation qualifies as a tax-free distribution to Abbott and its U.S. shareholders for U.S. federal income tax purposes.

        The historical operating results of the research-based proprietary pharmaceuticals business prior to separation are excluded from Earnings from Continuing Operations and are presented on the Earnings from Discontinued Operations line. Discontinued operations include the results of AbbVie's business except for certain corporate overhead costs and certain costs associated with transition services that will be provided by Abbott to AbbVie. Discontinued operations also includes other costs incurred by Abbott to separate AbbVie as well as an allocation of interest assuming a uniform ratio of consolidated debt to equity for all of Abbott's historical operations. The assets, liabilities, and cash flows of the research-based proprietary pharmaceuticals business are included in Abbott's Consolidated Balance Sheet and its Consolidated Statements of Cash Flows for periods prior to January 1, 2013.

        The following is a summary of the assets and liabilities transferred to AbbVie as part of the separation on January 1, 2013:

(in billions)
    
  

Assets:

        

Cash and cash equivalents

   $ 5.9  

Investments

     2.2  

Trade receivables, less allowances

     3.2  

Inventories

     0.7  

Prepaid expenses, deferred income taxes, and other current receivables

     2.9  

Net property and equipment

     2.2  

Intangible assets, net of amortization

     2.3  

Goodwill

     6.1  

Deferred income taxes and other assets

     1.1  
       
​ ​ ​ ​ ​

    26.6  
       
​ ​ ​ ​ ​

Liabilities:

        

Short-term borrowings

     1.0  

Trade accounts payable and other current liabilities

     5.2  

Long-term debt

     14.6  

Post-employment obligations, deferred income taxes and other long-term liabilities

     3.1  
       
​ ​ ​ ​ ​

    23.9  
       
​ ​ ​ ​ ​

Net Assets Transferred to AbbVie Inc. 

   $ 2.7  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        In addition, approximately $1 billion of accumulated other comprehensive losses, net of income taxes, primarily related to the pension and other benefit plan net liabilities as well as foreign translation was transferred to AbbVie.

        In 2013, there are no operating results related to discontinued operations other than a favorable adjustment to tax expense of $193 million as a result of the resolution of various tax positions related to

56


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 2 — Separation of AbbVie Inc. (Continued)

AbbVie's operations prior to separation. Summarized financial information for discontinued operations for 2012 and 2011 is as follows:

 
   Year Ended
December 31 		 
(in millions)
   2012   2011  

Net sales

   $ 18,380   $ 17,444  

Earnings before taxes

     5,958     3,963  

Taxes on earnings

     574     361  

Net earnings

     5,384     3,602  

        Abbott and AbbVie entered into transitional services agreements prior to the separation pursuant to which Abbott and AbbVie are providing various services to each other on an interim transitional basis. Transition services may be provided for up to 24 months with an option for a one-year extension by the recipient. Services being provided by Abbott include certain information technology and back office support. Billings by Abbott under these transitional services agreements are recorded as a reduction of the costs to provide the respective service in the applicable expense category in the Consolidated Statement of Earnings. This transitional support will enable AbbVie to establish its stand-alone processes for various activities that were previously provided by Abbott and does not constitute significant continuing support of AbbVie's operations.

        For a small portion of AbbVie's operations, the legal transfer of AbbVie's assets (net of liabilities) did not occur with the separation of AbbVie on January 1, 2013 due to the time required to transfer marketing authorizations and other regulatory requirements in each of these countries. Under the terms of the separation agreement with Abbott, AbbVie is subject to the risks and entitled to the benefits generated by these operations and assets. The majority of these operations were transferred to AbbVie in 2013 with the remainder transferring in 2014. These assets and liabilities have been presented as held for disposition in the Consolidated Balance Sheet. At December 31, 2013, the assets and liabilities held for disposition consist of inventories of $243 million, trade accounts receivable of $163 million, other current assets of $32 million, equipment of $28 million, other assets of $38 million, trade accounts payable and accrued liabilities of $386 million and other liabilities of $7 million. Abbott's obligation to transfer the net assets held for disposition to AbbVie of $111 million is included in Other accrued liabilities.

        Abbott has retained all liabilities for all U.S. federal and foreign income taxes on income prior to the separation, as well as certain non-income taxes attributable to AbbVie's business. AbbVie generally will be liable for all other taxes attributable to its business. In connection with the separation, Abbott has adjusted its employee stock compensation awards and separated its defined benefit programs for pensions and post-employment medical and dental benefit plans. See notes 8 and 12 for additional information.

Note 3 — Supplemental Financial Information

        Other (income) expense, net, for 2013 primarily relates to gains from the sales of equity securities. The loss on the extinguishment of debt of $1.35 billion in 2012 relates to the early redemption of $7.7 billion of long-term notes. The loss consists of the premium paid on the notes and the write off of deferred financing costs totaling $1.83 billion and was partially offset by a gain of $479 million related to the unwinding of interest rate swaps related to a portion of the debt. As discussed in Note 1, Other

57


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 3 — Supplemental Financial Information (Continued)

(income) expense, net, for 2011 includes a charge of $100 million to recognize the cumulative immaterial impacts to 2009 and 2010 relating to the change in year end for foreign subsidiaries.

        The detail of various balance sheet components is as follows:

 
   2013   2012  
 
   (in millions)
  

Long-term Investments:

              

Equity securities

   $ 93   $ 213  

Other

     26     61  
           
​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 119   $ 274  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        The reduction in long-term investments from December 31, 2012 to December 31, 2013 is due primarily to the separation of AbbVie on January 1, 2013.

 
   2013   2012  
 
   (in millions)
  

Other Accrued Liabilities:

              

Accrued rebates payable to government agencies

   $ 136   $ 1,020  

Accrued other rebates (a)

     220     1,079  

All other (b)

     3,144     4,689  
           
​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 3,500   $ 6,788  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           
(a)
Accrued wholesaler chargeback rebates of approximately $90 millon and $300 million at December 31, 2013 and 2012, respectively, are netted in trade receivables because Abbott's customers are invoiced at a higher catalog price but only remit to Abbott their contract price for the products. The reduction in the chargeback rebates from December 31, 2012 to December 31, 2013 is primarily due to the separation of AbbVie on January 1, 2013.

(b)
2013 and 2012 includes acquisition consideration payable of approximately $400 million related primarily to the acquisition of Piramal Healthcare Limited's Healthcare Solutions business.

 
   2013   2012  
 
   (in millions)
  

Post-employment Obligations and Other Long-term Liabilities:

              

Defined benefit pension plans and post-employment medical and dental plans for significant plans

   $ 1,818   $ 4,871  

Deferred income taxes

     466     710  

All other (c)

     2,500     3,476  
           
​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 4,784   $ 9,057  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           
(c)
2013 includes $1.3 billion of gross unrecognized tax benefits, as well as $70 million of acquisition consideration payable. 2012 includes $1.4 billion of gross unrecognized tax benefits, as well as acquisition consideration payable of $385 million related to the acquisition of Piramal Healthcare Limited's Healthcare Solutions business.

58


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 4 — Accumulated Other Comprehensive Income

        The components of the changes in accumulated other comprehensive income from continuing operation, net of income taxes, are as follows: (in millions)

 
   Cumulative
Foreign
Currency
Translation
Adjustments 		  Net
Actuarial
Losses and
Prior
Service
Costs and
Credits 		  Cumulative
Unrealized
Gains on
Marketable
Equity
Securities 		  Cumulative
Gains on
Derivative
Instruments
Designated as
Cash Flow
Hedges 		  Total  

Balance at December 31, 2012

   $ (79 ) $ (3,596 ) $ 31   $ 50   $ (3,594 )
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Separation of AbbVie

     (400 )   1,402     —     8     1,010  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other comprehensive income (loss) before reclassifications

     (239 )   771     22     (23 )   531  

Income (loss) amounts reclassified from accumulated other comprehensive income (a)

     —     111     (40 )   (30 )   41  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net current period comprehensive income (loss) from continuing operations

     (239 )   882     (18 )   (53 )   572  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balance at December 31, 2013

   $ (718 ) $ (1,312 ) $ 13   $ 5   $ (2,012 )
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       
(a)
Reclassified amounts for foreign currency translation are recorded in the Consolidated Statement of Earnings as Net Foreign exchange loss (gain); gains on marketable equity securities are recorded as Other (income) expense and gains/losses related to cash flow hedges are recorded as Cost of product sold. Net actuarial losses and prior service cost is included as a component of net periodic benefit plan cost — see Note 12 for additional information.

Note 5 — Business Acquisitions

        In August 2013, Abbott acquired 100 percent of IDEV Technologies, net of debt, for $310 million, in cash. The acquisition of IDEV Technologies expands Abbott's endovascular portfolio. The allocation of the fair value of the acquisition resulted in non-deductible acquired in-process research and development of approximately $170 million which is accounted for as an indefinite-lived intangible asset until regulatory approval or discontinuation, non-deductible definite-lived intangible assets of approximately $66 million, non-deductible goodwill of approximately $123 million and net deferred tax liabilities of $56 million. Acquired intangible assets consist of developed technology and are being amortized over 11 years.

59


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 5 — Business Acquisitions (Continued)

        In August 2013, Abbott acquired 100 percent of OptiMedica for $260 million, in cash, plus additional payments up to $150 million to be made upon completion of certain development, regulatory and sales milestones. The acquisition of OptiMedica provides Abbott with an immediate entry point into the laser assisted cataract surgery market. The allocation of the fair value of the acquisition resulted in non-deductible definite-lived intangible assets of approximately $160 million; non-deductible acquired in-process research and development of approximately $60 million, which is accounted for as an indefinite-lived intangible asset until regulatory approval or discontinuation; non-deductible goodwill of approximately $151 million, net deferred tax liabilities of $70 million and contingent consideration of approximately $70 million. The fair value of the contingent consideration was determined based on an independent appraisal. Acquired intangible assets consist primarily of developed technology that is being amortized over 18 years.

        The preliminary allocations of fair value of these acquisitions will be finalized when valuations are completed. Had the above acquisitions taken place on January 1 of the previous year, consolidated net sales and income would not have been significantly different from reported amounts.

Note 6 — Goodwill and Intangible Assets

        Abbott recorded goodwill of approximately $274 million in 2013 related to the acquisitions of IDEV Technologies and OptiMedica. Goodwill related to the IDEV acquisition was allocated to the Vascular Products segment and goodwill related to OptiMedica was allocated to a non-reportable segment. Foreign currency translation and other adjustments decreased goodwill in 2013 and 2011 by $168 million and $225 million, respectively, and increased goodwill in 2012 by $69 million. In addition, in connection with the separation of AbbVie on January 1, 2013, Abbott transferred approximately $6.1 billion of goodwill to AbbVie. The amount of goodwill related to reportable segments at December 31, 2013 was $2.9 billion for the Established Pharmaceutical Products segment, $286 million for the Nutritional Products segment, $444 million for the Diagnostic Products segment, and $3.1 billion for the Vascular Products segment. Other than the effects of the separation of AbbVie, there were no reductions of goodwill relating to the disposal of all or a portion of a business. There was no reduction of goodwill relating to impairments.

        The gross amount of amortizable intangible assets, primarily product rights and technology was $12.2 billion and $17.6 billion as of December 31, 2013 and 2012, respectively, and accumulated amortization was $6.8 billion and $9.7 billion as of December 31, 2013 and 2012, respectively. Indefinite-lived intangible assets, which relate to in-process research and development acquired in a business combination, were approximately $266 million and $691 million at December 31, 2013 and 2012, respectively. Gross amortizable intangible assets, accumulated amortization and indefinite-lived intangible assets of $5.7 billion, $3.8 billion and $417 million, respectively, were transferred to AbbVie as part of the separation on January 1, 2013. In 2012 and 2011, Abbott recorded impairment charges of $69 million and $125 million, respectively, for certain research and development assets due to changes in the projected development and regulatory timelines for the projects. The charges relate to non-reportable segments. Discounted cash flow analysis was used to analyze fair value and the charges are included in research and development expenses.

        The estimated annual amortization expense for intangible assets recorded at December 31, 2013 is approximately $711 million in 2014, $652 million in 2015, $636 million in 2016, $635 million in 2017 and $505 million in 2018. Amortizable intangible assets are amortized over 2 to 20 years (average 11 years).

60


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 7 — Restructuring Plans

        In 2013, Abbott management approved a plan to reduce costs and improve efficiencies across various functional areas as well as a plan to streamline certain manufacturing operations in order to reduce costs and improve efficiencies in Abbott's established pharmaceuticals business. In addition, in 2012, Abbott management approved plans to streamline various commercial operations in order to reduce costs and improve efficiencies in Abbott's core diagnostics, established pharmaceutical and nutritionals businesses. Abbott recorded employee related severance charges of approximately $78 million in 2013 and $167 million in 2012. Additional charges of approximately $4 million in 2013 and $22 million in 2012 were also recorded primarily for asset impairments. Approximately $35 million in 2013 and $70 million in 2012 are recorded in Cost of products sold and approximately $47 million in 2013 and $119 million as Selling, general and administrative expense in 2012. No significant cash payments were made during 2012 relating to the 2012 actions. The following summarizes the activity for these restructurings: (in millions)

Restructuring charges recorded in 2012

   $ 167  

Restructuring charges recorded in 2013

     78  

Payments and other adjustments

     (97 )
       
​ ​ ​ ​ ​

Accrued balance at December 31, 2013

   $ 148  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        In 2013 and prior years, Abbott management approved plans to realign its worldwide pharmaceutical and vascular manufacturing operations and selected domestic and international commercial and research and development operations in order to reduce costs. In 2013, Abbott recorded employee severance charges of approximately $11 million. In 2011, Abbott recorded charges of approximately $194 million reflecting the impairment of manufacturing facilities and other assets, employee severance and other related charges. Approximately $11 million in 2013 and $18 million in 2011 are classified as Cost of products sold. The remaining 2011 charge of $176 million related to businesses transferred to AbbVie and is being recognized in the results of discontinued operations.

        The following summarizes the activity for these restructurings: (in millions)

Accrued balance at January 1, 2011

   $ 77  

2011 restructuring charges

     194  

Payments, impairments and other adjustments

     (94 )
       
​ ​ ​ ​ ​

Accrued balance at December 31, 2011

     177  

Payments, impairments and other adjustments

     (48 )
       
​ ​ ​ ​ ​

Accrued balance at December 31, 2012

     129  

Transfer of liability to AbbVie

     (62 )

Restructuring charges

     11  

Payments and other adjustments

     (58 )
       
​ ​ ​ ​ ​

Accrued balance at December 31, 2013

   $ 20  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        An additional $41 million, $110 million and $25 million were recorded in 2013, 2012 and 2011, respectively, relating to these restructurings, primarily for accelerated depreciation.

        In 2012 and 2010, Abbott management approved restructuring plans primarily related to the acquisition of Solvay's pharmaceuticals business. These plans streamline operations, improve efficiencies and reduce costs in certain Solvay sites and functions as well as in certain Abbott and Solvay commercial

61


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 7 — Restructuring Plans (Continued)

organizations in various countries. In 2012, Abbott recorded a charge of approximately $150 million for employee severance and contractual obligations, primarily related to the exit from a research and development facility. These charges are related to businesses transferred to AbbVie and are being recognized in the results of discontinued operations. The accrued restructuring reserves of $115 million at December 31, 2012 related to these actions were transferred to AbbVie on January 1, 2013 as part of the separation. As such, there are no remaining accruals being reported in Abbott's balance sheet as of December 31, 2013.

        In 2011 and 2008, Abbott management approved plans to streamline global manufacturing operations, reduce overall costs, and improve efficiencies in Abbott's core diagnostic business. In 2011, a charge of $28 million was recorded in Cost of products sold. The following summarizes the activity for these restructurings: (in millions)

Accrued balance at January 1, 2011

   $ 88  

2011 restructuring charge

     28  

Payments and other adjustments

     (37 )
       
​ ​ ​ ​ ​

Accrued balance at December 31, 2011

     79  

Payments and other adjustments

     (23 )
       
​ ​ ​ ​ ​

Accrued balance at December 31, 2012

     56  

Payments and other adjustments

     (15 )
       
​ ​ ​ ​ ​

Accrued balance at December 31, 2013

   $ 41  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        In addition, charges of approximately $16 million and $42 million were recorded in 2012 and 2011, primarily for accelerated depreciation and product transfer costs.

Note 8 — Incentive Stock Program

        The 2009 Incentive Stock Program authorizes the granting of nonqualified stock options, restricted stock awards, restricted stock units, performance awards, foreign benefits and other share-based awards. Stock options, replacement stock options and restricted stock awards and units comprise the majority of benefits that have been granted and are currently outstanding under this program and a prior program. In 2013, Abbott granted 4,733,378 stock options, 918,819 replacement stock options, 848,674 restricted stock awards and 6,412,867 restricted stock units under this program.

        The purchase price of shares under option must be at least equal to the fair market value of the common stock on the date of grant, and the maximum term of an option is 10 years. Options generally vest equally over three years. Restricted stock awards generally vest between 3 and 5 years and for restricted stock awards that vest over 5 years, no more than one-third of the award vests in any one year upon Abbott reaching a minimum return on equity target. Restricted stock units vest over three years and upon vesting, the recipient receives one share of Abbott stock for each vested restricted stock unit. The aggregate fair market value of restricted stock awards and units is recognized as expense over the service period. Restricted stock awards and settlement of vested restricted stock units are issued out of treasury shares. Abbott generally issues new shares for exercises of stock options. Abbott does not have a policy of purchasing its shares relating to its share-based programs.

62


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 8 — Incentive Stock Program (Continued)

        In connection with the separation of AbbVie on January 1, 2013, Abbott modified its outstanding equity awards granted under incentive stock programs for its employees. The awards were generally modified such that immediately following the separation, the awardees held the same number of awards in Abbott stock and an equal number of awards in AbbVie stock. The exercise price on outstanding Abbott options was adjusted and the exercise price on the AbbVie options granted under this modification was established with the intention of generally preserving the value of the awards immediately prior to the separation. This modification did not result in additional compensation expense.

        At December 31, 2013, approximately 130 million shares were reserved for future grants. Subsequent to year-end, the reserve was reduced by approximately 22 million shares for stock options and restricted stock awards and units granted by the Board of Directors.

        The number of restricted stock awards and units outstanding and the weighted-average grant-date fair value at December 31, 2013 and January 1, 2013 was 14,385,221 and $30.13 and 15,728,503 and $25.51, respectively. The number of restricted stock awards and units, and the weighted-average grant-date fair value, that were granted, vested and lapsed during 2013 were 7,261,541 and $34.92, 7,821,999 and $25.36 and 782,824 and $29.34, respectively. The fair market value of restricted stock awards and units vested in 2013, 2012 and 2011 was $274 million, $385 million and $237 million, respectively.

 
   Options Outstanding   Exercisable Options  
 
   Shares   Weighted
Average
Exercise
Price 		  Weighted
Average
Remaining
Life (Years) 		  Shares   Weighted
Average
Exercise
Price 		  Weighted
Average
Remaining
Life (Years) 		 

December 31, 2012 (a)

     48,685,273   $ 24.97     4.0     43,511,651   $ 24.68     3.7  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                               

Granted

     5,652,197     34.91                          

Exercised

     (11,370,121 )   25.37                          

Lapsed

     (210,009 )   31.82                          
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

December 31, 2013

     42,757,340   $ 26.15     4.0     36,185,039   $ 25.02     3.1  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           
(a)
The amount of options outstanding and the weighted average exercise price have been revised to reflect the impact of the AbbVie separation.

        The aggregate intrinsic value of options outstanding and exercisable at December 31, 2013 was $525 million and $487 million, respectively. The total intrinsic value of options exercised in 2013, 2012 and 2011 was $120 million, $528 million and $94 million, respectively. The total unrecognized compensation cost related to all share-based compensation plans at December 31, 2013 amounted to approximately $153 million, which is expected to be recognized over the next three years.

        Total non-cash compensation expense charged against income from continuing operations in 2013, 2012 and 2011 for share-based plans totaled approximately $262 million, $284 million and $256 million, respectively, and the tax benefit recognized was approximately $84 million, $87 million and $71 million, respectively. Compensation cost capitalized as part of inventory is not significant.

63


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 8 — Incentive Stock Program (Continued)

        The fair value of an option granted in 2013, 2012 and 2011 was $5.77, $6.80, and $6.23, respectively. The fair value of an option grant was estimated using the Black-Scholes option-pricing model with the following assumptions

 
   2013   2012   2011  

Risk-free interest rate

     1.1 %   1.2 %   2.7 %

Average life of options (years)

     6.0     6.0     6.0  

Volatility

     20.0 %   21.0 %   21.0 %

Dividend yield

     1.6 %   3.6 %   4.1 %

        The risk-free interest rate is based on the rates available at the time of the grant for zero-coupon U.S. government issues with a remaining term equal to the option's expected life. The average life of an option is based on both historical and projected exercise and lapsing data. Expected volatility is based on implied volatilities from traded options on Abbott's stock and historical volatility of Abbott's stock over the expected life of the option. Dividend yield is based on the option's exercise price and annual dividend rate at the time of grant.

Note 9 — Debt and Lines of Credit

        The following is a summary of long-term debt at December 31: (in millions)

 
   2013   2012  

1.2% Notes, due 2015 (1)

   $ —   $ 3,500  

Variable Rate Notes, due 2015 (1)

     —     500  

1.75% Notes, due 2017 (1)

     —     4,000  

2.0% Notes, due 2018 (1)

     —     1,000  

5.125% Notes, due 2019

     947     947  

4.125% Notes, due 2020

     597     597  

2.9% Notes, due 2022 (1)

     —     3,100  

6.15% Notes, due 2037

     547     547  

6.0% Notes, due 2039

     515     515  

5.3% Notes, due 2040

     694     694  

4.4% Notes, due 2042 (1)

     —     2,600  

Other, including fair value adjustments relating to interest rate hedge contracts designated as fair value hedges

     88     85  
           
​ ​ ​ ​ ​ ​ ​ ​

Total, net of current maturities

     3,388     18,085  

Current maturities of long-term debt

     9     309  
           
​ ​ ​ ​ ​ ​ ​ ​

Total carrying amount

   $ 3,397   $ 18,394  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           
(1)
These notes were issued by AbbVie Inc. in November 2012. With the separation of AbbVie on January 1, 2013, Abbott no longer has any obligations related to this debt.

        In 2012, Abbott redeemed $7.7 billion of its outstanding notes. Abbott incurred a cost of $1.35 billion to extinguish this debt, net of gains from the unwinding of interest rate swaps related to the debt. In 2012, AbbVie Inc., a wholly owned subsidiary of Abbott, issued $14.7 billion of long-term debt with maturities

64


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 9 — Debt and Lines of Credit (Continued)

ranging from 3 to 30 years. The debt issued by AbbVie Inc. was guaranteed by Abbott with the guarantee expiring when AbbVie Inc. separated from Abbott on January 1, 2013.

        Principal payments required on long-term debt outstanding at December 31, 2013 are $9 million in 2014, $10 million in 2015, $3 million in 2016, $1 million in 2017, $1 million in 2018 and $3.3 billion in 2019 and thereafter.

        At December 31, 2013, Abbott's long-term debt rating was A+ by Standard & Poor's Corporation and A1 by Moody's Investors Service. Abbott has readily available financial resources, including unused lines of credit of $5.0 billion that support commercial paper borrowing arrangements which expire in 2017. Abbott's weighted-average interest rate on short-term borrowings was 0.2% at December 31, 2013 and 0.4% at December 31, 2012 and 2011.

Note 10 — Financial Instruments, Derivatives and Fair Value Measures

        Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, totaling $137 million at December 31, 2013, and $1.6 billion at December 31, 2012, are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Contracts totaling $1.0 billion were transferred to AbbVie as part of the separation on January 1, 2013. Accumulated gains and losses as of December 31, 2013 will be included in Cost of products sold at the time the products are sold, generally through the next twelve months. The amount of hedge ineffectiveness was not significant in 2013, 2012 and 2011.

        Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies and Japanese yen, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar, European currencies and Japanese yen. At December 31, 2013, 2012 and 2011, Abbott held $13.8 billion, $18.2 billion and $15.7 billion, respectively, of such foreign currency forward exchange contracts. Contracts totaling $4.3 billion were transferred to AbbVie as part of the separation on January 1, 2013.

        Abbott has designated foreign denominated short-term debt as a hedge of the net investment in a foreign subsidiary of approximately $505 million, $615 million and $680 million as of December 31, 2013, 2012 and 2011, respectively. Accordingly, changes in the fair value of this debt due to changes in exchange rates are recorded in Accumulated other comprehensive income (loss), net of tax.

        Abbott is a party to interest rate hedge contracts totaling $1.5 billion, $9.5 billion and $6.8 billion at December 31, 2013, 2012 and 2011, respectively, to manage its exposure to changes in the fair value of fixed-rate debt. $8.0 billion of the contracts outstanding at December 31, 2012 related to debt issued by AbbVie Inc. in the fourth quarter of 2012 and were transferred to AbbVie as part of the separation on January 1, 2013. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the

65


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 10 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount. No hedge ineffectiveness was recorded in income in 2013, 2012 and 2011 for these hedges.

        Gross unrealized holding gains on available-for-sale equity securities totaled $22 million, $51 million and $64 million at December 31, 2013, 2012 and 2011, respectively.

        The following table summarizes the amounts and location of certain derivative financial instruments as of December 31:

 
   Fair Value — Assets   Fair Value — Liabilities
 
   2013   2012   Balance Sheet Caption   2013   2012   Balance Sheet Caption
 
    
    
   (in millions)
    
    
    

Interest rate swaps designated as fair value hedges

   $ 87   $ 185   Deferred income taxes and other assets   $ —   $ 80   Post-employment obligations and other long-term liabilities

Foreign currency forward exchange contracts —

                                

Hedging instruments

     14     22   Other prepaid expenses and receivables     —     11   Other accrued liabilities

Others not designated as hedges

     70     98         75     135    

Debt designated as a hedge of net investment in a foreign subsidiary

     —     —   n/a     505     615   Short-term borrowings
                         
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  $ 171   $ 305       $ 580   $ 841    
                         
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                         

        The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges, debt designated as a hedge of net investment in a foreign subsidiary and the amounts and location of income (expense) and gain (loss) reclassified into income and for certain other derivative financial instruments. The amount of hedge ineffectiveness was not significant in 2013, 2012 and 2011 for these hedges.

 
   Gain (loss) Recognized in
Other Comprehensive
Income (loss) 		  Income (expense) and
Gain (loss) Reclassified
into Income 		   
 
   2013   2012   2011   2013   2012   2011   Income Statement Caption
 
   (in millions)
    

Foreign currency forward exchange contracts designated as cash flow hedges

   $ 35   $ 13   $ 67   $ 47   $ 114   $ (44 ) Cost of products sold

Debt designated as a hedge of net investment in a foreign subsidiary

     110     65     (30 )   —     —     —   n/a

Interest rate swaps designated as fair value hedges

     n/a     n/a     n/a     (98 )   62     488   Interest expense

Foreign currency forward exchange contracts not designated as hedges

     n/a     n/a     n/a     88     131     (41 ) Net foreign exchange (gain) loss

        The interest rate swaps are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The hedged debt is marked to market, offsetting the effect of marking the interest rate swaps to market.

        The carrying values and fair values of certain financial instruments as of December 31 are shown in the table below. The carrying values of all other financial instruments approximate their estimated fair values.

66


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 10 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from nonperformance by these counterparties.

 
   2013   2012  
 
   Carrying
Value 		  Fair
Value 		  Carrying
Value 		  Fair
Value 		 
 
   (in millions)
  

Long-term Investment Securities:

                          

Equity securities

   $ 93   $ 93   $ 213   $ 213  

Other

     26     24     61     56  

Total Long-term Debt

     (3,397 )   (3,930 )   (18,394 )   (19,588 )

Foreign Currency Forward Exchange Contracts:

                          

Receivable position

     84     84     120     120  

(Payable) position

     (75 )   (75 )   (146 )   (146 )

Interest Rate Hedge Contracts:

                          

Receivable position

     87     87     185     185  

(Payable) position

     —     —     (80 )   (80 )

67


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 10 — Financial Instruments, Derivatives and Fair Value Measures (Continued)

        The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the balance sheet:

 
    
   Basis of Fair Value Measurement  
 
   Outstanding
Balances 		  Quoted
Prices in
Active Markets 		  Significant Other
Observable
Inputs 		  Significant
Unobservable
Inputs 		 
 
   (in millions)
  

December 31, 2013:

                          

Equity securities

   $ 26   $ 26   $ —   $ —  

Interest rate swap financial instruments

     87     —     87     —  

Foreign currency forward exchange contracts

     84     —     84     —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Assets

   $ 197   $ 26   $ 171   $ —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Fair value of hedged long-term debt

   $ 1,623   $ —   $ 1,623   $ —  

Foreign currency forward exchange contracts

     75     —     75     —  

Contingent consideration related to business combinations

     208     —     —     208  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Liabilities

   $ 1,906   $ —   $ 1,698   $ 208  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

December 31, 2012:

                          

Equity securities

   $ 76   $ 76   $ —   $ —  

Interest rate swap financial instruments

     185     —     185     —  

Foreign currency forward exchange contracts

     120     —     120     —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Assets

   $ 381   $ 76   $ 305   $ —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Fair value of hedged long-term debt

   $ 9,632   $ —   $ 9,632   $ —  

Interest rate swap financial instruments

     80     —     80     —  

Foreign currency forward exchange contracts

     146     —     146     —  

Contingent consideration related to business combinations

     323     —     —     323  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Liabilities

   $ 10,181   $ —   $ 9,858   $ 323  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

        The fair value of the debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis using significant other observable inputs. The fair value of the contingent consideration was determined based on an independent appraisal adjusted for the time value of money, exchange and other changes in fair value.

Note 11 — Litigation and Environmental Matters

        Abbott has been identified as a potentially responsible party for investigation and cleanup costs at a number of locations in the United States and Puerto Rico under federal and state remediation laws and is investigating potential contamination at a number of company-owned locations. Abbott has recorded an estimated cleanup cost for each site for which management believes Abbott has a probable loss exposure. No individual site cleanup exposure is expected to exceed $4 million, and the aggregate cleanup exposure is not expected to exceed $15 million.

68


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 11 — Litigation and Environmental Matters (Continued)

        Abbott is involved in various claims and legal proceedings, and Abbott estimates the range of possible loss for its legal proceedings and environmental exposures to be from approximately $70 million to $90 million. The recorded accrual balance at December 31, 2013 for these proceedings and exposures was approximately $80 million. This accrual represents management's best estimate of probable loss, as defined by FASB ASC No. 450, "Contingencies." Within the next year, legal proceedings may occur that may result in a change in the estimated loss accrued by Abbott. While it is not feasible to predict the outcome of all such proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on Abbott's financial position, cash flows, or results of operations.

69


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 12 — Post-Employment Benefits

        Retirement plans consist of defined benefit, defined contribution and medical and dental plans. Information for Abbott's major defined benefit plans and post-employment medical and dental benefit plans is as follows:

 
   Defined Benefit
Plans 		  Medical and
Dental Plans 		 
(in millions)
   2013   2012   2013   2012  

Projected benefit obligations, January 1

   $ 11,322   $ 9,212   $ 1,889   $ 1,657  

Service cost — benefits earned during the year

     303     389     43     61  

Interest cost on projected benefit obligations

     276     460     59     81  

(Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs

     (650 )   1,461     (156 )   148  

Benefits paid

     (185 )   (308 )   (60 )   (63 )

Separation of AbbVie Inc. 

     (4,654 )   —     (450 )   —  

Other, including foreign currency translation

     20     108     (28 )   5  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Projected benefit obligations, December 31

   $ 6,432   $ 11,322   $ 1,297   $ 1,889  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Plan assets at fair value, January 1

   $ 7,949   $ 6,961   $ 417   $ 389  

Actual return on plans' assets

     727     878     61     48  

Company contributions

     724     379     40     40  

Benefits paid

     (185 )   (302 )   (56 )   (60 )

Separation of AbbVie Inc. 

     (3,107 )   —     —     —  

Other, primarily foreign currency translation

     15     33     —     —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Plan assets at fair value, December 31

   $ 6,123   $ 7,949   $ 462   $ 417  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Projected benefit obligations greater than plan assets, December 31

   $ (309 ) $ (3,373 ) $ (835 ) $ (1,472 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Long-term assets

   $ 685   $ 69   $ —   $ —  

Short-term liabilities

     (11 )   (43 )   —     —  

Long-term liabilities

     (983 )   (3,399 )   (835 )   (1,472 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net liability

   $ (309 ) $ (3,373 ) $ (835 ) $ (1,472 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Amounts Recognized in Accumulated Other Comprehensive Income (loss):

                          

Actuarial losses, net

   $ 1,791   $ 4,923   $ 334   $ 701  

Prior service cost (credits)

     20     61     (252 )   (322 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 1,811   $ 4,984   $ 82   $ 379  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

        In connection with separation of AbbVie on January 1, 2013, Abbott transferred to AbbVie Accumulated other comprehensive losses, net of income taxes, of approximately $1.4 billion. The projected benefit obligations for non-U.S. defined benefit plans was $2.0 billion and $3.1 billion at December 31,

70


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 12 — Post-Employment Benefits (Continued)

2013 and 2012, respectively. The accumulated benefit obligations for all defined benefit plans were $5.5 billion and $9.6 billion at December 31, 2013 and 2012, respectively.

        For plans where the accumulated benefit obligations exceeded plan assets at December 31, 2013 and 2012, the aggregate accumulated benefit obligations, the projected benefit obligations and the aggregate plan assets were as follows:

(in millions)
   2013   2012  

Accumulated benefit obligation

   $ 408   $ 8,100  

Projected benefit obligation

     505     9,619  

Fair value of plan assets

     —     6,243  

        In 2011, $776 million of assets and liabilities of a plan sponsored by Abbott Healthcare BV, a Dutch subsidiary of Abbott Laboratories, were irrevocably transferred to a Dutch insurance company in full settlement of that plan. The assets were used to purchase an annuity contract to fulfill the plan's obligations.

        The components of the net periodic benefit cost were as follows:

 
   Defined Benefit Plans   Medical and
Dental Plans 		 
 
   2013   2012   2011   2013   2012   2011  
 
   (in millions)
  

Service cost — benefits earned during the year

   $ 303   $ 389   $ 332   $ 43   $ 61   $ 55  

Interest cost on projected benefit obligations

     276     460     446     59     81     88  

Expected return on plans' assets

     (396 )   (611 )   (608 )   (36 )   (33 )   (34 )

Settlement

     —     —     40     —     —     —  

Amortization of actuarial losses

     169     244     163     34     34     38  

Amortization of prior service cost (credits)

     3     2     4     (35 )   (42 )   (42 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total cost

     355     484     377     65     101     105  

Less: Discontinued operations

     —     (206 )   (176 )   —     (48 )   (49 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net cost — continuing operations

   $ 355   $ 278   $ 201   $ 65   $ 53   $ 56  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           

        Other comprehensive income (loss) for each respective year includes the amortization of actuarial losses and prior service costs (credits) as noted in the previous table. Other comprehensive income (loss) for each respective year also includes: net actuarial gains and prior service credits of $995 million for defined benefit plans and $201 million for medical and dental plans in 2013; net actuarial losses of $1.2 billion for defined benefit plans and net actuarial losses of $134 million for medical and dental plans in 2012; and net actuarial losses of $1.1 billion for defined benefit plans and net actuarial gains of $66 million for medical and dental plans in 2011. The actuarial losses for 2012 and 2011 related to the businesses transferred to AbbVie as part of the separation were $167 million and $19 million, respectively; prior service costs were not significant.

        The pretax amount of actuarial losses and prior service cost (credits) included in Accumulated other comprehensive income (loss) at December 31, 2013 that is expected to be recognized in the net periodic benefit cost in 2014 is $102 million and $2 million of expense, respectively, for defined benefit pension plans and $17 million of expense and $37 million of income, respectively, for medical and dental plans.

71


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 12 — Post-Employment Benefits (Continued)

        The weighted average assumptions used to determine benefit obligations for defined benefit plans and medical and dental plans are as follows:

 
   2013   2012   2011  

Discount rate

     4.9 %   4.3 %   5.0 %

Expected aggregate average long-term change in compensation

     5.0 %   5.3 %   5.3 %

        The weighted average assumptions used to determine the net cost for defined benefit plans and medical and dental plans are as follows:

 
   2013   2012   2011  

Discount rate

     4.2 %   5.0 %   5.4 %

Expected return on plan assets

     7.8 %   8.0 %   7.8 %

Expected aggregate average long-term change in compensation

     5.0 %   5.3 %   5.1 %

        The assumed health care cost trend rates for medical and dental plans at December 31 were as follows:

 
   2013   2012   2011  

Health care cost trend rate assumed for the next year

     7 %   7 %   7 %

Rate that the cost trend rate gradually declines to

     5 %   5 %   5 %

Year that rate reaches the assumed ultimate rate

     2019     2019     2019  

        The discount rates used to measure liabilities were determined based on high-quality fixed income securities that match the duration of the expected retiree benefits. The health care cost trend rates represent Abbott's expected annual rates of change in the cost of health care benefits and is a forward projection of health care costs as of the measurement date. A one-percentage point increase/(decrease) in the assumed health care cost trend rate would increase/(decrease) the accumulated post-employment benefit obligations as of December 31, 2013, by $177 million /$(146) million, and the total of the service and interest cost components of net post-employment health care cost for the year then ended by approximately $18 million/$(14) million.

72


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 12 — Post-Employment Benefits (Continued)

        The following table summarizes the bases used to measure the defined benefit and medical and dental plan assets at fair value:

 
    
   Basis of Fair Value Measurement  
 
   Outstanding
Balances 		  Quoted
Prices in
Active Markets 		  Significant
Other
Observable
Inputs 		  Significant
Unobservable
Inputs 		 
 
   (in millions)
  

December 31, 2013:

                          

Equities:

                          

U.S. large cap (a)

   $ 1,618   $ 741   $ 877   $ —  

U.S. mid cap (b)

     409     134     275     —  

International (c)

     1,319     608     711     —  

Fixed income securities:

                          

U.S. government securities (d)

     453     61     392     —  

Corporate debt instruments (e)

     378     108     270     —  

Non-U.S. government securities (f)

     536     305     231     —  

Other (g)

     77     69     8     —  

Absolute return funds (h)

     1,474     197     791     486  

Commodities (i)

     170     6     97     67  

Other (j)

     151     149     —     2  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  $ 6,585   $ 2,378   $ 3,652   $ 555  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

December 31, 2012:

                          

Equities:

                          

U.S. large cap (a)

   $ 1,831   $ 1,058   $ 773   $ —  

U.S. mid cap (b)

     491     133     358     —  

International (c)

     1,607     657     950     —  

Fixed income securities:

                          

U.S. government securities (d)

     899     172     727     —  

Corporate debt instruments (e)

     736     355     381     —  

Non-U.S. government securities (f)

     374     83     291     —  

Other (g)

     24     —     24     —  

Absolute return funds (h)

     2,070     85     1,246     739  

Commodities (i)

     222     9     172     41  

Other (j)

     112     109     —     3  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  $ 8,366   $ 2,661   $ 4,922   $ 783  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Prior year amounts have been revised to conform with the current year's asset classifications.

(a)
A mix of index funds that track the S&P 500 (60 percent in 2013 and 50 percent in 2012) and separate actively managed equity accounts that are benchmarked to the Russell 1000 (40 percent in 2013 and 50 percent in 2012).

73


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 12 — Post-Employment Benefits (Continued)

(b)
A mix of index funds (70 percent in 2013 and 75 percent in 2012) and separate actively managed equity accounts (30 percent in 2013 and 25 percent in 2012) that track or are benchmarked to the S&P 400 midcap index.

(c)
Primarily separate actively managed pooled investment accounts that are benchmarked to the MSCI and MSCI emerging market indices.

(d)
Index funds not actively managed (50 percent in 2013 and 2012) and separate actively managed accounts (50 percent in 2013 and 2012).

(e)
Index funds not actively managed (40 percent in 2013 and 20 percent in 2012) and separate actively managed accounts (60 percent in 2013 and 80 percent in 2012).

(f)
Primarily United Kingdom, Japan and Irish government-issued bonds.

(g)
Primarily mortgage backed securities.

(h)
Primarily funds invested by managers that have a global mandate with the flexibility to allocate capital broadly across a wide range of asset classes and strategies including, but not limited to equities, fixed income, commodities, interest rate futures, currencies and other securities to outperform an agreed upon benchmark with specific return and volatility targets.

(i)
Primarily investments in liquid commodity future contracts and private energy funds.

(j)
Primarily cash and cash equivalents.

        Equities that are valued using quoted prices are valued at the published market prices. Equities in a common collective trust or a registered investment company that are valued using significant other observable inputs are valued at the net asset value (NAV) provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund minus its liabilities. Fixed income securities that are valued using significant other observable inputs are valued at prices obtained from independent financial service industry-recognized vendors. Absolute return funds and commodities are valued at the NAV provided by the fund administrator. Private energy funds are valued at the NAV provided by the partnership on a one-quarter lag adjusted for known cash flows and significant events through the reporting date.

        The following table summarizes the change in the value of assets that are measured using significant unobservable inputs:

 
   2013   2012  
 
   (in millions)
  

January 1

   $ 783   $ 682  

Transfers in (out of) from other categories

     6     6  

Separation of AbbVie, Inc. 

     (165 )   —  

Actual return on plan assets:

              

Assets on hand at year end

     29     59  

Assets sold during the year

     51     (4 )

Purchases, sales and settlements, net

     (149 )   40  
           
​ ​ ​ ​ ​ ​ ​ ​

December 31

   $ 555   $ 783  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

74


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 12 — Post-Employment Benefits (Continued)

        The investment mix of equity securities, fixed income and other asset allocation strategies is based upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return, less volatile fixed income securities. Investment allocations are made across a range of markets, industry sectors, capitalization sizes, and in the case of fixed income securities, maturities and credit quality. The plans do not directly hold any securities of Abbott. There are no known significant concentrations of risk in the plans' assets. Abbott's medical and dental plans' assets are invested in a similar mix as the pension plan assets. The actual asset allocation percentages at year end are consistent with the company's targeted asset allocation percentages.

        The plans' expected return on assets, as shown above is based on management's expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, as well as current economic and capital market conditions.

        Abbott funds its domestic pension plans according to IRS funding limitations. International pension plans are funded according to similar regulations. Abbott funded $724 million in 2013 and $379 million in 2012 to defined pension plans. Abbott expects to contribute approximately $400 million to its pension plans in 2014, of which approximately $300 million relates to its main domestic pension plan.

        Total benefit payments expected to be paid to participants, which includes payments funded from company assets, as well as paid from the plans, are as follows:

(in millions)
   Defined
Benefit Plans 		  Medical and
Dental Plans 		 

2014

   $ 186   $ 71  

2015

     198     73  

2016

     213     74  

2017

     229     76  

2018

     249     77  

2019 to 2023

     1,578     417  

75


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 12 — Post-Employment Benefits (Continued)

        The Abbott Stock Retirement Plan is the principal defined contribution plan. Abbott's contributions to this plan were $86 million in 2013, $150 million in 2012 and $151 million in 2011. The contribution amounts in 2012 and 2011 include amounts associated with the businesses transferred to AbbVie.

Note 13 — Taxes on Earnings from Continuing Operations

        Taxes on earnings from continuing operations reflect the annual effective rates, including charges for interest and penalties. Deferred income taxes reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts.

        In 2013, taxes on earnings from continuing operations reflect the recognition of $234 million of tax benefits as a result of the favorable resolution of various tax positions pertaining to prior years. Earnings from discontinued operations in 2013 include the recognition of $193 million of tax benefits as a result of the resolution of various tax positions related to AbbVie's operations prior to the separation. In addition, as a result of the American Taxpayer Relief Act of 2012 signed into law in January 2013, Abbott recognized a tax benefit in the tax provision related to continuing operations of approximately $103 million for the retroactive extension of the research tax credit and the look-through rules of section 954(c)(6) of the Internal Revenue Code to the beginning of 2012. The $1.515 billion domestic loss before taxes in 2012 includes $1.29 billion of net loss on the early extinguishment of debt.

        U.S. income taxes are provided on those earnings of foreign subsidiaries which are intended to be remitted to the parent company. Abbott does not record deferred income taxes on earnings reinvested indefinitely in foreign subsidiaries. Undistributed earnings reinvested indefinitely in foreign subsidiaries as working capital and plant and equipment aggregated $24.0 billion at December 31, 2013. It is not practicable to determine the amount of deferred income taxes not provided on these earnings. In the U.S., Abbott's federal income tax returns through 2010 are settled except for three items, and the income tax returns for years after 2010 are open. There are numerous other income tax jurisdictions for which tax returns are not yet settled, none of which are individually significant. Reserves for interest and penalties are not significant.

        Earnings from continuing operations before taxes, and the related provisions for taxes on earnings from continuing operations, were as follows:

(in millions)
   2013   2012   2011  

Earnings (Loss) From Continuing Operations Before Taxes:

                    

Domestic

   $ 529   $ (1,515 ) $ (593 )

Foreign

     1,992     1,820     1,829  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 2,521   $ 305   $ 1,236  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

76


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 13 — Taxes on Earnings from Continuing Operations (Continued)

 

(in millions)
   2013   2012   2011  

Taxes on Earnings From Continuing Operations:

                    

Current:

                    

Domestic

   $ 16   $ (21 ) $ (888 )

Foreign

     555     979     797  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total current

     571     958     (91 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Deferred:

                    

Domestic

     (308 )   (572 )   360  

Foreign

     (125 )   (660 )   (159 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total deferred

     (433 )   (1,232 )   201  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 138   $ (274 ) $ 110  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

        Differences between the effective income tax rate and the U.S. statutory tax rate were as follows:

 
   2013   2012   2011  

Statutory tax rate on earnings from continuing operations

     35.0 %   35.0 %   35.0 %

Benefit of lower tax rates and tax exemptions on foreign income

     (18.0 )   (75.7 )   (14.9 )

Resolution of certain tax positions pertaining to prior years

     (9.3 )   (69.4 )   (14.0 )

Effect of retroactive legislation

     (4.1 )   —     —  

State taxes, net of federal benefit

     1.7     3.4     (0.3 )

All other, net

     0.2     17.0     3.1  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Effective tax rate on earnings from continuing operations

     5.5 %   (89.7 )%   8.9 %
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

77


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 13 — Taxes on Earnings from Continuing Operations (Continued)

        The tax effect of the differences that give rise to deferred tax assets and liabilities were as follows:

(in millions)
   2013   2012  

Deferred tax assets:

              

Compensation and employee benefits

   $ 862   $ 1,936  

Other, primarily reserves not currently deductible, and NOL's and credit carryforwards        

     2,908     3,278  

Trade receivable reserves

     155     557  

Inventory reserves

     137     211  

Deferred intercompany profit

     274     1,095  

State income taxes

     196     197  
           
​ ​ ​ ​ ​ ​ ​ ​

Total deferred tax assets

     4,532     7,274  
           
​ ​ ​ ​ ​ ​ ​ ​

Deferred tax liabilities:

              

Depreciation

     (72 )   (75 )

Other, primarily the excess of book basis over tax basis of intangible assets

     (1,774 )   (2,447 )
           
​ ​ ​ ​ ​ ​ ​ ​

Total deferred tax liabilities

     (1,846 )   (2,522 )
           
​ ​ ​ ​ ​ ​ ​ ​

Total net deferred tax assets

   $ 2,686   $ 4,752  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        Abbott has incurred losses in a foreign jurisdiction where realization of the future economic benefit is so remote that the benefit is not reflected as a deferred tax asset. Valuation allowances for recorded deferred tax assets were not significant.

        The following table summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities or additions to deferred tax assets and liabilities if such unrecognized tax benefits were settled:

(in millions)
   2013   2012  

January 1

   $ 2,257   $ 2,123  

Increase due to current year tax positions

     244     673  

Increase due to prior year tax positions

     152     62  

Decrease due to prior year tax positions

     (541 )   (438 )

Lapse of statute

     (23 )   —  

Settlements

     (124 )   (163 )
           
​ ​ ​ ​ ​ ​ ​ ​

December 31

   $ 1,965   $ 2,257  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is approximately $1.7 billion. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by $350 million to $425 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.

78


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 14 — Segment and Geographic Area Information

        Abbott's principal business is the discovery, development, manufacture and sale of a broad line of health care products. Abbott's products are generally sold directly to retailers, wholesalers, hospitals, health care facilities, laboratories, physicians' offices and government agencies throughout the world. As a result of the separation of AbbVie, Abbott no longer has a Proprietary Pharmaceutical Products segment and this business has been removed from the 2012 and 2011 historical information presented below. Abbott's reportable segments are as follows:

        Established Pharmaceutical Products —  International sales of a broad line of branded generic pharmaceutical products.

        Nutritional Products —  Worldwide sales of a broad line of adult and pediatric nutritional products.

        Diagnostic Products —  Worldwide sales of diagnostic systems and tests for blood banks, hospitals, commercial laboratories and alternate-care testing sites. For segment reporting purposes, the Core Laboratories Diagnostics, Molecular Diagnostics, Point of Care and Ibis diagnostic divisions are aggregated and reported as the Diagnostic Products segment.

        Vascular Products —  Worldwide sales of coronary, endovascular, structural heart, vessel closure and other medical device products.

        Non-reportable segments include the Diabetes Care and Medical Optics segments.

        Abbott's underlying accounting records are maintained on a legal entity basis for government and public reporting requirements. Segment disclosures are on a performance basis consistent with internal management reporting. The cost of some corporate functions and the cost of certain employee benefits are charged to segments at predetermined rates that approximate cost. Remaining costs, if any, are not allocated to segments. In addition, effective January 1, 2013, intangible asset amortization is not allocated to operating segments, and intangible assets and goodwill are not included in the measure of each segment's assets. The segment information below for 2012 and 2011 has been adjusted to exclude intangible asset amortization from operating earnings and intangible assets and goodwill from the total segment asset information. The following segment information has been prepared in accordance with the

79


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 14 — Segment and Geographic Area Information (Continued)

internal accounting policies of Abbott, as described above, and are not presented in accordance with generally accepted accounting principles applied to the consolidated financial statements.

 
   Net Sales to External Customers (a)   Operating Earnings (a)  
(in millions)
   2013   2012   2011   2013   2012   2011  

Established Pharmaceuticals

   $ 4,974   $ 5,121   $ 5,355   $ 1,182   $ 1,237   $ 1,254  

Nutritionals

     6,740     6,461     5,989     1,263     1,020     792  

Diagnostics

     4,545     4,292     4,126     1,008     825     794  

Vascular

     3,012     3,071     3,333     962     1,020     1,111  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Reportable Segments

     19,271     18,945     18,803   $ 4,415   $ 4,102   $ 3,951  
                                 
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                 

Other

     2,577     2,549     2,604                    
                                 
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 21,848   $ 21,494   $ 21,407                    
                                 
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                 
(a)
Net sales and operating earnings were unfavorably affected by the relatively stronger U.S. dollar in 2013 and 2012 and were favorably affected by the relatively weaker U.S. dollar in 2011.

 
   2013   2012   2011  
 
   (in millions)
  

Total Reportable Segment Operating Earnings

   $ 4,415   $ 4,102   $ 3,951  

Corporate functions and benefit plans costs

     (514 )   (598 )   (529 )

Non-reportable segments

     423     443     457  

Net interest expense

     (90 )   (288 )   (294 )

Net loss on extinguishment of debt

     —     (1,351 )   —  

Share-based compensation

     (262 )   (284 )   (256 )

Amortization of intangible assets

     (791 )   (795 )   (884 )

Other, net (b)

     (660 )   (924 )   (1,209 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Earnings from Continuing Operations before Taxes

   $ 2,521   $ 305   $ 1,236  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

80


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 14 — Segment and Geographic Area Information (Continued)

(b)
Other, net includes: charges for cost reduction initiatives of approximately $350 million in 2013 and $430 million in 2012; and charges of $240 million in 2011 for cost reduction initiatives and integration.

 
   Depreciation   Additions to
Long-term Assets 		  Total Assets  
(in millions)
   2013   2012   2011   2013   2012   2011   2013   2012   2011  

Established Pharmaceuticals

   $ 84   $ 156   $ 169   $ 128   $ 237   $ 122   $ 2,637   $ 2,805   $ 4,348  

Nutritionals

     190     175     167     340     428     205     3,518     3,211     2,939  

Diagnostics

     368     295     313     394     349     394     3,312     3,286     3,218  

Vascular

     122     76     99     62     69     109     1,711     1,834     1,400  
                                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Reportable Segments

     764     702     748     924     1,083     830   $ 11,178   $ 11,136   $ 11,905  
                                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                                   

Other

     164     661     647     982     902     845                    
                                             
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 928   $ 1,363   $ 1,395   $ 1,906   $ 1,985   $ 1,675                    
                                             
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                             

 

 
   2013   2012   2011  
 
   (in millions)
  

Total Reportable Segment Assets

   $ 11,178   $ 11,136   $ 11,905  

Cash, investments and restricted funds (c)

     8,217     15,448     8,476  

Current deferred income taxes (c)

     2,528     2,986     2,701  

Non-reportable segments

     1,181     1,167     1,148  

Goodwill and intangible assets (c)

     15,507     24,362     25,695  

All other (c)

     4,342     12,136     10,352  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Assets

   $ 42,953   $ 67,235   $ 60,277  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               
(c)
In 2012 and 2011, the reported amounts include assets associated with the businesses transferred to AbbVie as part of the separation.

81


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 14 — Segment and Geographic Area Information (Continued)

 
   Net Sales to External
Customers (d) 		  Long-term Assets (e)  
 
   2013   2012   2011   2013   2012   2011  
 
   (in millions)
  

United States

   $ 6,269   $ 6,349   $ 6,302   $ 7,884   $ 15,244   $ 15,867  

Japan

     1,442     1,723     1,726     902     1,169     1,225  

Germany

     1,070     984     1,058     1,040     6,173     5,909  

The Netherlands

     960     1,107     1,204     560     532     462  

China

     1,083     859     625     356     259     127  

India

     922     919     917     3,080     3,467     3,160  

Brazil

     470     448     470     216     200     186  

Switzerland

     792     693     591     1,117     1,214     1,045  

Canada

     734     753     652     368     352     237  

Italy

     726     719     761     100     222     229  

France

     680     667     781     213     220     214  

Russia

     525     485     427     30     37     21  

Spain

     413     417     447     326     314     293  

United Kingdom

     479     497     475     1,380     1,345     1,273  

All Other Countries

     5,283     4,874     4,971     6,133     5,164     6,260  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Consolidated

   $ 21,848   $ 21,494   $ 21,407   $ 23,705   $ 35,912   $ 36,508  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           
(d)
Sales by country are based on the country that sold the product.

(e)
Amounts reported in 2012 and 2011 include assets associated with businesses transferred to AbbVie as part of the separation.

82


Abbott Laboratories and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Note 15 — Quarterly Results (Unaudited)

(in millions except per share data)

 
   2013   2012  

First Quarter

              

Continuing Operations:

              

Net Sales

   $ 5,378   $ 5,284  

Gross Profit

     2,747     2,716  

Earnings from Continuing Operations

     545     351  

Basic Earnings per Common Share

     0.35     0.22  

Diluted Earnings per Common Share

     0.34     0.22  

Net Earnings

     545     1,242  

Basic Earnings Per Common Share (a)

     0.35     0.79  

Diluted Earnings Per Common Share (a)

     0.34     0.78  

Market Price Per Share-High (b)

     35.34     29.42  

Market Price Per Share-Low (b)

     31.64     25.82  

Second Quarter

    
 		    
 		  

Continuing Operations:

              

Net Sales

   $ 5,446   $ 5,313  

Gross Profit

     2,704     2,748  

Earnings from Continuing Operations

     476     411  

Basic Earnings per Common Share

     0.30     0.26  

Diluted Earnings per Common Share

     0.30     0.26  

Net Earnings

     476     1,725  

Basic Earnings Per Common Share (a)

     0.30     1.09  

Diluted Earnings Per Common Share (a)

     0.30     1.08  

Market Price Per Share-High (b)

     38.77     30.85  

Market Price Per Share-Low (b)

     34.69     28.25  

Third Quarter

    
 		    
 		  

Continuing Operations:

              

Net Sales

   $ 5,369   $ 5,265  

Gross Profit

     2,722     2,581  

Earnings from Continuing Operations

     773     339  

Basic Earnings per Common Share

     0.50     0.21  

Diluted Earnings per Common Share

     0.49     0.21  

Net Earnings

     966     1,943  

Basic Earnings Per Common Share (a)

     0.62     1.22  

Diluted Earnings Per Common Share (a)

     0.61     1.21  

Market Price Per Share-High (b)

     37.16     33.69  

Market Price Per Share-Low (b)

     32.70     30.39  

Fourth Quarter

    
 		    
 		  

Continuing Operations:

              

Net Sales

   $ 5,655   $ 5,632  

Gross Profit

     2,844     2,837  

Earnings (loss) from Continuing Operations

     589     (522 )

Basic Earnings per Common Share

     0.38     (0.33 )

Diluted Earnings per Common Share

     0.37     (0.33 )

Net Earnings

     589     1,053  

Basic Earnings Per Common Share (a)

     0.38     0.66  

Diluted Earnings Per Common Share (a)

     0.37     0.66  

Market Price Per Share-High (b)

     38.81     34.67  

Market Price Per Share-Low (b)

     32.75     29.96  
(a)
The sum of the four quarters' of earnings per share for 2013 and 2012 may not add to the full year earnings per share amount due to rounding and/or the use of quarter-to-date weighted average shares to calculate the earnings per share amount in each respective quarter.

(b)
The 2012 market prices per share reflect historical share prices that have been adjusted to reflect the separation of AbbVie.

83


 MANAGEMENT REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING

        The management of Abbott Laboratories is responsible for establishing and maintaining adequate internal control over financial reporting. Abbott's internal control system was designed to provide reasonable assurance to the company's management and board of directors regarding the preparation and fair presentation of published financial statements.

        All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

        Abbott's management assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2013. In making this assessment, it used the criteria set forth in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we believe that, as of December 31, 2013, the company's internal control over financial reporting was effective based on those criteria.

        Abbott's independent registered public accounting firm has issued an audit report on their assessment of the effectiveness of the company's internal control over financial reporting. This report appears on page 86.

Miles D. White
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

Thomas C. Freyman
EXECUTIVE VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER

Robert E. Funck
VICE PRESIDENT, CONTROLLER

February 21, 2014

84


 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Abbott Laboratories:

        We have audited the accompanying consolidated balance sheets of Abbott Laboratories and subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related consolidated statements of earnings, comprehensive income, shareholders' investment, and cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

        As discussed in Note 2 to the consolidated financial statements, on January 1, 2013, the Company distributed all of the outstanding shares of AbbVie Inc., which encompasses the Company's research-based pharmaceuticals business, to the Company's shareholders. Also, as discussed in Note 1, in 2011 the Company changed the year end of its foreign subsidiaries from a November 30 fiscal year end to a December 31 calendar year end.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2014 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 21, 2014

85


 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Shareholders of Abbott Laboratories:

        We have audited the internal control over financial reporting of Abbott Laboratories and subsidiaries (the "Company") as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended December 31, 2013 and our report dated February 21, 2014 expressed an unqualified opinion on those financial statements and includes an explanatory paragraph regarding the distribution of the shares of AbbVie Inc. to the Company's shareholders and the Company's change to the year end of its foreign subsidiaries.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 21, 2014

86

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        As previously reported on Abbott's Current Report on Form 8-K, dated December 14, 2012, the Audit Committee of Abbott's Board of Directors approved the dismissal of Deloitte & Touche LLP (Deloitte) as Abbott's independent registered public accountant, effective as of the date of Deloitte's completion of the audit services for the fiscal year ended December 31, 2013 and the filing of Abbott's 2013 Annual Report on Securities and Exchange Commission Form 10-K, and approved the appointment of Ernst & Young LLP as Abbott's independent registered public accounting firm to perform independent audit services beginning with the fiscal year ending December 31, 2014.

        During the fiscal years ended December 31, 2013, 2012 and 2011, and through February 21, 2014, (i) there were no disagreements (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between Abbott and Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreement in connection with its reports on Abbott's consolidated financial statements for such years, and (ii) there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

        Evaluation of disclosure controls and procedures.    The Chief Executive Officer, Miles D. White, and the Chief Financial Officer, Thomas C. Freyman, evaluated the effectiveness of Abbott Laboratories' disclosure controls and procedures as of the end of the period covered by this report, and concluded that Abbott Laboratories' disclosure controls and procedures were effective to ensure that information Abbott is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and to ensure that information required to be disclosed by Abbott in the reports that it files or submits under the Exchange Act is accumulated and communicated to Abbott's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

        Management's annual report on internal control over financial reporting.    Management's report on Abbott's internal control over financial reporting is included on page 84 hereof. The report of Abbott's independent registered public accounting firm related to their assessment of the effectiveness of internal control over financial reporting is included on page 86 hereof.

        Changes in internal control over financial reporting.    During the quarter ended December 31, 2013, there were no changes in Abbott's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Abbott's internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

        None.

87


 PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

        Incorporated herein by reference are "Nominees for Election as Directors," "Committees of the Board of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance," and "Procedure for Recommendation and Nomination of Directors and Transaction of Business at Annual Meeting" to be included in the 2014 Abbott Laboratories Proxy Statement. The 2014 Proxy Statement will be filed on or about March 14, 2014. Also incorporated herein by reference is the text found under the caption, "Executive Officers of the Registrant" on pages 19 through 21 hereof.

        Abbott has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and principal accounting officer and controller. That code is part of Abbott's code of business conduct which is available free of charge through Abbott's investor relations website (www.abbottinvestor.com). Abbott intends to include on its website any amendment to, or waiver from, a provision of its code of ethics that applies to Abbott's principal executive officer, principal financial officer, and principal accounting officer and controller that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K.

ITEM 11.    EXECUTIVE COMPENSATION

        The material to be included in the 2014 Proxy Statement under the headings "2013 Director Compensation," and "Executive Compensation," and "Compensation Committee Report" is incorporated herein by reference. The 2014 Proxy Statement will be filed on or about March 14, 2014.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

(a)
Equity Compensation Plan Information.

        The following table presents information as of December 31, 2013 about our compensation plans under which Abbott common shares have been authorized for issuance.

Plan Category
  (a)
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants
and rights 		  (b)
Weighted-
average exercise
price of
outstanding
options,
warrants and
rights 		  (c)
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a)) 		 

Equity compensation plans approved by security holders (1)

     42,757,340   $ 26.15     137,024,619  

Equity compensation plans not approved by security holders

     0     —     0  

Total (1)

     42,757,340   $ 26.15     137,024,619  
(1)
(i) Abbott Laboratories 1996 Incentive Stock Program. Benefits under the 1996 Program include stock options intended to qualify for special tax treatment under Section 422 of the Internal Revenue Code ("incentive stock options"), stock options that do not qualify for that special tax treatment ("non-qualified stock options"), restricted stock, restricted stock units, stock appreciation rights, performance awards, and foreign qualified benefits. The shares that remain available for issuance under the 1996 Program may be issued in connection with any one of these benefits and may be either authorized but unissued shares or treasury shares (except that restricted stock awards may be satisfied only from treasury shares).

88

    If there is a lapse, expiration, termination, forfeiture or cancellation of any benefit granted under the 1996 Program without the issuance of shares or payment of cash thereunder, the shares subject to or reserved for that benefit, or so reacquired, may again be used for new stock options, rights, or awards of any type authorized under the 1996 Program. If shares are issued under any benefit under the 1996 Program and thereafter are reacquired by Abbott pursuant to rights reserved upon their issuance, or pursuant to the payment of the purchase price of shares under stock options by delivery of other common shares of Abbott, the shares subject to or reserved for that benefit, or so reacquired, may not again be used for new stock options, rights, or awards of any type authorized under the 1996 Program.

    In April 2009, the 1996 Program was replaced by the Abbott Laboratories 2009 Incentive Stock Program. No further awards will be granted under the 1996 Program.

    (ii) Abbott Laboratories 2009 Incentive Stock Program. Benefits under the 2009 Program include stock options that do not qualify for special tax treatment under Section 422 of the Internal Revenue Code ("non-qualified stock options"), restricted stock, restricted stock units, performance awards, other share-based awards (including stock appreciation rights, dividend equivalents and recognition awards), awards to non-employee directors, and foreign benefits. The shares that remain available for issuance under the 2009 Program may be issued in connection with any one of these benefits and may be either authorized but unissued shares or treasury shares (except that restricted stock awards are satisfied from treasury shares).

    If there is a lapse, expiration, termination, forfeiture or cancellation of any benefit granted under the 2009 Program without the issuance of shares or payment of cash thereunder, the shares subject to or reserved for that benefit, or so reacquired, may again be used for new stock options, rights, or awards of any type authorized under the 2009 Program. If shares are issued under any benefit under the 2009 Program and thereafter are reacquired by Abbott pursuant to rights reserved upon their issuance, or pursuant to the payment of the purchase price of shares under stock options by delivery of other common shares of Abbott, the shares subject to or reserved for that benefit, or so reacquired, may not again be used for new stock options, rights, or awards of any type authorized under the 2009 Program.

    (iii) Abbott Laboratories 2009 Employee Stock Purchase Plan for Non-U.S. Employees. Eligible employees of participating non-U.S. affiliates of Abbott may participate in this plan. An eligible employee may authorize payroll deductions at the rate of 1% to 10% of eligible compensation (in multiples of one percent) subject to a limit of US $12,500 during any purchase cycle.

    Purchase cycles are generally six months long and usually begin on August 1 and February 1. On the last day of each purchase cycle, Abbott uses participant contributions to acquire Abbott common shares. The shares acquired come from treasury shares. The purchase price is 85% of the lower of the fair market value of the shares on that date or on the first day of that purchase cycle.

    (iv) Advanced Medical Optics, Inc. Plans. In 2009, in connection with its acquisition of Advanced Medical Optics, Inc., Abbott assumed options outstanding under the Amended and Restated Advanced Medical Optics, Inc. 2002 Incentive Compensation Plan, as amended; AMO's 2004 Stock Incentive Plan, as amended and restated; the Advanced Medical Optics, Inc. 2005 Incentive Compensation Plan; and the VISX, Incorporated 2000 Stock Plan. As of December 31, 2013, 1,125,820 options remained outstanding under the plans. These options have a weighted average purchase price of $40.48. No further awards will be granted under the plans.

        For additional information concerning the Abbott Laboratories 1996 Incentive Stock Program, the Abbott Laboratories 2009 Incentive Stock Program, and the Abbott Laboratories 2009 Employee Stock Purchase Plan for Non-U.S. Employees, see the discussion in Note 8 entitled "Incentive Stock Program" of the Notes to Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data."

(b)
Information Concerning Security Ownership.    Incorporated herein by reference is the material under the heading "Security Ownership of Executive Officers and Directors" in the 2014 Proxy Statement. The 2014 Proxy Statement will be filed on or about March 14, 2014.

89

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

        The material to be included in the 2014 Proxy Statement under the headings "The Board of Directors," "Committees of the Board of Directors," "Leadership Structure," "Director Selection, "Board Diversity," "Corporate Governance Materials," and "Approval Process for Related Person Transactions" is incorporated herein by reference. The 2014 Proxy Statement will be filed on or about March 14, 2014.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

        The material to be included in the 2014 Proxy Statement under the headings "Audit Fees and Non-Audit Fees" and "Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditor" is incorporated herein by reference. The 2014 Proxy Statement will be filed on or about March 14, 2014.

90


 PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)
Documents filed as part of this Form 10-K.

(1)
Financial Statements:    See Item 8, "Financial Statements and Supplementary Data," on page 45 hereof, for a list of financial statements.

(2)
Financial Statement Schedules:    The required financial statement schedules are found on the pages indicated below. These schedules should be read in conjunction with the Consolidated Financial Statements of Abbott Laboratories:

 
Abbott Laboratories Financial Statement Schedules
  Page No.
 

Valuation and Qualifying Accounts (Schedule II)

   94
 

Schedules I, III, IV, and V are not submitted because they are not applicable or not required

    
 

Report of Independent Registered Public Accounting Firm

   95
 

Individual Financial Statements of businesses acquired by the registrant have been omitted pursuant to Rule 3.05 of Regulation S-X

    
(b)
Exhibits filed (see Exhibit Index on pages 96 through 101).

(c)
Financial Statement Schedule filed (page 94).

91


 SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Abbott Laboratories has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    ABBOTT LABORATORIES

 
 
By
 
/s/ MILES D. WHITE
 Miles D. White
Chairman of the Board and
Chief Executive Officer

 
 
Date: February 21, 2014

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Abbott Laboratories on February     , 2014 in the capacities indicated below.

/s/ MILES D. WHITE
 Miles D. White
Chairman of the Board, Chief Executive Officer
and Director of Abbott Laboratories
(principal executive officer)		   /s/ THOMAS C. FREYMAN
 Thomas C. Freyman
Executive Vice President, Finance and Chief
Financial Officer (principal financial officer)

/s/ ROBERT E. FUNCK
 Robert E. Funck
Vice President and Controller
(principal accounting officer)
 
 

/s/ ROBERT J. ALPERN, M.D.
 Robert J. Alpern, M.D.
Director of Abbott Laboratories
 
/s/ ROXANNE S. AUSTIN
 Roxanne S. Austin
Director of Abbott Laboratories

/s/ SALLY E. BLOUNT, PH.D.
 Sally E. Blount, Ph.D.
Director of Abbott Laboratories
 
/s/ W. JAMES FARRELL
 W. James Farrell
Director of Abbott Laboratories

/s/ EDWARD M. LIDDY
 Edward M. Liddy
Director of Abbott Laboratories
 
/s/ NANCY MCKINSTRY
 Nancy McKinstry
Director of Abbott Laboratories

92

/s/ PHEBE N. NOVAKOVIC
 Phebe N. Novakovic
Director of Abbott Laboratories		   /s/ WILLIAM A. OSBORN
 William A. Osborn
Director of Abbott Laboratories

/s/ SAMUEL C. SCOTT III
 Samuel C. Scott III
Director of Abbott Laboratories
 
/s/ GLENN F. TILTON
 Glenn F. Tilton
Director of Abbott Laboratories

93


 ABBOTT LABORATORIES AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012, AND 2011
(in millions of dollars)

Allowances for Doubtful
Accounts and Product Returns
  Balance
at Beginning
of Year 		  Provisions/
Charges
to Income 		  Amounts
Charged Off
and Other
Deductions 		  Balance at
End of Year 		 

2013

   $ 406   $ 163   $ (257 )(1) $ 312  

2012

     421     343     (358 )   406  

2011

     389     430     (398 )   421  
(1)
Includes $178 million transferred to AbbVie as part of the separation on January 1, 2013.

94


 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Abbott Laboratories:

We have audited the consolidated financial statements of Abbott Laboratories and subsidiaries (the "Company") as of December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013, and the Company's internal control over financial reporting as of December 31, 2013, and have issued our reports thereon dated February 21, 2014, which report relating to the consolidated financial statements expresses an unqualified opinion and includes an explanatory paragraph regarding the distribution of the shares of AbbVie Inc. to the Company's shareholders and the Company's change to the year end of its foreign subsidiaries; such reports are included elsewhere in this Form 10-K. Our audits also included the consolidated financial statement schedule of the Company listed in Item 15. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois
February 21, 2014

95


 EXHIBIT INDEX
ABBOTT LABORATORIES
ANNUAL REPORT
FORM 10-K
2013

        Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be "filed under the Securities Exchange Act of 1934."

10-K
Exhibit
Table
Item No. 		   
 

2.1

  

*Amendment No. 2 to Business Transfer Agreement dated January 29, 2011, by and among Abbott Healthcare Private Limited, Abbott Laboratories, Piramal Healthcare Limited ("Piramal") and certain shareholders of Piramal, filed as Exhibit 2 to the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.
 

2.2

  

*Separation and Distribution Agreement, dated as of November 28, 2012, by and between Abbott Laboratories and AbbVie Inc., filed as Exhibit 2.1 to the Abbott Laboratories Current Report on Form 8-K dated November 28, 2012.
 

 

Certain schedules and exhibits have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Abbott will furnish supplemental copies of any such schedules or exhibits to the U.S. Securities and Exchange Commission upon request.
 

3.1

  

*Articles of Incorporation, Abbott Laboratories, filed as Exhibit 3.1 to the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
 

3.2

  

*By-Laws of Abbott Laboratories, as amended and restated effective April 27, 2012, filed as Exhibit 3.1 to the Abbott Laboratories Current Report on Form 8-K dated February 17, 2012.
 

4.1

  

*Indenture dated as of February 9, 2001, between Abbott Laboratories and The Bank of New York Mellon Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association, successor to Bank One Trust Company, N.A.) (including form of Security), filed as Exhibit 4.1 to the Abbott Laboratories Registration Statement on Form S-3 dated February 12, 2001.
 

4.2

  

*Supplemental Indenture dated as of February 27, 2006, between Abbott Laboratories and The Bank of New York Mellon Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association), filed as Exhibit 4.2 to the Abbott Laboratories Registration Statement on Form S-3 dated February 28, 2006.
 

4.3

  

*Form of $1,000,000,000 6.150% Note due 2037, filed as Exhibit 99.6 to the Abbott Laboratories Current Report on Form 8-K dated November 6, 2007.
 

4.4

  

*Actions of the Authorized Officers with respect to Abbott's 5.150% Notes due 2012, 5.600% Notes due 2017 and 6.150% Notes due 2037, filed as Exhibit 99.3 to the Abbott Laboratories Current Report on Form 8-K dated November 6, 2007.
 

4.5

  

*Form of $2,000,000,000 5.125% Note due 2019, filed as Exhibit 99.4 to the Abbott Laboratories Current Report on Form 8-K dated February 26, 2009.
 

4.6

  

*Form of $1,000,000,000 6.000% Note due 2039, filed as Exhibit 99.5 to the Abbott Laboratories Current Report on Form 8-K dated February 26, 2009.

96

10-K
Exhibit
Table
Item No. 		   
 

4.7

  

*Actions of the Authorized Officers with respect to Abbott's 5.125% Note due 2019 and 6.000% Note due 2039, filed as Exhibit 99.3 to the Abbott Laboratories Current Report on Form 8-K dated February 26, 2009.
 

4.8

  

*Form of 2020 Note, filed as Exhibit 99.5 to the Abbott Laboratories Current Report on Form 8-K dated May 27, 2010.
 

4.9

  

*Form of 2040 Note, filed as Exhibit 99.6 to the Abbott Laboratories Current Report on Form 8-K dated May 27, 2010.
 

4.10

  

*Actions of the Authorized Officers with respect to Abbott's 2.70% Notes, 4.125% Notes and 5.30% Notes, filed as Exhibit 99.3 to the Abbott Laboratories Current Report on Form 8-K dated May 27, 2010.
 

 

Other debt instruments are omitted in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K. Copies of such agreements will be furnished to the Securities and Exchange Commission upon request.
 

10.1

  

*Supplemental Plan Abbott Laboratories Extended Disability Plan, filed as an exhibit (pages 50-51) to the 1992 Abbott Laboratories Annual Report on Form 10-K.**
 

10.2

  

*Abbott Laboratories Deferred Compensation Plan, as amended effective January 1, 2008, filed as Exhibit 4.1 to the 2008 Abbott Laboratories Annual Report on Form 10-K.**
 

10.3

  

*Abbott Laboratories 401(k) Supplemental Plan, as amended and restated, filed as Exhibit 10.3 to the 2013 Abbott Laboratories Annual Report on Form 10-K.**
 

10.4

  

*Abbott Laboratories Supplemental Pension Plan, as amended and restated, filed as Exhibit 10.4 to the 2013 Abbott Laboratories Annual Report on Form 10-K.**
 

10.5

  

The 1986 Abbott Laboratories Management Incentive Plan, as amended and restated.**
 

10.6

  

*1998 Abbott Laboratories Performance Incentive Plan, as amended effective January 1, 2008, filed as Exhibit 10.7 to the 2008 Abbott Laboratories Annual Report on Form 10-K.**
 

10.7

  

*Rules for the 1998 Abbott Laboratories Performance Incentive Plan, as amended and restated, filed as Exhibit 10.7 to the 2013 Abbott Laboratories Annual Report on Form 10-K.**
 

10.8

  

*The Abbott Laboratories 1996 Incentive Stock Program, as amended and restated through the 6th Amendment February 20, 2009, filed as Exhibit 10.11 to the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.**
 

10.9

  

*Abbott Laboratories 2009 Incentive Stock Program, as amended and restated, filed as Exhibit 10.9 to the 2013 Abbott Laboratories Annual Report on Form 10-K.**
 

10.10

  

*Abbott Laboratories Non-Employee Directors' Fee Plan, as amended and restated, filed as Exhibit 10.10 to the 2013 Abbott Laboratories Annual Report on Form 10-K.**
 

10.11

  

*Form of Non-Employee Director Stock Option Agreement under the Abbott Laboratories 1996 Incentive Stock Program granted on or after February 18, 2005, filed as Exhibit 10.7 to the Abbott Laboratories Current Report on Form 8-K dated February 18, 2005.**
 

10.12

  

*Form of Employee Stock Option Agreement for a Non-Qualified Stock Option granted with an Incentive Stock Option under the Abbott Laboratories 1996 Incentive Stock Program, filed as Exhibit 10.1 to the Abbott Laboratories Current Report on Form 8-K dated August 20, 2004.**

97

10-K
Exhibit
Table
Item No. 		   
 

10.13

  

*Form of Employee Stock Option Agreement for a Non-Qualified Stock Option under the Abbott Laboratories 1996 Incentive Stock Program, filed as Exhibit 10.2 to the Abbott Laboratories Current Report on Form 8-K dated August 20, 2004.**
 

10.14

  

*Form of Employee Stock Option Agreement for an Incentive Stock Option granted with a Non-Qualified Stock Option under the Abbott Laboratories 1996 Incentive Stock Program, filed as Exhibit 10.3 to the Abbott Laboratories Current Report on Form 8-K dated August 20, 2004.**
 

10.15

  

*Form of Employee Stock Option Agreement for an Incentive Stock Option under the Abbott Laboratories 1996 Incentive Stock Program, filed as Exhibit 10.4 to the Abbott Laboratories Current Report on Form 8-K dated August 20, 2004.**
 

10.16

  

*Form of Employee Stock Option Agreement for a Replacement Stock Option under the Abbott Laboratories 1996 Incentive Stock Program, filed as Exhibit 10.5 to the Abbott Laboratories Current Report on Form 8-K dated August 20, 2004.**
 

10.17

  

*Form of Non-Employee Director Restricted Stock Unit Agreement under Abbott Laboratories 1996 Incentive Stock Program, filed as Exhibit 10.2 to the Abbott Laboratories Current Report on Form 8-K dated December 10, 2004.**
 

10.18

  

*Form of Employee Stock Option Agreement for a Non-Qualified Stock Option granted with an Incentive Stock Option under the Abbott Laboratories 1996 Incentive Stock Program on or after February 18, 2005, filed as Exhibit 10.1 to the Abbott Laboratories Current Report on Form 8-K dated February 18, 2005.**
 

10.19

  

*Form of Employee Stock Option Agreement for a new Non-Qualified Stock Option under the Abbott Laboratories 1996 Incentive Stock Program granted on or after February 18, 2005, filed as Exhibit 10.2 to the Abbott Laboratories Current Report on Form 8-K dated February 18, 2005.**
 

10.20

  

*Form of Employee Stock Option Agreement for an Incentive Stock Option granted with a Non-Qualified Stock Option under the Abbott Laboratories 1996 Incentive Stock Program on or after February 18, 2005, filed as Exhibit 10.3 to the Abbott Laboratories Current Report on Form 8-K dated February 18, 2005.**
 

10.21

  

*Form of Employee Stock Option Agreement for an Incentive Stock Option under the Abbott Laboratories 1996 Incentive Stock Program granted on or after February 18, 2005, filed as Exhibit 10.4 to the Abbott Laboratories Current Report on Form 8-K dated February 18, 2005.**
 

10.22

  

*Form of Non-Qualified Stock Option Agreement for an award of non-qualified stock options under the Abbott Laboratories 1996 Incentive Stock Program granted on or after February 17, 2006, filed as Exhibit 10.4 to the Abbott Laboratories Current Report on Form 8-K dated February 16, 2006.**
 

10.23

  

*Form of Non-Qualified Stock Option Agreement for an award of non-qualified stock options under the Abbott Laboratories 1996 Incentive Stock Program granted on or after February 20, 2009, filed as Exhibit 10.3 to the Abbott Laboratories Current Report on 8-K dated February 20, 2009.**

98

10-K
Exhibit
Table
Item No. 		   
 

10.24

  

*Form of Non-Qualified Replacement Stock Option Agreement for an award of non-qualified replacement stock options under the Abbott Laboratories 1996 Incentive Stock Program granted on or after February 20, 2009, filed as Exhibit 10.4 to the Abbott Laboratories Current Report on 8-K dated February 20, 2009.**
 

10.25

  

*Form of Non-Employee Director Non-Qualified Stock Option Agreement, filed as Exhibit 10.2 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.26

  

*Form of Non-Employee Director Restricted Stock Unit Agreement, filed as Exhibit 10.3 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.27

  

*Form of Non-Employee Director Non-Qualified Replacement Stock Option Agreement, filed as Exhibit 10.4 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.28

  

*Form of Non-Qualified Stock Option Agreement (ratably vested), filed as Exhibit 10.5 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.29

  

*Form of Non-Qualified Replacement Stock Option Agreement, filed as Exhibit 10.6 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.30

  

*Form of Performance Restricted Stock Agreement, filed as Exhibit 10.7 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.31

  

*Form of Restricted Stock Agreement (ratably vested), filed as Exhibit 10.8 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.32

  

*Form of Restricted Stock Agreement (cliff vested), filed as Exhibit 10.9 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.33

  

*Form of Performance Restricted Stock Agreement (annual performance based), filed as Exhibit 10.10 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.34

  

*Form of Performance Restricted Stock Agreement (interim performance based), filed as Exhibit 10.11 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.35

  

*Form of Restricted Stock Unit Agreement (cliff vested), filed as Exhibit 10.12 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.36

  

*Form of Restricted Stock Unit Agreement (ratably vested), filed as Exhibit 10.13 to the Abbott Laboratories Current Report on Form 8-K dated April 24, 2009.**
 

10.37

  

Form of Restricted Stock Unit Agreement (ratably vested).
 

10.38

  

Form of Restricted Stock Unit Agreement for foreign employees (ratably vested).
 

10.39

  

Form of Performance Restricted Stock Unit Agreement for foreign employees (annual performance based).
 

10.40

  

Form of Performance Restricted Stock Unit Agreement for foreign executive officers (annual performance based).
 

10.41

  

Form of Performance Restricted Stock Unit Agreement for foreign employees (interim performance based).
 

10.42

  

Form of Performance Restricted Stock Unit Agreement for foreign executive officers (interim performance based).

99

10-K
Exhibit
Table
Item No. 		   
 

10.43

  

Form of Restricted Stock Unit Agreement (cliff vested).
 

10.44

  

Form of Restricted Stock Unit Agreement for executive officers (cliff vested).
 

10.45

  

Form of Restricted Stock Unit Agreement for foreign employees (cliff vested).
 

10.46

  

Form of Restricted Stock Unit Agreement for foreign executive officers (cliff vested).
 

10.47

  

Form of Non-Employee Director Restricted Stock Unit Agreement.
 

10.48

  

Form of Non-Employee Director Restricted Stock Unit Agreement for foreign non-employee directors.
 

10.49

  

Form of Restricted Stock Unit Agreement for Participants in France.
 

10.50

  

Form of Restricted Stock Agreement (ratably vested).
 

10.51

  

Form of Restricted Stock Agreement for executive officers (ratably vested).
 

10.52

  

Form of Performance Restricted Stock Agreement (annual performance based).
 

10.53

  

Form of Performance Restricted Stock Agreement for executive officers (annual performance based).
 

10.54

  

Form of Performance Restricted Stock Agreement (interim performance based).
 

10.55

  

Form of Performance Restricted Stock Agreement for executive officers (interim performance based).
 

10.56

  

Form of Restricted Stock Agreement (cliff vested).
 

10.57

  

Form of Restricted Stock Agreement for executive officers (cliff vested).
 

10.58

  

Form of Non-Qualified Stock Option Agreement.
 

10.59

  

Form of Non-Qualified Stock Option Agreement for executive officers.
 

10.60

  

Form of Non-Qualified Stock Option Agreement for foreign employees.
 

10.61

  

Form of Non-Qualified Stock Option Agreement for foreign executive officers.
 

10.62

  

Form of Non-Qualified Replacement Stock Option Agreement.
 

10.63

  

Form of Non-Qualified Replacement Stock Option Agreement for foreign employees.
 

10.64

  

Form of Non-Employee Director Non-Qualified Stock Option Agreement.
 

10.65

  

Form of Non-Employee Director Non-Qualified Stock Option Agreement for foreign non-employee directors.
 

10.66

  

Form of UK Option Award Agreement.
 

10.67

  

Form of UK Option Award Agreement for executive officers.
 

10.68

  

*Form of Agreement Regarding Change in Control by and between Abbott Laboratories and certain named executive officers (other than Mr. White), filed as Exhibit 10.1 to the Abbott Laboratories Current Report on Form 8-K dated November 30, 2012.**
 

10.69

  

*Form of Time Sharing Agreement between Abbott Laboratories, Inc. and M.D. White and T.C. Freyman, filed as Exhibit 10.6 to the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.**

100

10-K
Exhibit
Table
Item No. 		   
 

10.70

  

*Amended and Restated Advanced Medical Optics, Inc. 2002 Incentive Compensation Plan, as amended, filed as Exhibit 4.3 to the Abbott Laboratories Registration Statement on Form S-8 dated March 20, 2009.**
 

10.71

  

*First Amendment to Amended and Restated Advanced Medical Optics, Inc. 2002 Incentive Compensation Plan, filed as Exhibit 4.4 to the Abbott Laboratories Registration Statement on Form S-8 dated March 20, 2009.**
 

10.72

  

*2004 Stock Incentive Plan, as amended and restated, filed as Exhibit 4.5 to the Abbott Laboratories Registration Statement on Form S-8 dated March 20, 2009.**
 

10.73

  

*Advanced Medical Optics, Inc. 2005 Incentive Compensation Plan, filed as Exhibit 4.6 to the Abbott Laboratories Registration Statement on Form S-8 dated March 20, 2009.**
 

10.74

  

*VISX, Incorporated 2000 Stock Plan, filed as Exhibit 4.8 to the Abbott Laboratories Registration Statement on Form S-8 dated March 20, 2009.**
 

12

  

Computation of Ratio of Earnings to Fixed Charges.
 

21

  

Subsidiaries of Abbott Laboratories.
 

23.1

  

Consent of Independent Registered Public Accounting Firm.
 

31.1

  

Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
 

31.2

  

Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
 

32.1

  

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 

32.2

  

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 

101

  

The following financial statements and notes from the Abbott Laboratories Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 21, 2014, formatted in XBRL: (i) Consolidated Statement of Earnings; (ii) Consolidated Statement of Cash Flows; (iii) Consolidated Balance Sheet; (iv) Consolidated Statement of Shareholders' Investment; and (v) the notes to the consolidated financial statements.

        The 2014 Abbott Laboratories Proxy Statement will be filed with the Securities and Exchange Commission under separate cover on or about March 14, 2014.

*
Incorporated herein by reference. Commission file number 1-2189.

**
Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto.

        Abbott will furnish copies of any of the above exhibits to a shareholder upon written request to the Secretary, Abbott Laboratories, 100 Abbott Park Road, Abbott Park, Illinois 60064-6400.

101



Exhibit 10.5

 

Amended and Restated
effective January 1, 2013

 

1986 ABBOTT LABORATORIES MANAGEMENT INCENTIVE PLAN

 

SECTION 1
INTRODUCTION

 

1.1                               BACKGROUND AND PURPOSES.  This 1986 ABBOTT LABORATORIES MANAGEMENT INCENTIVE PLAN (the “Plan”) is a successor Plan to the 1961, 1971 and 1981 Management Incentive Plans (the “Predecessor Plans”).  This Plan is being established by ABBOTT LABORATORIES (“Abbott”) for the following purposes:

 

(a)                                 To provide greater incentive for participants in the Plan to attain and maintain the highest standards of managerial performance by rewarding them for services rendered with compensation, in addition to their base salaries, in proportion to the success of Abbott and to the participants’ respective contribution to such success; and

 

(b)                                 To attract and retain in the employ of Abbott and its subsidiaries persons of outstanding competence.

 

1.2                               EFFECTIVE DATE AND FISCAL YEAR.  The Plan became effective as of January 1, 1986, was subsequently amended and restated as of January 1, 2008, in accordance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”), and is hereby amended and restated as of January 1, 2013.  Except as expressly provided herein, the provisions of the Plan as they were in effect immediately prior to the January 1, 2013 amendment and restatement shall continue to apply to any participant who retired or terminated employment prior to January 1, 2013.  The term “fiscal year,” as used in this Plan, means the fiscal period from time to time employed by Abbott for the purpose of reporting earnings to shareholders.

 

1.3                               ADMINISTRATION.  The Plan will be administered by the Compensation Committee (the “Committee”) appointed by the Board of Directors of Abbott (the “Board of Directors”).

 

1.4                               GRANDFATHERED AMOUNTS.  Notwithstanding anything in the Plan to the contrary, any amounts under the Plan that were earned and vested before January 1, 2005 (as determined in accordance with Code Section 409A) with respect to participants who retired before January 1, 2005 (“Grandfathered Amounts”) shall be subject to the terms and conditions of the Plan as administered and as in effect on December 31, 2004.  Amendments made to the Plan pursuant to this amendment and restatement or otherwise shall not affect the Grandfathered Amounts unless expressly provided for in the amendment.  The terms and conditions applicable to the Grandfathered Amounts are set forth in Exhibit A attached hereto.

 


 

SECTION 2
ELIGIBILITY AND PARTICIPATION

 

2.1                               PERSONS ELIGIBLE FOR PARTICIPATION.  Participation in the Plan will be limited to those Officers and managerial employees of Abbott and its subsidiaries who, from time to time, shall be selected as participants by the Committee.

 

2.2                               PARTICIPANTS.  The term “participant,” as used in the Plan, shall include both active participants and inactive participants.

 

2.3                               ACTIVE PARTICIPANTS.  For each fiscal year, there shall be a group of active participants which, except as provided below, shall not exceed forty-five persons and shall consist of those persons eligible for participation who shall have been designated as active participants and notified of that fact by the Committee.  If, as a result of the growth of Abbott and its subsidiaries or changes in Abbott’s organization, the Board of Directors deems it appropriate, the Board of Directors may, in its discretion, from time to time, increase the number of persons who may be designated as active participants for any fiscal year beyond the limit of forty-five persons provided for above.  Selection as an active participant for any fiscal year shall not confer upon any person a right to be an active participant in any subsequent fiscal year, nor shall it confer upon him the right to receive any allocation under the Plan, other than amounts allocated to him by the Committee pursuant to the Plan, and all such allocations shall be subject to all of the terms and conditions of the Plan.

 

2.4                               INACTIVE PARTICIPANTS.  Inactive participants shall consist of those persons, including beneficiaries of deceased participants, if any, for whom an allocation shall have been made for a prior fiscal year under this Plan or a Predecessor Plan, the payment of which was deferred and remains unpaid.  Status as an inactive participant shall not preclude a person from also being an active participant during any fiscal year.

 

SECTION 3
MANAGEMENT INCENTIVE PLAN FUND

 

3.1                               DETERMINATION OF MANAGEMENT INCENTIVE PLAN AMOUNT FOR ANY YEAR.

 

(a)                                 For each fiscal year, the Committee shall determine a tentative amount as the Management Incentive Plan Amount for that year, which tentative amount shall not exceed an amount which equals 200 percent of the aggregate base salaries of all active participants for such year. For purposes of the Plan, “base salary” means the amount of salary paid to each active participant by Abbott and its subsidiaries for such year and does not included bonuses, other awards or any other compensation of any kind.

 

(b)                                 Following determination of the tentative Management Incentive Plan Amount described in (a) above, the Committee shall report in writing the amount of such tentative amount to the Board of

 

2


 

Directors. At the meeting of the Board of Directors coincident with or next following receipt by it of the Committee’s determination, the Board of Directors shall have the power to approve or reduce, but not to increase, the tentative amount reported to it by the Committee. The amount approved by the Board of Directors shall be the Management Incentive Plan Amount for such year.

 

3.2                               THE MANAGEMENT INCENTIVE PLAN FUND.  The Management Incentive Plan Fund at any time shall consist of an amount equal to the aggregate of the Management Incentive Plan Amounts established pursuant to subsection 3.1 (or the applicable predecessor subsection) of this Plan for all fiscal years during which this Plan shall have been operative, plus the amounts established as Management Incentive Plan Amounts for any prior fiscal year pursuant to a Predecessor Plan, reduced by an amount equal to the aggregate of the amounts of awards which shall have been allocated to participants in accordance with this Plan or a Predecessor Plan.

 

SECTION 4
ALLOCATION OF MANAGEMENT INCENTIVE FUND

 

4.1                               ANNUAL ALLOCATION OF MANAGEMENT INCENTIVE FUND.  As soon as practicable after the close of each fiscal year, part or all of the amount then in the Management Incentive Plan Fund (including the Management Incentive Plan Amount for such fiscal year) will be allocated by the Committee among active participants in the Plan for such fiscal year, having due regard for the purposes for which the Plan was established, in the following manner and order:

 

(a)                                 First, if the Chairman of the Board of Abbott shall be an active participant for such year, the members of the Committee, other than the Chairman of the Board, shall determine the amount, if any, to be allocated to the Chairman of the Board from such Fund for such year; and

 

(b)                                 Next, all or a part of the balance of such Fund may be allocated among the active participants (other than the Chairman of the Board) for such year, in such amounts and proportions as the Committee shall determine provided, however, that the amount allocated to any active participant for any year shall not exceed 200 percent of such participant’s base salary for that year.

 

4.2                               COMMITTEE’S DISCRETION IN ALLOCATIONS.  In making any allocations in accordance with subsection 4.1 for any year, the discretion of the Committee shall be absolute, and no active participants for any year, by reason of their designation as such, shall be entitled to any particular amounts or any amount whatsoever.

 

3


 

SECTION 5
PAYMENT OF AMOUNTS ALLOCATED TO PARTICIPANTS

 

5.1                               TIME OF PAYMENT.  For fiscal years beginning after December 31, 1988, a participant shall direct the payment or deferral of an allocation made to him pursuant to subsection 4.1 (a “Plan Award”) at the time specified in subsection 5.2 (subject to such conditions relating to the right of the participant to receive payment of such amount as established by the Committee) by one or more of the following methods:

 

(a)                                 current payment in cash to the participant, which payment shall be made no later than the last day of the “applicable 2½ month period”, as such term is defined in Treasury Regulation § 1.409A-1(b)(4)(i)(A);

 

(b)                                 current payment of a portion in cash and deposited to a grantor trust (the “Grantor Trust”) established by the participant (in a form which the Committee determines is substantially similar to the trust in Exhibit B) and the balance withheld on behalf of the participant to satisfy the participant’s aggregate federal, state and local individual income and employment taxes (determined in accordance with subsections 6.6 and 6.7); provided that all payments or contributions to the Grantor Trust and participant contemplated by this subsection 5.1(b) shall be made no later than the last day of the “applicable 2½ month period,” as such term is defined in Treasury Regulation § 1.409A-1(b)(4)(i)(A); or

 

(c)                                  deferral of payment until such time and in such manner as determined in accordance with subsection 5.14.

 

5.2                               TIME OF ELECTION.

 

(a)                                 A participant must make the election described in subsection 5.1 by filing it with the Committee or its delegate on or before December 31 of the year prior to the fiscal year during which the incentive compensation is earned under the Plan.

 

(b)                                 Notwithstanding the timing requirements described above, an individual who newly becomes eligible to participate in the Plan by being designated as a participant under subsection 2.1 (and who was not eligible to participate in any other plan that would be aggregated with the Plan under Treasury Regulation §1.409A-1(c)) may make an initial deferral election as described in subsection 5.1 by filing it with the Committee or its delegate within the thirty (30) day period immediately following the date he or she first is designated as participant, provided that the compensation deferred pursuant to such election relates solely to services performed after the date of such election.  For this purpose, an election shall be deemed to apply

 

4


 

to compensation paid for services performed after the election if the election applies to no more than the amount prescribed by Treasury Regulation §1.409A-2(a)(7)(i).

 

(c)                                  Any election described in subsection 5.1 shall be irrevocable for the fiscal year to which the election applies.

 

5.3                               SEPARATE ACCOUNTS.  The Committee shall establish accounts for participants who have made elections pursuant to subsection 5.1(b) or 5.1(c) as follows.

 

(a)                                 The Committee will maintain a “Deferred Account” in the name of each participant who has elected to defer payment of all or a portion of his or her Plan Award under subsection 5.1(c).  The Deferred Account shall consist of allocations deferred according to subsection 5.1(c) and any adjustments made in accordance with subsection 5.4.

 

(b)                                 The Committee will maintain two separate Accounts, a “Pre-Tax Account” and an “After-Tax Account,” in the name of each participant who has elected to have a portion of his or her Plan Award deposited in cash to a Grantor Trust according to subsection 5.1(b).  The Pre-Tax Account shall consist of the aggregate of all allocations contemplated by subsection 5.1(b), whether deposited to the participant’s Grantor Trust or made in cash to the participant, and any adjustments made in accordance with subsection 5.5.  The After-Tax Account shall consist of after-tax allocations deposited to the participant’s Grantor Trust in cash according to subsection 5.1(b) and any adjustments made in accordance with subsection 5.6.

 

5.4                               ADJUSTMENT OF DEFERRED ACCOUNTS.  As of the end of each fiscal year, each participant’s Deferred Account shall be adjusted by the Committee as follows:

 

(a)                                 FIRST, reduced by an amount equal to any distributions made to the participant during that year pursuant to subsections 5.14 or 5.15;

 

(b)                                 NEXT, increased by an amount equal to the Plan Award for that year that is deferred pursuant to subsection 5.1(c); and

 

(c)                                  FINALLY, increased by an amount equal to the interest earned for that year according to subsection 5.7.

 

5.5                               ADJUSTMENT OF PRE-TAX ACCOUNTS.  As of the end of each fiscal year, each participant’s Pre-Tax Account shall be adjusted by the Committee as follows:

 

(a)                                 FIRST, reduced, in any year in which the participant receives a distribution from his or her Grantor Trust, by an amount equal to the distribution that would have been made to the participant if the

 

5


 

aggregate amounts allocated according to subsection 5.1(b) had instead been deferred under subsection 5.1(c);

 

(b)                                 NEXT, increased by an amount equal to any Plan Award for that year that is withheld on behalf of the participant to satisfy the participant’s aggregate federal, state and local individual income and employment taxes (including the amount deposited in the participant’s Grantor Trust) according to subsection 5.1(b); and

 

(c)                                  FINALLY, increased by an amount equal to the pre-tax interest earned for that year according to subsection 5.7(a) and (c).

 

5.6                               ADJUSTMENT OF AFTER-TAX ACCOUNTS.  As of the end of each fiscal year, each participant’s After-Tax Account shall be adjusted by the Committee as follows:

 

(a)                                 FIRST, reduced, in any year in which the participant receives a benefit distribution from his or her Grantor Trust, by an amount calculated as provided in subsection 5.19 which represents the distribution for such year;

 

(b)                                 NEXT, increased by an amount equal to the Plan Award for that year that is deposited in the participant’s Grantor Trust according to subsection 5.1(b); and

 

(c)                                  FINALLY, increased by an amount equal to the after-tax interest earned for that year according to subsection 5.7(b) and (c).

 

5.7                               INTEREST ACCRUALS ON ACCOUNTS.

 

(a)                                 As of the end of each fiscal year, a participant’s Deferred Account or Pre-Tax Account, as applicable, shall be credited with interest (“Interest”) at the following rate:

 

(i)                                     the average of the “prime rate” of interest published by the Wall Street Journal (Mid-West Edition) or comparable successor quotation service on the first business day of January and the last business day of each month of the fiscal year;

 

(ii)                                  plus two hundred twenty-five (225) basis points.

 

(b)                                 As of the end of each fiscal year, a participant’s After-Tax Account shall be credited with the amount of Interest provided above, multiplied by (one minus the aggregate of the applicable federal, state and local individual income tax rates and employment tax rate determined in accordance with subsections 6.6 and 6.7) (the “After-Tax Interest”).

 

6


 

(c)                                  This Interest and After-Tax Interest, as applicable, shall be credited on the conditions established by the Committee, provided that any award allocation shall be considered to have been made and credited to a participant’s Account as of the first day of the fiscal year in which the award is made.

 

5.8                               INTEREST PAYMENTS.  In addition to any Plan Award made to a participant for any fiscal year in accordance with subsection 5.1(b), Abbott shall also make a payment (an “Interest Payment”) with respect to each participant who has established a Grantor Trust for each year in which the Grantor Trust is in effect.  Prior to January 1, 2013, the Interest Payment equaled the excess, if any, of the participant’s Net Interest Accrual (as defined below) over the net earnings of the participant’s Grantor Trust for the year (the “Pre-Amendment Amount”) and was paid to the participant’s Grantor Trust within the thirty (30)-day period beginning April 1 of the following fiscal year.  Effective as of January 1, 2013, the Interest Payment shall equal the excess, if any, of the pre-tax Interest credited to the participant’s Pre-Tax Account pursuant to subsection 5.5(c), over the net earnings of the participant’s Grantor Trust for the year, as adjusted by the amounts described in Schedule A, and shall be paid within the thirty (30)-day period beginning April 1 of the following fiscal year.  A portion of such Interest Payment, equal to the excess, if any, of the Net Interest Accrual over the net earnings of the participant’s Grantor Trust (i.e., the Pre-Amendment Amount), shall be deposited in the participant’s Grantor Trust, with the balance paid to, or withheld on behalf of, the Participant; provided, however, in the event that the net earnings of the participant’s Grantor Trust exceeds the Net Interest Accrual, a distribution from the Grantor Trust shall be required in accordance with Section 6.9. A participant’s Net Interest Accrual for the year is an amount equal to the After-Tax Interest credited to the participant’s After-Tax Account for that year in accordance with subsection 5.7.

 

5.9                               GRANTOR TRUST ASSETS.  Each participant’s Grantor Trust assets shall be invested solely in the instruments specified by investment guidelines established by the Committee.  Such investment guidelines, once established, may be changed by the Committee, provided that any change shall not take effect until the year following the year in which the change is made and provided further that the instruments specified shall be consistent with the provisions of subsection 3(b) of the form of Grantor Trust attached hereto as Exhibit B.

 

5.10                        DESIGNATION OF BENEFICIARIES.  Subject to the conditions and limitations set forth below, each participant, and after a participant’s death, each primary beneficiary designated by a participant in accordance with the provisions of this subsection 5.10, shall have the right from time to time to designate a primary beneficiary or beneficiaries and successive or contingent beneficiary or beneficiaries to receive unpaid amounts from the participant’s Deferred Account under the Plan and the Predecessor Plans.  A beneficiary may be a natural person or persons or a fiduciary, such as a trustee of a trust or the legal representative of an estate.  Any such designation shall take effect upon the death of the participant or such beneficiary, as the case may be, or in the case of any fiduciary beneficiary, upon the termination of all of its duties (other than the duty to dispose of the right to receive amounts remaining to be paid under the Plan or a

 

7


 

Predecessor Plan).  The conditions and limitations relating to the designation of beneficiaries are as follows:

 

(a)                                 A nonfiduciary beneficiary shall have the right to designate a further beneficiary or beneficiaries only if the original participant or the next preceding primary beneficiary, as the case may be, shall have expressly so provided in writing; and

 

(b)                                 A fiduciary beneficiary shall designate as a further beneficiary or beneficiaries only those persons or other fiduciaries who are entitled to receive the amounts payable from the participant’s account under the trust or estate of which it is a fiduciary.

 

Any beneficiary designation or grant of any power to any beneficiary under this subsection may be exercised only by an instrument in writing, executed by the person making the designation or granting such power and filed with the Secretary of Abbott during such person’s lifetime or prior to the termination of a fiduciary’s duties.  If a deceased participant or a deceased nonfiduciary beneficiary who had the right to designate a beneficiary as provided above dies without having designated a further beneficiary, or if no beneficiary designated as provided above is living or qualified and acting, the Committee, in its discretion, may direct distribution of the amount remaining from time to time to either:

 

(i)                                     any one or more or all of the next of kin (including the surviving spouse) of the participant or the deceased beneficiary, as the case may be, and in such proportions as the Committee determines; or

 

(ii)                                  the legal representative of the estate of the deceased participant or deceased beneficiary as the case may be.

 

5.11                        STATUS OF BENEFICIARIES.  Following a participant’s death, the participant’s beneficiary or beneficiaries will be considered and treated as an inactive participant for all purposes of this Plan.

 

5.12                        NON-ASSIGNABILITY AND FACILITY OF PAYMENT.  Amounts payable to participants and their beneficiaries under the Plan are not in any way subject to their debts and other obligations, and may not be voluntarily or involuntarily sold, transferred or assigned; provided that the preceding provisions of this subsection shall not be construed as restricting in any way a designation right granted to a beneficiary pursuant to the terms of subsection 5.10. When a participant or the beneficiary of a participant is under legal disability, or in the Committee’s opinion is in any way incapacitated so as to be unable to manage his or her financial affairs, the Committee may direct that payments shall be made to the participant’s or beneficiary’s legal representative, or to a relative or friend of the participant or beneficiary for the benefit of the participant or beneficiary, or the Committee may direct the payment or distribution for the benefit of the participant or beneficiary in any manner that the Committee determines.

 

8


 

5.13                        PAYER OF AMOUNTS ALLOCATED TO PARTICIPANTS.  Any amount allocated to a participant in the Plan and any interest credited thereto will be paid by the employer (or such employer’s successor) by whom the participant was employed during the fiscal year for which any amount was allocated, and for that purpose, if a participant shall have been employed by two or more employers during any fiscal year the amount allocated under this Plan for that year shall be an obligation of each of the respective employers in proportion to the respective amounts of base salary paid by each of them in that fiscal year.

 

5.14                        MANNER OF PAYMENT OF DEFERRED ACCOUNTS.  Subject to subsection 5.15, a participant shall elect to receive payment of his Deferred Account in substantially equal annual installments over a minimum period of ten years, or a longer period, at the time of his deferral election under subsection 5.1(c).  Payment of a participant’s Deferred Account shall commence on the first business day of January of the year following the year in which the participant incurs a termination of employment.

 

5.15                        PAYMENTS UPON TERMINATION FOLLOWING CHANGE IN CONTROL.  Notwithstanding any other provision of the Plan or the provisions of any award made under the Plan, if a participant incurs a termination of employment with Abbott and its subsidiaries for any reason within two (2) years following the date of a Change in Control, provided that the event constituting a Change in Control is also a “change in control event”, as such term is defined in Treasury Regulation § 1.409A-3(i)(5): (a) with respect to a participant whose allocations under the Plan are deferred in accordance with subsection 5.1(c), the aggregate unpaid balance of the participant’s Deferred Account shall be paid to such participant in a lump sum within thirty (30) days following the date of such termination of employment, and (b) with respect to a participant whose Plan Awards are made pursuant to subsection 5.1(b), (i) the aggregate of the participant’s unpaid Plan Award under subsection 5.1(b) (if any) for the fiscal year in which the termination occurs and (ii) a pro rata portion of the unpaid Guaranteed Rate Payment under subsection 5.8 attributable to the portion of the year elapsed prior to the date of termination, shall be paid to such participant’s Grantor Trust in a lump sum within thirty (30) days following the date of such termination of employment.

 

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

 

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

 

(b)                                 the date the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who,

 

9


 

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 Abbott) whose appointment or election by the Board of Directors or nomination for election by Abbott’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

 

(c)                                  the date on which there is consummated a merger or consolidation of Abbott or any direct or indirect subsidiary of Abbott with any other corporation or other entity, other than (i) a merger or consolidation (A) 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 Abbott, the entity surviving such merger or consolidation or, if Abbott or the entity surviving such merger or consolidation is then a subsidiary, the ultimate parent thereof and (B) which results in the voting securities of Abbott 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 Abbott or any subsidiary of Abbott, at least 50% of the combined voting power of the securities of Abbott or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of Abbott (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Abbott (not including in the securities Beneficially Owned by such Person any securities acquired directly from Abbott or its Affiliates) representing 20% or more of the combined voting power of Abbott’s then outstanding securities; or

 

(d)                                 the date the shareholders of Abbott approve a plan of complete liquidation or dissolution of Abbott or there is consummated an agreement for the sale or disposition by Abbott of all or substantially all of Abbott’s assets, other than a sale or disposition by Abbott of all or substantially all of Abbott’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of Abbott, in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of Abbott or any subsidiary of

 

10

 

Abbott, in substantially the same proportions as their ownership of Abbott 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 Abbott 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 Abbott immediately following such transaction or series of transactions.

 

For purposes of this Plan: “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 13d3 under the Exchange Act; “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time; 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) Abbott or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of Abbott 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 Abbott in substantially the same proportions as their ownership of stock of Abbott.

 

5.17                        POTENTIAL CHANGE IN CONTROL.  A “Potential Change in Control” shall exist during any period in which the circumstances described in paragraphs (a), (b), (c) or (d), below, exist (provided, however, that a Potential Change in Control shall cease to exist not later than the occurrence of a Change in Control):

 

(a)                                 Abbott enters into an agreement, the consummation of which would result in the occurrence of a Change in Control, provided that a Potential Change in Control described in this paragraph (a) shall cease to exist upon the expiration or other termination of all such agreements.

 

(b)                                 Any Person (without regard to the exclusions set forth in subsections (i) through (iv) of such definition) publicly announces an intention to take or to consider taking actions the consummation of which would constitute a Change in Control; provided that a Potential Change in Control described in this paragraph (b) shall cease to exist upon the withdrawal of such intention, or upon a determination by the Board of Directors that there is no reasonable chance that such actions would be consummated.

 

(c)                                  Any Person becomes the Beneficial Owner, directly or indirectly, of securities of Abbott representing 10% or more of either the then outstanding shares of common stock of Abbott or the combined voting power of Abbott’s then outstanding securities (not including

 

11


 

any securities beneficially owned by such Person which are or were acquired directly from Abbott or its Affiliates).

 

(d)                                 The Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control exists; provided that a Potential Change in Control described in this paragraph (d) shall cease to exist upon a determination by the Board of Directors that the reasons that gave rise to the resolution providing for the existence of a Potential Change in Control have expired or no longer exist.

 

5.18                        PROHIBITION AGAINST AMENDMENT.  The provisions of subsections 5.15, 5.16, 5.17 and this subsection 5.18 may not be amended or deleted, nor superseded by any other provision of this Plan, (i) during the pendency of a Potential Change in Control and (ii) during the period beginning on the date of a Change in Control and ending on the date five (5) years following such Change in Control.

 

5.19                        ADMINISTRATOR’S CALCULATION OF GRANTOR TRUST DISTRIBUTIONS.  The Administrator shall calculate the amount to be distributed from a participant’s Grantor Trust in any year in which the participant is entitled to a benefit distribution by multiplying (i) the amount of the reduction determined in accordance with subsection 5.5(a), by (ii) a fraction, the numerator of which is the balance in the participant’s After-Tax Account as of the end of the prior fiscal year and the denominator of which is the balance of the participant’s Pre-Tax Account as of that same date.

 

SECTION 6
MISCELLANEOUS

 

6.1                               RULES.  The Committee may establish such rules and regulations as it may consider necessary or desirable for the effective and efficient administration of the Plan.

 

6.2                               MANNER OF ACTION BY COMMITTEE.  A majority of the members of the Committee qualified to act on any particular question may act by meeting or by writing signed without meeting, and may execute any instrument or document required or delegate to one of its members authority to sign.  The Committee from time to time may delegate the performance of certain ministerial functions in connection with the Plan, such as the keeping of records, to such person or persons as the Committee may select. Except as otherwise expressly provided in the Plan, the costs of administration of the Plan will be paid by Abbott.  Any notice required to be given to, or any document required to be filed with the Committee, will be properly given or filed if mailed or delivered in writing to the Secretary of Abbott.

 

6.3                               RELIANCE UPON ADVICE.  The Board of Directors and the Committee may rely upon any information or advice furnished to it by any Officer of Abbott or by Abbott’s independent auditors, or other consultants, and shall be fully protected in relying upon such information or advice.  No member of the Board of Directors or the Committee shall be liable for any act or failure to act on their part, excepting only any acts done or

 

12


 

omitted to be done in bad faith, nor shall they be liable for any act or failure to act of any other member.

 

6.4                               TAXES.  Any employer shall be entitled, if necessary or desirable, to pay or withhold the amount of any federal, state or local tax attributable to any amounts payable by it under the Plan, and may require payment or indemnification from the participant in an amount necessary to satisfy such taxes prior to remitting such taxes.

 

6.5                               RIGHTS OF PARTICIPANTS.  Employment rights of participants with Abbott and its subsidiaries shall not be enlarged or affected by reason of establishment of or inclusion as a participant in the Plan. Nothing contained in the Plan shall require Abbott or any subsidiary to segregate or earmark any assets, funds or property for the purpose of payment of any amounts which may have been deferred.  The Deferred Account, Pre-Tax Account and After-Tax Account with respect to any participant established pursuant to subsection 5.2 are for the convenience of the administration of the Plan and no trust relationship with respect to such Accounts is intended or should be implied. Participant’s rights shall be limited to payment to them at the time or times and in such amounts as are contemplated by the Plan.  Any decision made by the Board of Directors or the Committee, which is within the sole and uncontrolled discretion of either, shall be conclusive and binding upon the other and upon all other persons whomsoever.

 

6.6                               EMPLOYMENT TAX ASSUMPTION.  For purposes of Sections 5 and 6, a participant’s employment tax rate shall be deemed to be the highest marginal rate of Federal Insurance Contributions Act tax in effect in the calendar year in which a calculation under those Sections is to be made.

 

6.7                               INCOME TAX ASSUMPTIONS.  For purposes of Sections 5 and 6, a participant’s federal income tax rate shall be deemed to be the highest marginal rate of federal income individual tax in effect in the calendar year in which a calculation under those Sections is to be made, and state and local tax rates shall be deemed to be the highest marginal rates of individual income tax in effect in the state and locality of the participant’s residence on the date such a calculation is made, net of any federal tax benefits without a benefit for any net capital losses.

 

6.8                               CODE SECTION 409A.  To the extent applicable, it is intended that the Plan comply with the provisions of Code Section 409A.  The Plan will be administered and interpreted in a manner consistent with this intent, and any provision that would cause the Plan 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 Plan, 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 Plan 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, plus interest thereon, at a rate equal to the

 

13


 

rate specified in subsection 5.7 (to the extent that such interest is not already provided to the participant under subsection 5.6), from the respective dates on which such amounts would otherwise have been paid until the actual date of payment.  In addition, for purposes of the Plan, each amount to be paid and each installment payment shall be construed as a separate identified payment for purposes of Code Section 409A.

 

6.9                               DOMESTIC RELATIONS ORDER.  In accordance with Treasury Regulation 1.409A-3(j)(4)(ii), distributions shall be made to an individual (other than to the participant) pursuant to the terms of a “domestic relations order” (as defined in Internal Revenue Code Section 414(p)(1)(B)), as determined and administered by the Senior Vice President, Human Resources of Abbott or his or her delegate, provided, that such order (a) does not require the plan to provide any type or form of benefit, or any option not otherwise provided under the plan, (b) does not require the plan to provide increased benefits, and (c) does not require the payment of benefits to an alternate payee which are required to be paid to another alternate payee under another order.

 

6.10                        GRANTOR TRUSTS.  Abbott, as the administrator of the participant’s Grantor Trust, may direct the trustee to distribute to the participant from the income of such Grantor Trust an amount sufficient to pay the taxes on the Grantor Trust earnings for such year, to the extent a sufficient sum of money has not been paid to, or withheld on behalf of, the participant pursuant to Section 5.8.  The taxes shall be determined in accordance with Sections 6.6 and 6.7.

 

SECTION 7
AMENDMENT, TERMINATION AND CHANGE OF
CONDITIONS RELATING TO PAYMENTS

 

7.1                               AMENDMENT AND TERMINATION.  The Plan will be effective from its effective date until terminated by the Board of Directors. During the fifth year after the Plan’s effective date and during every fifth year thereafter, the Committee may recommend to the Board of Directors whether the Plan should be amended or terminated.  The Board of Directors reserves the right to amend the Plan from time to time and to terminate the Plan at any time, except that no such amendment or any termination of the Plan shall reduce any fixed or contingent obligations which shall have arisen under the Plan prior to the date of such amendment or termination, or change the terms and conditions of payment of any allocation theretofore made without the consent of the participant concerned.

 

7.2                               CHANGE OF CONDITIONS RELATING TO PAYMENTS.  No change to the time or payment or the time of commencement of payment and any period over which payment shall be made shall be effected except in strict compliance with the subsequent election requirements of Treasury Regulation § 1.409A-2(b) to the extent subject thereto.

 

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SCHEDULE A

 


 

EXHIBIT A

 

1986 ABBOTT LABORATORIES MANAGEMENT INCENTIVE PLAN

 

[The 1986 Abbott Laboratories Management Incentive Plan, as amended, as filed as Exhibit 10.5 to the Abbott Laboratories Quarterly Report for the quarter ended June 30, 2003 on Form 10-Q.]

 

 

EXHIBIT B

 

IRREVOCABLE GRANTOR TRUST AGREEMENT

 

THIS AGREEMENT, made this            day of                         , 20    , by and between                                                of                       , Illinois (the “grantor”), and The Northern Trust Company located at Chicago, Illinois, as trustee (the “trustee”),

 

WITNESSETH THAT:

 

WHEREAS, the grantor desires to establish and maintain a trust to hold certain benefits received by the grantor under the 1986 Abbott Laboratories Management Incentive Plan, as it may be amended from time to time;

 

NOW, THEREFORE, IT IS AGREED as follows:

 

ARTICLE I
INTRODUCTION

 

I-1                                NAME.  This agreement and the trust hereby evidenced (the “trust”) may be referred to as the “                             20     Grantor Trust”.

 

I-2                                THE TRUST FUND.  The “trust fund” as at any date means all property then held by the trustee under this agreement.

 

I-3                                STATUS OF THE TRUST.  The trust shall be irrevocable.  The trust is intended to constitute a grantor trust under Sections 671-678 of the Internal Revenue Code, as amended, and shall be construed accordingly.

 

I-4                                THE ADMINISTRATOR.  Abbott Laboratories (“Abbott”) shall act as the “administrator” of the trust, and as such shall have certain powers, rights and duties under this agreement as described below.  Abbott will certify to the trustee from time to time the person or persons authorized to act on behalf of Abbott as the administrator.  The trustee may rely on the latest certificate received without further inquiry or verification.

 

I-5                                ACCEPTANCE.  The trustee accepts the duties and obligations of the “trustee” hereunder, agrees to accept funds delivered to it by the grantor or the administrator, and agrees to hold such funds (and any proceeds from the investment of such funds) in trust in accordance with this agreement.

 

ARTICLE II
DISTRIBUTION OF THE TRUST FUND

 

II-1                           SEPARATE ACCOUNTS.  The administrator shall maintain two separate accounts under the trust, a “rollout account” and a “deferred account.”  Funds delivered to the trustee shall be allocated between the accounts by the trustee as directed by the administrator.  As of the end of each calendar year, the administrator shall charge each account with all distributions made from such account during that year; and credit each account with its share of income and

 

1


 

realized gains and charge each account with its share of expenses and realized losses for the year.  The trustee shall not be required to make any separate investment of the trust fund for the accounts, and may administer and invest all funds delivered to it under the trust as one trust fund.

 

II-2                           DISTRIBUTIONS FROM THE ROLLOUT ACCOUNT PRIOR TO THE GRANTOR’S DEATH.  The trustee shall distribute principal and accumulated income credited to the rollout account to the grantor, if then living, at such times and in such amounts as the administrator shall direct.

 

II-3                           DISTRIBUTIONS FROM THE DEFERRED ACCOUNT PRIOR TO THE GRANTOR’S DEATH.  Principal and accumulated income credited to the deferred account shall not be distributed from the trust prior to the grantor’s retirement or other termination of employment with Abbott or a subsidiary of Abbott (the grantor’s “settlement date”); provided that, each year the administrator may direct the trustee to distribute to the grantor a portion of the income of the deferred account for that year, with the balance of such income to be accumulated in that account.  The administrator shall inform the trustee of the grantor’s settlement date. Thereafter, the trustee shall distribute the amounts from time to time credited to the deferred account to the grantor, if then living, in a series of annual installments, with the amount of each installment computed by one of the following methods:

 

(a)                                 The amount of each installment shall be equal to the sum of: (i) the amount credited to the deferred account as of the end of the year in which the grantor’s settlement date occurs, divided by the number of years over which installments are to be distributed; plus (ii) the net earnings credited to the deferred account for the preceding year  (excluding the year in which the grantor’s settlement date occurs).

 

(b)                                 The amount of each installment shall be determined by dividing the amount credited to the deferred account as of the end of the preceding year by the difference between (i) the total number of years over which installments are to be distributed, and (ii) the number of annual installment distributions previously made from the deferred account.

 

(c)                                  Each installment (after the first installment) shall be approximately equal, with the amount comprised of the sum of: (i) the amount of the first installment, plus interest thereon at the rate determined under the 1986 Abbott Laboratories Management Incentive Plan, compounded annually; and (ii) the net earnings credited to the deferred account for the preceding year.

 

Notwithstanding the foregoing, the final installment distribution made to the grantor under this paragraph II-3 shall equal the total principal and accumulated income then held in the trust fund.  The grantor, by writing filed with the trustee and the administrator on or before the end of the calendar year in which the grantor’s settlement date occurs (or the end of the calendar year in which this trust is established, if the grantor’s settlement date has already occurred), may select both the period (which may not be less than ten years from the end of the calendar year in which the grantor’s settlement date occurred) over which the installment distributions are to be made and the method of computing the amount of each installment.  In the absence of such a written direction by the grantor, installment distributions shall be made over a period of ten years, and the amount of each installment

 

2


 

shall be computed by using the method described in subparagraph (a) next above.  Installment distributions under this Paragraph II-3 shall be made as of January 1 of each year, beginning with the calendar year following the year in which the grantor’s settlement date occurs.  The administrator shall inform the trustee of the amount of each installment distribution under this paragraph II-3, and the trustee shall be fully protected in relying on such information received from the administrator.

 

II-4                           DISTRIBUTIONS FROM THE TRUST FUND AFTER THE GRANTOR’S DEATH.  The grantor, from time to time, may name any person or persons (who may be named contingently or successively and who may be natural persons or fiduciaries) to whom the principal of the trust fund and all accrued or undistributed income therefrom shall be distributed in a lump sum or, if the beneficiary is the grantor’s spouse (or a trust for which the grantor’s spouse is the sole income beneficiary), in installments, as directed by the grantor, upon the grantor’s death.  If the grantor directs an installment method of distribution to the spouse as beneficiary, any amounts remaining at the death of the spouse beneficiary shall be distributed in a lump sum to the executor or administrator of the spouse beneficiary’s estate.  If the grantor directs an installment method of distribution to a trust for which the grantor’s spouse is the sole income beneficiary, any amounts remaining at the death of the spouse shall be distributed in a lump sum to such trust.  Despite the foregoing, if (i) the beneficiary is a trust for which the grantor’s spouse is the sole income beneficiary, (ii) payments are being made pursuant to this paragraph II-4 other than in a lump sum and (iii) income earned by the trust fund for the year exceeds the amount of the annual installment payment, then such trust may elect to withdraw such excess income by written notice to the trustee.  Each designation shall revoke all prior designations, shall be in writing and shall be effective only when filed by the grantor with the administrator during the grantor’s lifetime.  If the grantor fails to direct a method of distribution, the distribution shall be made in a lump sum.  If the grantor fails to designate a beneficiary as provided above, then on the grantor’s death, the trustee shall distribute the balance of the trust fund in a lump sum to the executor or administrator of the grantor’s estate.

 

II-5                           FACILITY OF PAYMENT.  When a person entitled to a distribution hereunder is under legal disability, or, in the trustee’s opinion, is in any way incapacitated so as to be unable to manage his or her financial affairs, the trustee may make such distribution to such person’s legal representative, or to a relative or friend of such person for such person’s benefit.  Any distribution made in accordance with the preceding sentence shall be a full and complete discharge of any liability for such distribution hereunder.

 

II-6                           PERPETUITIES.  Notwithstanding any other provisions of this agreement, on the day next preceding the end of 21 years after the death of the last to die of the grantor and the grantor’s descendants living on the date of this instrument, the trustee shall immediately distribute any remaining balance in the trust to the beneficiaries then entitled to distributions hereunder.

 

ARTICLE III
MANAGEMENT OF THE TRUST FUND

 

III-1                      GENERAL POWERS.  The trustee shall, with respect to the trust fund, have the following powers, rights and duties in addition to those provided elsewhere in this agreement or by law:

 

3


 

(a)                                 Subject to the limitations of subparagraph (b) next below, to sell, contract to sell, purchase, grant or exercise options to purchase, and otherwise deal with all assets of the trust fund, in such way, for such considerations, and on such terms and conditions as the trustee decides.

 

(b)                                 To retain in cash such amounts as the trustee considers advisable; and to invest and reinvest the balance of the trust fund, without distinction between principal and income, in obligations of the United States Government and its agencies or which are backed by the full faith and credit of the United States Government or in any mutual fund, common trust fund or collective investment fund which invests solely in such obligations; and any such investment made or retained by the trustee in good faith shall be proper despite any resulting risk or lack of diversification or marketability.

 

(c)                                  To deposit cash in any depositary (including the banking department of the bank acting as trustee) without liability for interest, and to invest cash in savings accounts or time certificates of deposit bearing a reasonable rate of interest in any such depositary.

 

(d)                                 To invest, subject to the limitations of subparagraph (b) above, in any common or commingled trust fund or funds maintained or administered by the trustee solely for the investment of trust funds.

 

(e)                                  To borrow from anyone, with the administrator’s approval, such sum or sums from time to time as the trustee considers desirable to carry out this trust, and to mortgage or pledge all or part of the trust fund as security.

 

(f)                                   To retain any funds or property subject to any dispute without liability for interest and to decline to make payment or delivery thereof until final adjudication by a court of competent jurisdiction or until an appropriate release is obtained.

 

(g)                                  To begin, maintain or defend any litigation necessary in connection with the administration of this trust, except that the trustee shall not be obliged or required to do so unless indemnified to the trustee’s satisfaction.

 

(h)                                 To compromise, contest, settle or abandon claims or demands.

 

(i)                                     To give proxies to vote stocks and other voting securities, to join in or oppose (alone or jointly with others) voting trusts, mergers, consolidations, foreclosures, reorganizations, liquidations, or other changes in the financial structure of any corporation, and to exercise or sell stock subscription or conversion rights.

 

(j)                                    To hold securities or other property in the name of a nominee, in a depositary or in any other way, with or without disclosing the trust relationship.

 

(k)                                 To divide or distribute the trust fund in undivided interests or wholly or partly in kind.

 

(l)                                     To pay any tax imposed on or with respect to the trust; to defer making payment of any such tax if it is indemnified to its satisfaction in the premises; and to require before

 

4


 

making any payment such release or other document from any lawful taxing authority and such indemnity from the intended payee as the trustee consider necessary for its protection.

 

(m)                             To deal without restriction with the legal representative of the grantor’s estate or the trustee or other legal representative of any trust created by the grantor or a trust or estate in which a beneficiary has an interest, even though the trustee, individually, shall be acting in such other capacity without liability for any loss that may result.

 

(n)                                 To appoint or remove by written instrument any bank or corporation qualified to act as successor trustee, wherever located, as special trustee as to part or all of the trust fund, including property as to which the trustee does not act, and such special trustee, except as specifically limited or provided by this or the appointing instrument, shall have all of the rights, titles, powers, duties, discretions and immunities of the trustee, without liability for any action taken or omitted to be taken under this or the appointing instrument.

 

(o)                                 To appoint or remove by written instrument any bank, wherever located, as custodian of part or all of the trust fund, and each such custodian shall have such rights, powers, duties and discretions as are delegated to it by the trustee.

 

(p)                                 To employ agents, attorneys, accountants or other persons, and to delegate to them such powers as the trustee considers desirable, and the trustee shall be protected in acting or refraining from acting on the advice of persons so employed without court action.

 

(q)                                 To perform any and all other acts which in the trustee’s judgment are appropriate for the proper management, investment and distribution of the trust fund.

 

III-2                      PRINCIPAL AND INCOME.  Any income earned on the trust fund which is not distributed as provided in Article II shall be accumulated and from time to time added to the principal of the trust. The grantor’s interest in the trust shall include all assets or other property held by the trustee hereunder, including principal and accumulated income.

 

III-3                      STATEMENTS.  The trustee shall prepare and deliver monthly to the administrator and annually to the grantor, if then living, otherwise to each beneficiary then entitled to distributions under this agreement, a statement (or series of statements) setting forth (or which taken together set forth) all investments, receipts, disbursements and other transactions effected by the trustee during the reporting period; and showing the trust fund and the value thereof at the end of such period.

 

III-4                      COMPENSATION AND EXPENSES.  All reasonable costs, charges and expenses incurred in the administration of this trust, including compensation to the trustee, any compensation to agents, attorneys, accountants and other persons employed by the trustee, and expenses incurred in connection with the sale, investment and reinvestment of the trust fund shall be paid from the trust fund.

 

5


 

ARTICLE IV
GENERAL PROVISIONS

 

IV-1                       INTERESTS NOT TRANSFERABLE.  The interests of the grantor or other persons entitled to distributions hereunder are not subject to their debts or other obligations and may not be voluntarily or involuntarily sold, transferred, alienated, assigned or encumbered.

 

IV-2                       DISAGREEMENT AS TO ACTS.  If there is a disagreement between the trustee and anyone as to any act or transaction reported in any accounting, the trustee shall have the right to a settlement of its account by any proper court.

 

IV-3                       TRUSTEE’S OBLIGATIONS.  No power, duty or responsibility is imposed on the trustee except as set forth in this agreement.  The trustee is not obliged to determine whether funds delivered to or distributions from the trust are proper under the trust, or whether any tax is due or payable as a result of any such delivery or distribution. The trustee shall be protected in making any distribution from the trust as directed pursuant to Article II without inquiring as to whether the distributee is entitled thereto; and the trustee shall not be liable for any distribution made in good faith without written notice or knowledge that the distribution is not proper under the terms of this agreement.

 

IV-4                       GOOD FAITH ACTIONS.  The trustee’s exercise or non-exercise of its powers and discretions in good faith shall be conclusive on all persons.  No one shall be obliged to see to the application of any money paid or property delivered to the trustee.  The certificate of the trustee that it is acting according to this agreement will fully protect all persons dealing with the trustee.

 

IV-5                       WAIVER OF NOTICE.  Any notice required under this agreement may be waived by the person entitled to such notice.

 

IV-6                       CONTROLLING LAW.  The laws of the State of Illinois shall govern the interpretation and validity of the provisions of this agreement and all questions relating to the management, administration, investment and distribution of the trust hereby created.

 

IV-7                       SUCCESSORS.  This agreement shall be binding on all persons entitled to distributions hereunder and their respective heirs and legal representatives, and on the trustee and its successors.

 

ARTICLE V
CHANGES IN TRUSTEE

 

V-1                            RESIGNATION OR REMOVAL OF TRUSTEE.  The trustee may resign at any time by giving thirty (30) days’ advance written notice to the administrator and the grantor.  The administrator may remove a trustee by written notice to the trustee and the grantor.

 

V-2                            APPOINTMENT OF SUCCESSOR TRUSTEE.  The administrator shall fill any vacancy in the office of trustee as soon as practicable by written notice to the successor trustee; and shall give prompt written notice thereof to the grantor, if then living, otherwise to each beneficiary then entitled to payments or distributions under this agreement. A successor trustee shall be a bank (as defined in Section 581 of the Internal Revenue Code, as amended).

 

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V-3                            DUTIES OF RESIGNING OR REMOVED TRUSTEE AND OF SUCCESSOR TRUSTEE.  A trustee that resigns or is removed shall furnish promptly to the administrator and the successor trustee an account of its administration of the trust from the date of its last account. Each successor trustee shall succeed to the title to the trust fund vested in its predecessor without the signing or filing of any instrument, but each predecessor trustee shall execute all documents and do all acts necessary to vest such title of record in the successor trustee.  Each successor trustee shall have all the powers conferred by this agreement as if originally named trustee.  No successor trustee shall be personally liable for any act or failure to act of a predecessor trustee. With the approval of the administrator, a successor trustee may accept the account furnished and the property delivered by a predecessor trustee without incurring any liability for so doing, and such acceptance will be complete discharge to the predecessor trustee.

 

ARTICLE VI
AMENDMENT AND TERMINATION

 

VI-1                       AMENDMENT.  With the consent of the administrator, this trust may be amended from time to time by the grantor, if then living, otherwise by a majority of the beneficiaries then entitled to payments or distributions hereunder, except as follows:

 

(a)                                 The duties and liabilities of the trustee cannot be changed substantially without its consent.

 

(b)                                 This trust may not be amended so as to make the trust revocable.

 

VI-2                       TERMINATION.  This trust shall not terminate, and all rights, titles, powers, duties, discretions and immunities imposed on or reserved to the trustee, the administrator, the grantor and the beneficiaries shall continue in effect, until all assets of the trust have been distributed by the trustee as provided in Article II.

 

*      *      *

 

IN WITNESS WHEREOF, the grantor and the trustee have executed this agreement as of the day and year first above written.

 

 

 

 

Grantor

 

 

 

 

 

The Northern Trust Company as Trustee

 

 

 

 

 

By

 

 

 

 

 

Its

 

7



Exhibit 10.37

 

ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on specified Delivery Dates.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(e)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(f)                                   Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(g)                                  Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(h)                                 Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(i)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(j)                                    Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

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·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                  (Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(j), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(k)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Delivery Dates and Shareholder Rights.  The Delivery Dates for Shares underlying the Units are the respective dates on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date(s):

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

The Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”)

 

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(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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 5 and 6 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.  Subject to Section 5 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on one-third of the Units will lapse on each of the first three anniversaries of the Grant Date until, on the third anniversary of the Grant Date, 100% of the Units are no longer subject to the Restrictions.  Subject to subsections (b), (c), and (d) below, Units for which Restrictions have lapsed shall be settled in the form of Shares on the date(s) on which such Restrictions lapse (each, a “Delivery Date”).  Unless indicated otherwise, Shares shall be delivered in an equal number (subject to rounding) as of each Delivery Date.

 

(b)                                 Retirement.  The Restrictions shall lapse on the date of the Employee’s Termination due to Retirement, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Retirement.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Effect of Certain Bad Acts.  Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause,

 

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whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than Retirement, death or Disability, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Units not previously settled on a Delivery Date to lapse and be settled in the form of Shares on the Delivery Dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this

 

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Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

10.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

11.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and

 

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management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

13.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

14.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

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16.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including Retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the

 

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Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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Exhibit 10.38

 

ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on specified Delivery Dates.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s employment contract, if any;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Controlled Group

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(e)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(f)                                   Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(g)                                  Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(h)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(i)                                     Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

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(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(i), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(j)                                    Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Delivery Dates and Shareholder Rights.  The Delivery Dates for Shares underlying the Units are the respective dates on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date(s):

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (other than dividends or distributions of securities of the Company which

 

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may be issued with respect to its Shares by virtue of any stock split, combination, stock dividend or recapitalization) to the same extent and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 5 and 6 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.  Subject to Section 5 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on one-third of the Units will lapse on each of the first three anniversaries of the Grant Date until, on the third anniversary of the Grant Date, 100% of the Units are no longer subject to the Restrictions.  Subject to subsections (b), (c), and (d) below, Units for which Restrictions have lapsed shall be settled in the form of Shares on the date(s) on which such Restrictions lapse (each, a “Delivery Date”).  Unless indicated otherwise, Shares shall be delivered in an equal number (subject to rounding) as of each Delivery Date.

 

(b)                                 Retirement.  The Restrictions shall lapse on the date of the Employee’s Termination due to Retirement, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Retirement.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Effect of Certain Bad Acts.  Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

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6.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than Retirement, death or Disability, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Units not previously settled on a Delivery Date to lapse and be settled in the form of Shares on the Delivery Dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.  In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Award.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

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9.                                      Nature of Grant.  In accepting this grant of Units, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the

 

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amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

10.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

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(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               Form of Payment.  The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (iii) would result in adverse tax consequences for the Employee or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).

 

12.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

13.                               Exchange Controls.  As a condition to this grant of Units, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

14.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or

 

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its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restriction or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

15.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including Retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

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16.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

17.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

18.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

20.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

21.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

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22.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

23.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

24.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

25.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Award is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the Employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local law or to facilitate administration of the Program.

 

ALGERIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

AUSTRALIA

 

1.                                      Award Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Award is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.                                      Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Award.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Award, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Units, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous

 

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documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

CHILE

 

Private Placement. The following provision shall replace Section 12 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement. As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

Foreign Exchange Control Laws.  The Employee agrees to hold the Shares received upon settlement of the Units with the Company’s designated broker.  Upon a Termination, the Employee shall be required to sell all Shares issued pursuant to the Units within 90 days (or such shorter period as may be required by the State Administration for Foreign Exchange) of the Termination date and repatriate the sales proceeds to China in the manner designated by the Company.  For purposes of the foregoing, the Company shall establish procedures for effectuating the forced sale of the Shares (including procedures whereby the Company may issue sell instructions on behalf of the Employee), and the Employee hereby agrees to comply with such procedures and take any and all actions as the Company determines, in its sole discretion, are necessary or advisable for purposes of complying with local laws, rules and regulations in China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Units in accordance with Chinese law including, without limitation, any applicable State Administration of Foreign Exchange rules, regulations and requirements.

 

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CROATIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

DENMARK

 

Treatment of Units upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items. Notwithstanding Section 7 of the Agreement, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.                                      Settlement in Shares. Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      Lapse of Restrictions.  If, for any reason, Shares are issued to the Employee within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

3.                                      IMPORTANT NOTICE.  WARNING: The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Units and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials, the Employee should obtain independent professional advice.

 

4.                                      Wages.  The Units and Shares subject to the Units do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

5.                                      Nature of the Program. The Company specifically intends that the Program will not be treated as an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”). To the extent any court, tribunal or legal/regulatory body in Hong Kong determines that the Program constitutes an occupational retirement scheme for the purposes of ORSO, the grant of the Units shall be null and void.

 

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INDIA

 

Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of Units, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

MEXICO

 

1.                                      Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Award does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Award as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the local Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.                                      Extraordinary Item of Compensation. The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Employee’s Agreement and this Addendum. As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability. The value of the Units is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any. The Units are not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any Awards under the Program as a result of such Termination.

 

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PAKISTAN

 

1.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all Dividend Equivalents and all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

2.                                      Exchange Control Obligations. To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan. As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to acquiring or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

ROMANIA

 

1.                                      Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.                                      English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar în limba engleză.

 

RUSSIA

 

1.                                      Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Award in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.                                      Repatriation Requirements. As a condition of this Award, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations. Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Award under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. The Employee should note that, as a result, the Award is subject

 

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to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares underlying the Award in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.                                      Withholding Taxes.  The following provision supplements Section 7 of the Agreement:

 

By accepting the Award, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon vesting of the Units.  If the Employee fails to advise the Employer of the gain realized upon vesting of the Units, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.                                      Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

1.                                      Acknowledgement of Discretionary Nature of the Program; No Vested Rights

 

By accepting the Award, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Units are granted on the assumption and condition that the Units and the Shares acquired upon settlement of the Units shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason the Award shall be null and void.

 

The Employee understands and agrees that, as a condition of the Award, unless otherwise provided in Section 4 of the Agreement, any unvested Units as of the date the Employee ceases active employment will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Units.

 

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2.                                      Termination for Cause.  Notwithstanding anything to the contrary in the Program or the Agreement, “Cause” shall be as defined as set forth in the Agreement, regardless of whether the Termination is considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

 

SRI LANKA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UKRAINE

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UNITED KINGDOM

 

1.                                      Withholding Taxes.  The following provision supplements Section 7 of the Agreement.

 

If payment or withholding of the income tax due in connection with the Award is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 7 of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.                                      Exclusion of Claim.  The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to the Units, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Units.  Upon the grant of the Award, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

UZBEKISTAN

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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VIETNAM

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

19



Exhibit 10.39

 

ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”).

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Performance Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s employment contract, if any;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(e)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(f)                                   Disability:   As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(g)                                  Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(h)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(i)                                     Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

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(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(i), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(j)                                    Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Delivery Dates and Shareholder Rights.  The Delivery Dates for Shares underlying the Units are the respective dates on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date(s):

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (other than dividends or distributions of securities of the Company which

 

3


 

may be issued with respect to its Shares by virtue of any stock split, combination, stock dividend or recapitalization) to the same extent and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 5 and 6 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.  Subject to Section 5 below:

 

(a)                                 Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

(i)                                     the Restrictions on one-third of the total number of Units will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)                                  the Restrictions on an additional one-third of the total number of Units will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)                               the Restrictions on an additional one-third of the total number of Units will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                              any Units for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on the last business day of February 201     and/or 201    , provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Units will vest in any one year.

 

Subject to subsections (b), (c), and (d) below, Units for which Restrictions have  lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date(s) on which such Restrictions lapse (each, a “Delivery Date”).  Unless indicated otherwise, Shares shall be delivered in an equal number (subject to rounding) as of each Delivery Date.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a), in which case any Units not previously settled on a Delivery Date shall be settled in the form of Shares on the

 

4


 

Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Retirement.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Effect of Certain Bad Acts.  Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than Retirement, death or Disability, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause some or all of the Units not previously settled on a Delivery Date to continue to be subject to the Restrictions, provided such Restrictions may lapse thereafter in accordance with the provisions of subsection 4(a), in which case such Units shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Termination.  In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Award.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

5


 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      Nature of Grant.  In accepting this grant of Units, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or

 

6


 

welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

10.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according

 

7


 

to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               Form of Payment.  The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (iii) would result in adverse tax consequences for the Employee or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).

 

12.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

8


 

13.                               Exchange Controls.  As a condition to this grant of Units, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

14.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restriction or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

15.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including Retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of

 

9


 

Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

16.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

17.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

18.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and

 

10

 

agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

20.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

21.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

22.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

23.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

24.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

25.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Award is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the Employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local law or to facilitate administration of the Program.

 

ALGERIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company

 

AUSTRALIA

 

1.             Award Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Award is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.             Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Award.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Award, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Units, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.             Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.             English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous

 

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documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

CHILE

 

Private Placement.  The following provision shall replace Section 12 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

Foreign Exchange Control Laws.  The Employee agrees to hold the Shares received upon settlement of the Units with the Company’s designated broker.  Upon a Termination, the Employee shall be required to sell all Shares issued pursuant to the Units within 90 days (or such shorter period as may be required by the State Administration for Foreign Exchange) of the Termination date and repatriate the sales proceeds to China in the manner designated by the Company.  For purposes of the foregoing, the Company shall establish procedures for effectuating the forced sale of the Shares (including procedures whereby the Company may issue sell instructions on behalf of the Employee), and the Employee hereby agrees to comply with such procedures and take any and all actions as the Company determines, in its sole discretion, are necessary or advisable for purposes of complying with local laws, rules and regulations in China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Units in accordance with Chinese law including, without limitation, any applicable State Administration of Foreign Exchange rules, regulations and requirements.

 

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CROATIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

DENMARK

 

Treatment of Units upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding Section 7 of the Agreement, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.             Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.             Lapse of Restrictions.  If, for any reason, Shares are issued to the Employee within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

3.             IMPORTANT NOTICE.  WARNING: The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Units and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials, the Employee should obtain independent professional advice.

 

4.             Wages.  The Units and Shares subject to the Units do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

5.             Nature of the Program.  The Company specifically intends that the Program will not be treated as an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).  To the extent any court, tribunal or legal/regulatory body in Hong Kong determines that the Program constitutes an occupational retirement scheme for the purposes of ORSO, the grant of the Units shall be null and void.

 

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INDIA

 

Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of Units, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

MEXICO

 

1.             Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Award does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Award as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.             Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Employee’s Agreement and this Addendum.   As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Units is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Units are not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any Awards under the Program as a result of such Termination.

 

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PAKISTAN

 

1.             Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all Dividend Equivalents and all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

2.             Exchange Control Obligations. To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan. As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to acquiring or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

ROMANIA

 

1.             Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.             English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar  în limba engleză.

 

RUSSIA

 

1.             Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Award in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.             Repatriation Requirements.  As a condition of this Award, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Award under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority

 

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pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. The Employee should note that, as a result, the Award is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares underlying the Award in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.             Withholding Taxes.  The following provision supplements Section 7 of the Agreement:

 

By accepting the Award, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon vesting of the Units.  If the Employee fails to advise the Employer of the gain realized upon vesting of the Units, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.             Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

1.             Acknowledgement of Discretionary Nature of the Program; No Vested Rights

 

By accepting the Award, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Units are granted on the assumption and condition that the Units and the Shares acquired upon settlement of the Units shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason the Award shall be null and void.

 

The Employee understands and agrees that, as a condition of the Award, unless otherwise provided in Section 4 of the Agreement, any unvested Units as of the date the Employee ceases active employment will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Units.

 

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2.             Termination for Cause.  Notwithstanding anything to the contrary in the Program or the Agreement, “Cause” shall be as defined as set forth in the Agreement, regardless of whether the Termination is considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

 

SRI LANKA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UKRAINE

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UNITED KINGDOM

 

1.             Withholding Taxes.  The following provision supplements Section 7 of the Agreement.

 

If payment or withholding of the income tax due in connection with the Award is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 7 of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.             Exclusion of Claim.  The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to the Units, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Units.  Upon the grant of the Award, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

UZBEKISTAN

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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VIETNAM

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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Exhibit 10.40

 

ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”).

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Performance Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s employment contract, if any;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any

 


 

activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

(c)                                  Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                                 Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                  Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                     a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)                                  the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                               a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

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(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                           the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(f)                                   Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                  Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(h)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested

 

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or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(i)                                     Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(j)                                    Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(k)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(l)                                     Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(l), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

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(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(m)                             Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Delivery Dates and Shareholder Rights.  The Delivery Dates for Shares underlying the Units are the respective dates on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date(s):

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 6 and 7 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) (d) or Section 5 occurs.

 

4.                                      Lapse of Restrictions.  Subject to Section 6 below:

 

(a)                                 Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

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(i)                                     the Restrictions on one-third of the total number of Units will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)                                  the Restrictions on an additional one-third of the total number of Units will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)                               the Restrictions on an additional one-third of the total number of Units will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                              any Units for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on the last day business day of February 201     and/or 201    , provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Units will vest in any one year.

 

Subject to subsections (b), (c), (d) and Section 5 below, Units for which Restrictions have lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date(s) on which such Restrictions lapse (each, a “Delivery Date”).  Unless indicated otherwise, Shares shall be delivered in an equal number (subject to rounding) as of each Delivery Date.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a), in which case any Units not previously settled on a Delivery Date shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Retirement.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace

 

6


 

this Award, the Restrictions shall lapse on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 5 shall supersede Section 13(a)(iv) and (v) of the Plan.

 

6.                                      Effect of Certain Bad Acts.  If Section 5 does not apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary. If Section 5 does apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than those set forth in subsections 4 (b), (c), (d) or Section 5, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause some or all of the Units not previously settled on a Delivery Date to continue to be subject to the Restrictions, provided such Restrictions may lapse thereafter in accordance with the provisions of subsection 4(a), in which case such Units shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Termination.  In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Award.

 

8.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

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The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

9.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

10.                               Nature of Grant.  In accepting this grant of Units, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or

 

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welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

11.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according

 

9


 

to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               Form of Payment.  The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (iii) would result in adverse tax consequences for the Employee or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).

 

13.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

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14.                               Exchange Controls.  As a condition to this grant of Units, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

15.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restriction or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

16.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including Retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of

 

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Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

18.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

19.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

20.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and

 

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agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

21.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

22.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

23.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

24.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

25.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

26.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Award is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the Employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local law or to facilitate administration of the Program.

 

ALGERIA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

AUSTRALIA

 

1.                                      Award Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Award is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.                                      Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Award.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Award, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Units, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

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CHILE

 

Private Placement.  The following provision shall replace Section 13 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

Foreign Exchange Control Laws.  The Employee agrees to hold the Shares received upon settlement of the Units with the Company’s designated broker.  Upon a Termination, the Employee shall be required to sell all Shares issued pursuant to the Units within 90 days (or such shorter period as may be required by the State Administration for Foreign Exchange) of the Termination date and repatriate the sales proceeds to China in the manner designated by the Company.  For purposes of the foregoing, the Company shall establish procedures for effectuating the forced sale of the Shares (including procedures whereby the Company may issue sell instructions on behalf of the Employee), and the Employee hereby agrees to comply with such procedures and take any and all actions as the Company determines, in its sole discretion, are necessary or advisable for purposes of complying with local laws, rules and regulations in China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Units in accordance with Chinese law including, without limitation, any applicable State Administration of Foreign Exchange rules, regulations and requirements.

 

CROATIA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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DENMARK

 

Treatment of Units upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding Section 8 of the Agreement, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      Lapse of Restrictions.  If, for any reason, Shares are issued to the Employee within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

3.                                      IMPORTANT NOTICE.  WARNING: The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Units and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials, the Employee should obtain independent professional advice.

 

4.                                      Wages.  The Units and Shares subject to the Units do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

5.                                      Nature of the Program.  The Company specifically intends that the Program will not be treated as an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).  To the extent any court, tribunal or legal/regulatory body in Hong Kong determines that the Program constitutes an occupational retirement scheme for the purposes of ORSO, the grant of the Units shall be null and void.

 

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INDIA

 

Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of Units, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

MEXICO

 

1.                                      Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Award does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Award as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.                                      Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Employee’s Agreement and this Addendum.  As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Units is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Units are not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any Awards under the Program as a result of such Termination.

 

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PAKISTAN

 

1.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all Dividend Equivalents and all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

2.                                      Exchange Control Obligations. To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan. As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to acquiring or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

ROMANIA

 

1.                                      Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.                                      English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificari, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar în limba engleză.

 

RUSSIA

 

1.                                      Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Award in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Award under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority

 

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pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. The Employee should note that, as a result, the Award is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares underlying the Award in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.                                      Withholding Taxes.  The following provision supplements Section 8 of the Agreement:

 

By accepting the Award, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon vesting of the Units.  If the Employee fails to advise the Employer of the gain realized upon vesting of the Units, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.                                      Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

1.                                      Acknowledgement of Discretionary Nature of the Program; No Vested Rights

 

By accepting the Award, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Units are granted on the assumption and condition that the Units and the Shares acquired upon settlement of the Units shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason the Award shall be null and void.

 

The Employee understands and agrees that, as a condition of the Award, unless otherwise provided in Sections 4 or 5 of the Agreement, any unvested Units as of the date the Employee ceases active employment will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Units.

 

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2.                                      Termination for Cause.  Notwithstanding anything to the contrary in the Program or the Agreement, “Cause” shall be as defined as set forth in the Agreement, regardless of whether the Termination is considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

 

SRI LANKA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UKRAINE

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UNITED KINGDOM

 

1.                                      Withholding Taxes.  The following provision supplements Section 8 of the Agreement.

 

If payment or withholding of the income tax due in connection with the Award is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8 of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.                                      Exclusion of Claim.  The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to the Units, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Units.  Upon the grant of the Award, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

UZBEKISTAN

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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VIETNAM

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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Exhibit 10.41

 

ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”).

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Performance Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s employment contract, if any;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(e)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(f)                                   Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(g)                                  Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(h)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(i)                                     Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

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(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(i), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(j)                                    Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Delivery Dates and Shareholder Rights.  The Delivery Dates for Shares underlying the Units are the respective dates on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date(s):

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (other than dividends or distributions of securities of the Company which

 

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may be issued with respect to its Shares by virtue of any stock split, combination, stock dividend or recapitalization) to the same extent and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 5 and 6 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.  Subject to Section 5 below:

 

(a)                                 Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

(i)                                     the Restrictions on one-third of the total number of Units will lapse on «M_1st_yr_vest», provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)                                  the Restrictions on an additional one-third of the total number of Units will lapse on «M_2nd_yr_vest», provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)                               the Restrictions on an additional one-third of the total number of Units will lapse on «M_3rd_yr_vest», provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                              any Units for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on <<month and date of grant>>, «4th_yr_vest» and/or «5th_yr_vest», provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Units will vest in any one year.

 

Subject to subsections (b), (c), and (d) below, Units for which Restrictions have lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date(s) on which such Restrictions lapse (each, a “Delivery Date”).  Unless indicated otherwise, Shares shall be delivered in an equal number (subject to rounding) as of each Delivery Date.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a), in which case any Units not

 

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previously settled on a Delivery Date shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Retirement.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Effect of Certain Bad Acts.  Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than Retirement, death or Disability, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause some or all of the Units not previously settled on a Delivery Date to continue to be subject to the Restrictions, provided such Restrictions may lapse thereafter in accordance with the provisions of subsection 4(a), in which case such Units shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Termination.  In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Award.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

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(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      Nature of Grant.  In accepting this grant of Units, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

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(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

10.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

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(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               Form of Payment.  The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (iii) would result in adverse tax consequences for the Employee or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).

 

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12.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

13.                               Exchange Controls.  As a condition to this grant of Units, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

14.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restriction or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

15.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be

 

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deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including Retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

16.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

17.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

18.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the

 

10

 

Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

20.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

21.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

22.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

23.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

24.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

25.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Award is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the Employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local law or to facilitate administration of the Program.

 

ALGERIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

AUSTRALIA

 

1.                                      Award Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Award is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.                                      Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Award.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Award, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Units, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous

 

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documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

CHILE

 

Private Placement.  The following provision shall replace Section 12 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

Foreign Exchange Control Laws.  The Employee agrees to hold the Shares received upon settlement of the Units with the Company’s designated broker.  Upon a Termination, the Employee shall be required to sell all Shares issued pursuant to the Units within 90 days (or such shorter period as may be required by the State Administration for Foreign Exchange) of the Termination date and repatriate the sales proceeds to China in the manner designated by the Company.  For purposes of the foregoing, the Company shall establish procedures for effectuating the forced sale of the Shares (including procedures whereby the Company may issue sell instructions on behalf of the Employee), and the Employee hereby agrees to comply with such procedures and take any and all actions as the Company determines, in its sole discretion, are necessary or advisable for purposes of complying with local laws, rules and regulations in China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Units in accordance with Chinese law including, without limitation, any applicable State Administration of Foreign Exchange rules, regulations and requirements.

 

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CROATIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

DENMARK

 

Treatment of Units upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding Section 7 of the Agreement, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      Lapse of Restrictions.  If, for any reason, Shares are issued to the Employee within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

3.                                      IMPORTANT NOTICE.  WARNING: The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Units and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials, the Employee should obtain independent professional advice.

 

4.                                      Wages.  The Units and Shares subject to the Units do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

5.                                      Nature of the Program.  The Company specifically intends that the Program will not be treated as an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).  To the extent any court, tribunal or legal/regulatory body in Hong Kong determines that the Program constitutes an occupational retirement scheme for the purposes of ORSO, the grant of the Units shall be null and void.

 

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INDIA

 

Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of Units, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

MEXICO

 

1.                                      Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Award does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Award as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.                                      Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Employee’s Agreement and this Addendum.  As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Units is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Units are not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any Awards under the Program as a result of such Termination.

 

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PAKISTAN

 

1.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all Dividend Equivalents and all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

2.                                      Exchange Control Obligations. To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan. As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to acquiring or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

ROMANIA

 

1.                                      Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.                                      English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar în limba engleză.

 

RUSSIA

 

1.                                      Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Award in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Award under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority

 

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pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. The Employee should note that, as a result, the Award is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares underlying the Award in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.                                      Withholding Taxes.  The following provision supplements Section 7 of the Agreement:

 

By accepting the Award, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon vesting of the Units.  If the Employee fails to advise the Employer of the gain realized upon vesting of the Units, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.                                      Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

1.                                      Acknowledgement of Discretionary Nature of the Program; No Vested Rights

 

By accepting the Award, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Units are granted on the assumption and condition that the Units and the Shares acquired upon settlement of the Units shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason the Award shall be null and void.

 

The Employee understands and agrees that, as a condition of the Award, unless otherwise provided in Section 4 of the Agreement, any unvested Units as of the date the Employee ceases active employment will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Units.

 

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2.                                      Termination for Cause.  Notwithstanding anything to the contrary in the Program or the Agreement, “Cause” shall be as defined as set forth in the Agreement, regardless of whether the Termination is considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

 

SRI LANKA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UKRAINE

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UNITED KINGDOM

 

1.                                      Withholding Taxes.  The following provision supplements Section 7 of the Agreement.

 

If payment or withholding of the income tax due in connection with the Award is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 7 of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.                                      Exclusion of Claim.  The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to the Units, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Units.  Upon the grant of the Award, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

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UZBEKISTAN

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

VIETNAM

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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Exhibit 10.42

 

ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”).

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Performance Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s employment contract, if any;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any

 


 

activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

(c)                                  Change in Control Agreement: An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                                 Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                  Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                     a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)                                  the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                               a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

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(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                           the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(f)                                   Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                  Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(h)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested

 

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or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(i)                                     Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(j)                                    Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(k)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(l)                                     Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(l), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

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(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(m)                             Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Delivery Dates and Shareholder Rights.  The Delivery Dates for Shares underlying the Units are the respective dates on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date(s):

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 6 and 7 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c), (d) or Section 5 occurs.

 

4.                                      Lapse of Restrictions.  Subject to Section 6 below:

 

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(a)                                 Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

(i)                                     the Restrictions on one-third of the total number of Units will lapse on <<M_1st_yr_vest>>, provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)                                  the Restrictions on an additional one-third of the total number of Units will lapse on <<M_2nd_yr_vest>>, provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)                               the Restrictions on an additional one-third of the total number of Units will lapse on <<M_3rd_yr_vest>>, provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                              any Units for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on <<month and date of grant>>, <<4th_yr_vest>> and/or <<5th_yr_vest>>, provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Units will vest in any one year.

 

Subject to subsections (b), (c), (d) and Section 5 below, Units for which Restrictions have lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date(s) on which such Restrictions lapse (each, a “Delivery Date”).  Unless indicated otherwise, Shares shall be delivered in an equal number (subject to rounding) as of each Delivery Date.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a), in which case any Units not previously settled on a Delivery Date shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Retirement.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing

 

6


 

Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Award, the Restrictions shall lapse on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 5 shall supersede Section 13(a)(iv) and (v) of the Plan.

 

6.                                      Effect of Certain Bad Acts.  If Section 5 does not apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary. If Section 5 does apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than those set forth in subsections 4 (b), (c), (d) or Section 5, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause some or all of the Units not previously settled on a Delivery Date to continue to be subject to the Restrictions, provided such Restrictions may lapse thereafter in accordance with the provisions of subsection 4(a), in which case such Units shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Termination.  In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Award.

 

8.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

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(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

9.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

10.                               Nature of Grant.  In accepting this grant of Units, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

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(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

11.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

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(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               Form of Payment.  The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (iii) would result in adverse tax consequences for the Employee or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).

 

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13.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

14.                               Exchange Controls.  As a condition to this grant of Units, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

15.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restriction or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

16.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be

 

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deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including Retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

18.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

19.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the

 

12


 

Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

20.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

21.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

22.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

23.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

24.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

25.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

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26.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Award is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the Employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local law or to facilitate administration of the Program.

 

ALGERIA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

AUSTRALIA

 

1.             Award Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Award is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.             Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Award.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Award, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Units, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.             Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.             English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous

 

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documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

CHILE

 

Private Placement.  The following provision shall replace Section 13 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

Foreign Exchange Control Laws.  The Employee agrees to hold the Shares received upon settlement of the Units with the Company’s designated broker.  Upon a Termination, the Employee shall be required to sell all Shares issued pursuant to the Units within 90 days (or such shorter period as may be required by the State Administration for Foreign Exchange) of the Termination date and repatriate the sales proceeds to China in the manner designated by the Company.  For purposes of the foregoing, the Company shall establish procedures for effectuating the forced sale of the Shares (including procedures whereby the Company may issue sell instructions on behalf of the Employee), and the Employee hereby agrees to comply with such procedures and take any and all actions as the Company determines, in its sole discretion, are necessary or advisable for purposes of complying with local laws, rules and regulations in China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Units in accordance with Chinese law including, without limitation, any applicable State Administration of Foreign Exchange rules, regulations and requirements.

 

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CROATIA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

DENMARK

 

Treatment of Units upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding Section 8 of the Agreement, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.             Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.             Lapse of Restrictions.  If, for any reason, Shares are issued to the Employee within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

3.             IMPORTANT NOTICE.  WARNING: The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Units and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials, the Employee should obtain independent professional advice.

 

4.             Wages.  The Units and Shares subject to the Units do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

5.             Nature of the Program.  The Company specifically intends that the Program will not be treated as an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).  To the extent any court, tribunal or legal/regulatory body in Hong Kong determines that the Program constitutes an occupational retirement scheme for the purposes of ORSO, the grant of the Units shall be null and void.

 

17

 

INDIA

 

Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of Units, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

MEXICO

 

1.             Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Award does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Award as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.             Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Employee’s Agreement and this Addendum.  As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Units is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Units are not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any Awards under the Program as a result of such Termination.

 

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PAKISTAN

 

1.             Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all Dividend Equivalents and all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

2.             Exchange Control Obligations. To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan. As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to acquiring or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

ROMANIA

 

1.             Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.             English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar în limba engleză.

 

RUSSIA

 

1.             Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Award in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.             Repatriation Requirements.  As a condition of this Award, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Award under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority

 

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pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. The Employee should note that, as a result, the Award is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares underlying the Award in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.             Withholding Taxes.  The following provision supplements Section 8 of the Agreement:

 

By accepting the Award, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon vesting of the Units.  If the Employee fails to advise the Employer of the gain realized upon vesting of the Units, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.             Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

1.             Acknowledgement of Discretionary Nature of the Program; No Vested Rights

 

By accepting the Award, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Units are granted on the assumption and condition that the Units and the Shares acquired upon settlement of the Units shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason the Award shall be null and void.

 

The Employee understands and agrees that, as a condition of the Award, unless otherwise provided in Sections 4 or 5 of the Agreement, any unvested Units as of the date the Employee ceases active employment will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Units.

 

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2.             Termination for Cause.  Notwithstanding anything to the contrary in the Program or the Agreement, “Cause” shall be as defined as set forth in the Agreement, regardless of whether the Termination is considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

 

SRI LANKA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UKRAINE

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UNITED KINGDOM

 

1.             Withholding Taxes.  The following provision supplements Section 8 of the Agreement.

 

If payment or withholding of the income tax due in connection with the Award is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8 of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.             Exclusion of Claim.  The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to the Units, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Units.  Upon the grant of the Award, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

UZBEKISTAN

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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VIETNAM

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

22



Exhibit 10.43

 

ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Unit Award (the “Award”) of « NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on a specified Delivery Date.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(e)                                  Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(f)                                   Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(g)                                  Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(h)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(i)                                     Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.

 

2.                                      Delivery Date and Shareholder Rights.  The Delivery Date for Shares underlying the Units is the date on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date:

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

The Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (other than dividends or

 

2


 

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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 5 and 6 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until the earliest to occur of the events described in subsection 4(a), (b), or (c).

 

4.                                      Lapse of Restrictions.  Subject to Section 5 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on 100% of the Units will lapse on the third anniversary of the Grant Date.  Subject to subsections (b) and (c) below, Units for which Restrictions have lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date on which such Restrictions lapse (a “Delivery Date”).

 

(b)                                 Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and the Units shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(c)                                  Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and the Units shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Effect of Certain Bad Acts.  Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than death or Disability, any Units with respect to which Restrictions have not lapsed as of the date of

 

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Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Units not previously settled on a Delivery Date to lapse and be settled in the form of Shares on the Delivery Date set forth in subsection 4(a) above as if the Employee had remained employed on such date.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

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10.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

11.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and

 

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management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

13.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

14.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration

 

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requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

16.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and

 

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upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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Exhibit 10.44

 

ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on a specified Delivery Date.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                                 Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                  Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                     a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)                                  the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                               a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic

 

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basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                           the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive

 

(f)                                   Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(h)                                 Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(i)                                     Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

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(j)                                    Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(k)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(l)                                     Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.

 

2.                                      Delivery Date and Shareholder Rights.  The Delivery Date for Shares underlying the Units is the date on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date:

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

The Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 6 and 7 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until the earliest to occur of the events described in subsection 4(a), (b), (c) or Section 5.

 

4.                                      Lapse of Restrictions.  Subject to Section 6 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on 100% of the Units will lapse on the third anniversary of the Grant Date.  Subject to subsections (b) and (c) below, Units for which Restrictions have lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date on which such Restrictions lapse (a “Delivery Date”).

 

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(b)                                 Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and the Units shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(c)                                  Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and the Units shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Award, the Restrictions shall lapse on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 5 shall supersede Section 13(a)(iv) of the Plan.

 

6.                                      Effect of Certain Bad Acts.  If Section 5 does not apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary. If Section 5 does apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than those set forth in subsection 4(b), (c) or Section 5, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause Restrictions on some or all of the Units not previously settled on a Delivery Date to lapse and be settled in the form of Shares on the Delivery Date set forth in subsection 4(a) above as if the Employee had remained employed on such date.

 

8.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

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(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

9.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

10.                               No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

11.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

12.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer

 

6


 

of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation,

 

7


 

administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

13.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

14.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

15.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

16.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

17.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be

 

8


 

treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

18.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

20.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

9



Exhibit 10.45

 

ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on a specified Delivery Date.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s employment contract, if any;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(e)                                  Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(f)                                   Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(g)                                  Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(h)                                 Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Delivery Date and Shareholder Rights.  The Delivery Date for Shares underlying the Units is the date on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date:

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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

 

2


 

dividend or recapitalization) to the same extent and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 5 and 6 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until the earliest to occur of the events  described in subsections 4(a), (b), or (c).

 

4.                                      Lapse of Restrictions.  Subject to Section 5 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on 100% of the Units will lapse on the third anniversary of the Grant Date.  Subject to subsections (b) and (c) below, Units for which Restrictions have lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date on which such Restrictions lapse (a “Delivery Date”).

 

(b)                                 Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and the Units shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(c)                                  Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and the Units shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Effect of Certain Bad Acts.  Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than death or Disability, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Units not previously settled on a Delivery Date to lapse and be settled in the form of Shares on the Delivery Date set forth in subsection 4(a) above as if the Employee had remained employed on such date.  In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will terminate effective

 

3


 

as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Award.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      Nature of Grant.  In accepting this grant of Units, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

4


 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

10.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer

 

5


 

of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation,

 

6


 

administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               Form of Payment.  The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (iii) would result in adverse tax consequences for the Employee or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).

 

12.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

13.                               Exchange Controls.  As a condition to this grant of Units, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

14.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restriction or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more

 

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than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

15.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

16.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

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17.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

18.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

20.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

21.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

22.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

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23.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

24.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

25.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

10

 

ADDENDUM TO THE ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Award is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the Employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local law or to facilitate administration of the Program.

 

ALGERIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

AUSTRALIA

 

1.                                      Award Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Award is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.                                      Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Award.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Award, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Units, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous

 

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documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

CHILE

 

Private Placement.  The following provision shall replace Section 12 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

Foreign Exchange Control Laws.  The Employee agrees to hold the Shares received upon settlement of the Units with the Company’s designated broker.  Upon a Termination, the Employee shall be required to sell all Shares issued pursuant to the Units within 90 days (or such shorter period as may be required by the State Administration for Foreign Exchange) of the Termination date and repatriate the sales proceeds to China in the manner designated by the Company.  For purposes of the foregoing, the Company shall establish procedures for effectuating the forced sale of the Shares (including procedures whereby the Company may issue sell instructions on behalf of the Employee), and the Employee hereby agrees to comply with such procedures and take any and all actions as the Company determines, in its sole discretion, are necessary or advisable for purposes of complying with local laws, rules and regulations in China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Units in accordance with Chinese law including, without limitation, any applicable State Administration of Foreign Exchange rules, regulations and requirements.

 

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CROATIA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

DENMARK

 

Treatment of Units upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding Section 7 of the Agreement, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      Lapse of Restrictions.  If, for any reason, Shares are issued to the Employee within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

3.                                      IMPORTANT NOTICE.  WARNING: The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Units and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials, the Employee should obtain independent professional advice.

 

4.                                      Wages.  The Units and Shares subject to the Units do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

5.                                      Nature of the Program.  The Company specifically intends that the Program will not be treated as an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).  To the extent any court, tribunal or legal/regulatory body in Hong Kong determines that the Program constitutes an occupational retirement scheme for the purposes of ORSO, the grant of the Units shall be null and void.

 

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INDIA

 

Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of Units, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

MEXICO

 

1.                                      Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Award does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Award as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.                                      Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Employee’s Agreement and this Addendum.  As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Units is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Units are not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any Awards under the Program as a result of such Termination.

 

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PAKISTAN

 

1.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all Dividend Equivalents and all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

2.                                      Exchange Control Obligations. To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan. As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to acquiring or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

ROMANIA

 

1.                                      Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.                                      English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar în limba engleză.

 

RUSSIA

 

1.                                      Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Award in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Award under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority

 

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pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. The Employee should note that, as a result, the Award is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares underlying the Award in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.                                      Withholding Taxes.  The following provision supplements Section 7 of the Agreement:

 

By accepting the Award, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon vesting of the Units.  If the Employee fails to advise the Employer of the gain realized upon vesting of the Units, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.                                      Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

1.                                      Acknowledgement of Discretionary Nature of the Program; No Vested Rights

 

By accepting the Award, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Units are granted on the assumption and condition that the Units and the Shares acquired upon settlement of the Units shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason the Award shall be null and void.

 

The Employee understands and agrees that, as a condition of the Award, unless otherwise provided in Section 4 of the Agreement, any unvested Units as of the date the Employee ceases active employment will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Units.

 

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2.                                      Termination for Cause.  Notwithstanding anything to the contrary in the Program or the Agreement, “Cause” shall be as defined as set forth in the Agreement, regardless of whether the Termination is considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

 

SRI LANKA

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UKRAINE

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UNITED KINGDOM

 

1.                                      Withholding Taxes.  The following provision supplements Section 7 of the Agreement.

 

If payment or withholding of the income tax due in connection with the Award is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 7 of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.                                      Exclusion of Claim.  The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to the Units, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Units.  Upon the grant of the Award, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

UZBEKISTAN

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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VIETNAM

 

Settlement in Cash.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 11 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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Exhibit 10.46

 

ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on a specified Delivery Date.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s employment contract, if any;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                                 Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                  Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                     a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)                                  the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                               a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic

 

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basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                           the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(f)                                   Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(h)                                 Disability:  As of a particular date, the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of at least six months under (i) the terms of the Abbott Laboratories Extended Disability Plan (the “EDP”), or (ii) if the Employee’s employer does not participate in the EDP, such similar accident and health plan providing replacement benefits in which the Employee’s employer participates.

 

(i)                                     Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

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(j)                                    Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(k)                                 Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Delivery Date and Shareholder Rights.  The Delivery Date for Shares underlying the Units is the date on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date:

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Employee is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Employee shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units are subject to the forfeiture provisions in Sections 6 and 7 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until the earliest to occur of the events described in subsections 4(a), (b), (c) or Section 5.

 

4.                                      Lapse of Restrictions.  Subject to Section 6 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on 100% of the Units will lapse on the third anniversary of the Grant Date.  Subject to subsections (b),(c) and Section 5 below, Units for which Restrictions have lapsed, as described in this subsection 4(a), shall be settled in the form of Shares on the date on which such Restrictions lapse (a “Delivery Date”).

 

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(b)                                 Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and the Units shall be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death.

 

(c)                                  Disability.  The Restrictions shall lapse on the date of the Employee’s Disability, and the Units shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.

 

5.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Award, the Restrictions shall lapse on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination. The provisions of this Section 5 shall supersede Section 13(a)(iv) of the Plan.

 

6.                                      Effect of Certain Bad Acts.  If Section 5 does not apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary. If Section 5 does apply, Units with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than those set forth in subsections 4(b), (c) or Section 5, any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause Restrictions on some or all of the Units not previously settled on a Delivery Date to lapse and be settled in the form of Shares on the Delivery Date set forth in subsection 4(a) above as if the Employee had remained employed on such date.  In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have

 

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the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Award.

 

8.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Units back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

9.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

10.                               Nature of Grant.  In accepting this grant of Units, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

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(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

11.                               Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

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(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

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The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               Form of Payment.  The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (iii) would result in adverse tax consequences for the Employee or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).

 

13.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

14.                               Exchange Controls.  As a condition to this grant of Units, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

15.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restriction or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its

 

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Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

16.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable: (i) all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment; (ii) the term “as soon as administratively possible” means a period of time that in no event will extend beyond the later of the end of the Employee’s taxable year in which Termination or Disability (as applicable) occurs or the fifteenth day of the third calendar month following Termination or Disability (as applicable); and (iii) the date of the Employee’s Disability shall be determined by the Company in its sole discretion.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

18.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries

 

10

 

determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

19.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

20.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

21.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

22.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

23.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

24.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s

 

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Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

25.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

26.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Award is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the Employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local law or to facilitate administration of the Program.

 

ALGERIA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

AUSTRALIA

 

1.                                      Award Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Award is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.                                      Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Award.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Award, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Units, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous

 

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documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

CHILE

 

Private Placement.  The following provision shall replace Section 13 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

Foreign Exchange Control Laws.  The Employee agrees to hold the Shares received upon settlement of the Units with the Company’s designated broker.  Upon a Termination, the Employee shall be required to sell all Shares issued pursuant to the Units within 90 days (or such shorter period as may be required by the State Administration for Foreign Exchange) of the Termination date and repatriate the sales proceeds to China in the manner designated by the Company.  For purposes of the foregoing, the Company shall establish procedures for effectuating the forced sale of the Shares (including procedures whereby the Company may issue sell instructions on behalf of the Employee), and the Employee hereby agrees to comply with such procedures and take any and all actions as the Company determines, in its sole discretion, are necessary or advisable for purposes of complying with local laws, rules and regulations in China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Units in accordance with Chinese law including, without limitation, any applicable State Administration of Foreign Exchange rules, regulations and requirements.

 

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CROATIA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

DENMARK

 

Treatment of Units upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding Section 8 of the Agreement, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.                                      Settlement in Shares.  Notwithstanding anything to the contrary in the Agreement, Addendum or the Program, the Award shall be settled only in Shares (and may not be settled in cash).

 

2.                                      Lapse of Restrictions.  If, for any reason, Shares are issued to the Employee within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

3.                                      IMPORTANT NOTICE.  WARNING: The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Units and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials, the Employee should obtain independent professional advice.

 

4.                                      Wages.  The Units and Shares subject to the Units do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

5.                                      Nature of the Program.  The Company specifically intends that the Program will not be treated as an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).  To the extent any court, tribunal or legal/regulatory body in Hong Kong determines that the Program constitutes an occupational retirement scheme for the purposes of ORSO, the grant of the Units shall be null and void.

 

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INDIA

 

Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of Units, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

MEXICO

 

1.                                      Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Award does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Award as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.                                      Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Employee’s Agreement and this Addendum.  As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Units is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Units are not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any Awards under the Program as a result of such Termination.

 

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PAKISTAN

 

1.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to repatriate all Dividend Equivalents and all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

2.                                      Exchange Control Obligations. To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan. As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to acquiring or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

ROMANIA

 

1.                                      Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.                                      English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinri legate direct sau indirect de acest Contract să fie redactate sau efectuate doar în limba engleză.

 

RUSSIA

 

1.                                      Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Award in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.                                      Repatriation Requirements.  As a condition of this Award, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Award under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority

 

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pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. The Employee should note that, as a result, the Award is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares underlying the Award in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.                                      Withholding Taxes.  The following provision supplements Section 8 of the Agreement:

 

By accepting the Award, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon vesting of the Units.  If the Employee fails to advise the Employer of the gain realized upon vesting of the Units, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.                                      Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

1.                                      Acknowledgement of Discretionary Nature of the Program; No Vested Rights

 

By accepting the Award, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Units are granted on the assumption and condition that the Units and the Shares acquired upon settlement of the Units shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason the Award shall be null and void.

 

The Employee understands and agrees that, as a condition of the Award, unless otherwise provided in Sections 4 or 5 of the Agreement, any unvested Units as of the date the Employee ceases active employment will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Units.

 

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2.                                      Termination for Cause.  Notwithstanding anything to the contrary in the Program or the Agreement, “Cause” shall be as defined as set forth in the Agreement, regardless of whether the Termination is considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

 

SRI LANKA

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UKRAINE

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

UNITED KINGDOM

 

1.                                      Withholding Taxes.  The following provision supplements Section 8 of the Agreement.

 

If payment or withholding of the income tax due in connection with the Award is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8 of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.                                      Exclusion of Claim.  The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to the Units, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Units.  Upon the grant of the Award, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

UZBEKISTAN

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

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VIETNAM

 

Settlement in Cash.  Notwithstanding Sections 4 or 5 of the Agreement or any other provision in the Agreement to the contrary, pursuant to Section 12 of the Agreement, the Units will be settled in the form of a cash payment, except as otherwise determined by the Company.

 

20



Exhibit 10.47

 

ABBOTT LABORATORIES
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Director”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on a specified Delivery Date.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Data:  Certain personal information about the Director held by the Company and the Subsidiary for which the Director provides services (if applicable), including (but not limited to) the Director’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Director’s favor, for the purpose of managing and administering the Program.

 

(c)                                  Director’s Representative:  The Director’s legal guardian or other legal representative.

 

(d)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(e)                                  Termination:  A termination from service for any reason (including death or retirement) with the Board of Directors of the Company and all Subsidiaries.

 

2.                                      Delivery Date and Shareholder Rights.  The “Delivery Date” for Shares underlying the Units is the date on which the Shares are payable to the Director after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date:

 

(a)                                     the Director shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 


 

(b)                                     the Director shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                      the Director’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

The Director shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Director with respect to dividends or distributions the record date for which occurs on or after the date the Director has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Director is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Director shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units shall be fully vested as of the Grant Date; provided, however, that the Units will be subject to subsections (3)(a), (b), and (c) below (collectively, the “Restrictions”) until the earlier to occur of the events described in subsection 4(a) or (b).

 

(a)                                The Units may not be sold, exchanged, assigned, transferred, pledged, or otherwise disposed of.

 

(b)                                Any additional Shares or other securities or property issued with respect to Shares covered by the Units as a result of any stock split, combination, stock dividend or recapitalization, shall be subject to the Restrictions and other provisions of the Program and this Agreement.

 

(c)                                 The Director shall not be entitled to receive any Shares prior to completion of all actions deemed appropriate by the Company to comply with federal, state or other applicable securities laws and stock exchange requirements.

 

4.                                      Lapse of Restrictions.  The Restrictions shall lapse and have no further force or effect and Shares underlying the Units shall be settled upon the earlier of the following events (each, a “Delivery Date”):

 

(a)                                Termination Event.  The date of the Director’s Termination; or

 

(b)                                Change in Control.  The date of occurrence of a Change in Control; provided that the event constituting a Change in Control is a “change in control event” as such term is defined in Treasury Regulation § 1.409A-3(i)(5).

 

2


 

5.                                      Withholding Taxes.  The Director may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                tendering a cash payment;

 

(b)                                having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                 tendering Shares received in connection with the Units back to the Company; or

 

(d)                                delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Director pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Director, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Director, the Director is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

6.                                      No Right to Continued Service.  This Agreement and the Director’s participation in the Program is not and shall not be interpreted to:

 

(a)                                form a contractual or other relationship with the Company or its Subsidiaries;

 

(b)                                confer upon the Director any right to continue in the service of the Company or any of its Subsidiaries; or

 

(c)                                interfere with the ability of the Company or its Subsidiaries to terminate the Director’s service at any time.

 

7.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Director.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

8.                                      Data Privacy

 

(a)                                Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Director’s personal Data is necessary for the Company’s administration of the Program and the Director’s participation in the Program.  The Director’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Director:

 

3


 

(i)                                   voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Director’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Director’s behalf to a broker or other third party with whom the Director may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                   Data may be provided by the Director or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Director’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Director’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Director’s participation in the Program.

 

(c)                                    The Company will transfer Data as necessary for the purpose of implementation, administration and management of the Director’s participation in the Program, and the Company and the Subsidiary that served by the Director (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                   The Director may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                   obtain confirmation as to the existence of the Data;

 

(ii)                                verify the content, origin and accuracy of the Data;

 

(iii)                             request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                            oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation,

 

4


 

administration and/or operation of the Program and the Director’s participation in the Program.

 

The Director may seek to exercise these rights by contacting the Company’s corporate human resources department.

 

9.                                      No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Director’s participation in the Program or the Director’s acquisition or sale of the underlying Shares.  The Director is hereby advised to consult with the Director’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

10.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Director and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

11.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Director, the Director’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

12.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

13.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Director’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Director shall not be deemed to have had a Termination unless the Director has incurred a “separation from

 

5


 

service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Director’s Termination shall instead be paid on the first business day after the date that is six months following the Director’s Termination (or upon the Director’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable, all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Director is entitled under this Agreement shall be treated as a separate payment.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Director (or any other individual claiming a benefit through the Director) for any tax, interest, or penalties the Director may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Director from the obligation to pay any taxes pursuant to Code Section 409A.

 

14.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Director, the Director’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

15.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

16.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

 

Miles D. White

 

Chairman and Chief Executive Officer

 

7



Exhibit 10.48

 

ABBOTT LABORATORIES
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Director”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on a specified Delivery Date.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement.

 

(b)                                 Data:  Certain personal information about the Director held by the Company and the Subsidiary for which the Director provides services (if applicable), including (but not limited to) the Director’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Director’s favor, for the purpose of managing and administering the Program.

 

(c)                                  Director’s Representative:  The Director’s legal guardian or other legal representative.

 

(d)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(e)                                  Termination:  A termination from service for any reason (including death or retirement) with the Board of Directors of the Company and all Subsidiaries.

 

2.                                      Delivery Date and Shareholder Rights.  The “Delivery Date” for Shares underlying the Units is the date on which the Shares are payable to the Director after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date:

 

(a)                                     the Director shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 


 

(b)                                     the Director shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                      the Director’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Director shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Director with respect to dividends or distributions the record date for which occurs on or after the date the Director has forfeited the Units, or the date the Restrictions on the Units have lapsed.  For purposes of compliance with the requirements of Code Section 409A, to the extent applicable, the specified date for payment of any Dividend Equivalents to which the Director is entitled under this Section 2 is the calendar year during the term of this Agreement in which the associated dividends or distributions are paid on Shares underlying the Units.  The Director shall have no right to determine the year in which Dividend Equivalents will be paid.

 

3.                                      Restrictions.  The Units shall be fully vested as of the Grant Date; provided, however, that the Units will be subject to subsections (3)(a), (b), and (c) below (collectively, the “Restrictions”) until the earlier to occur of the events described in subsection 4(a) or (b).

 

(a)                                The Units may not be sold, exchanged, assigned, transferred, pledged, or otherwise disposed of.

 

(b)                                Any additional Shares or other securities or property issued with respect to Shares covered by the Units as a result of any stock split, combination, stock dividend or recapitalization, shall be subject to the Restrictions and other provisions of the Program and this Agreement.

 

(c)                                 The Director shall not be entitled to receive any Shares prior to completion of all actions deemed appropriate by the Company to comply with federal, state or other applicable securities laws and stock exchange requirements.

 

4.                                      Lapse of Restrictions.  The Restrictions shall lapse and have no further force or effect and Shares underlying the Units shall be settled upon the earlier of the following events (each, a “Delivery Date”):

 

(a)                                Termination Event.  The date of the Director’s Termination; or

 

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(b)                                Change in Control.  The date of occurrence of a Change in Control; provided that the event constituting a Change in Control is a “change in control event” as such term is defined in Treasury Regulation § 1.409A-3(i)(5).

 

5.                                      Withholding Taxes.  The Director may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                tendering a cash payment;

 

(b)                                having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                 tendering Shares received in connection with the Units back to the Company; or

 

(d)                                delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Director pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Director, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Director, the Director is deemed to have been issued the full number of Shares underlying the Units, subject to the Restrictions set forth in this Agreement.

 

6.                                      No Right to Continued Service.  This Agreement and the Director’s participation in the Program is not and shall not be interpreted to:

 

(a)                                form a contractual or other relationship with the Company or its Subsidiaries;

 

(b)                                confer upon the Director any right to continue in the service of the Company or any of its Subsidiaries; or

 

(c)                                interfere with the ability of the Company or its Subsidiaries to terminate the Director’s service at any time.

 

7.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Director.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

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8.                                      Data Privacy

 

(a)                                   Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Director’s personal Data is necessary for the Company’s administration of the Program and the Director’s participation in the Program.  The Director’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Director:

 

(i)                                   voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Director’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Director’s behalf to a broker or other third party with whom the Director may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                   Data may be provided by the Director or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Director’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Director’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Director’s participation in the Program.

 

(c)                                    The Company will transfer Data as necessary for the purpose of implementation, administration and management of the Director’s participation in the Program, and the Company and the Subsidiary that served by the Director (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and

 

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management of the Program.  These recipients may be located throughout the world.

 

(d)                                   The Director may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                   obtain confirmation as to the existence of the Data;

 

(ii)                                verify the content, origin and accuracy of the Data;

 

(iii)                             request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                            oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Director’s participation in the Program.

 

The Director may seek to exercise these rights by contacting the Company’s corporate human resources department.

 

9.                                      Form of Payment.  The Company may, in its sole discretion, settle the Director’s Units in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under local law; (ii) would require the Director, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Director’s country; (iii) would result in adverse tax consequences for the Director or the Company; or (iv) is administratively burdensome.  Alternatively, the Company may, in its sole discretion, settle the Director’s Units in the form of Shares but require the Director to immediately sell such Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Director’s behalf).

 

10.                               Private Placement.  The grant of this Unit is not intended to be a public offering of securities in the Director’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this grant of Units is not subject to the supervision of the local securities authorities.

 

11.                               Exchange Controls.  As a condition to this grant of Units, the Director agrees to comply with any applicable foreign exchange rules and regulations.

 

12.                               Exchange Rate Fluctuations.  Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate

 

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13.                               Compliance with Applicable Laws and Regulations.

 

(a)                                The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Director’s participation in the Program and legally applicable to the Director or deemed by the Company or its Subsidiaries to be an appropriate charge to the Director even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Director acknowledges that the ultimate liability for all Tax-Related Items is and remains the Director’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Director further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restrictions or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Director’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Director has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Director acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

14.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Director’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

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To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Director shall not be deemed to have had a Termination unless the Director has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Director’s Termination shall instead be paid on the first business day after the date that is six months following the Director’s Termination (or upon the Director’s death, if earlier).  For purposes of Code Section 409A, to the extent applicable, all payments provided hereunder shall be treated as a right to a series of separate payments and each separately identified amount to which the Director is entitled under this Agreement shall be treated as a separate payment.

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Director (or any other individual claiming a benefit through the Director) for any tax, interest, or penalties the Director may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Director from the obligation to pay any taxes pursuant to Code Section 409A.

 

15.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Director’s participation in the Program or the Director’s acquisition or sale of the underlying Shares.  The Director is hereby advised to consult with the Director’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

16.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Director’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Director to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Director agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Director’s country.  In addition, the Director agrees to take any and all actions as may be required to comply with the Director’s personal obligations under local laws, rules and regulations in the Director’s country.

 

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17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Director, the Director’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

18.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Director hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

19.                               Addendum.  This grant of Units shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Director’s country.  Any such Addendum shall constitute part of this Agreement.

 

20.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

21.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Director and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

22.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Director, the Director’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

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23.                               Language.  If the Director has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

24.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

 

Miles D. White

 

Chairman and Chief Executive Officer

 

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Exhibit 10.49

 

ABBOTT LABORATORIES
RESTRICTED STOCK UNIT AGREEMENT FOR PARTICIPANTS IN FRANCE

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories, an Illinois corporation located at 100 Abbott Park Road, Abbott Park, Illinois, U.S.A., hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Unit Award (the “Award”) of «NoShares12345» restricted stock units (the “Units”) representing the right to receive an equal number of Shares on specified Delivery Dates.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Unit Agreement for Participants in France.

 

(b)                                 Closed Periods: Pursuant to Section L. 225-197-1 of the French Commercial Code, as amended, and as interpreted by the French administrative guidelines, means:

 

(i)                                     Ten (10) quotation days preceding and three (3) quotation days following the disclosure to the public of the consolidated financial statements or the annual statements of the Company; or

 

(ii)                                  The period beginning when information that could, if disclosed to the public, significantly impact the quotation of Shares, has been disclosed to Company corporate management entities involved in the governance of the Company (such as the Board, the Committee, supervisory directorate, etc.) and ending ten quotation days after the day such information is disclosed to the public.

 

(c)                                  Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 


 

(d)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(e)                                  Disability:  Shall have the meaning provided under the French RSU Plan.

 

(f)                                   Employee’s Representative:  The Employee’s legal guardian or other legal representative as determined under local law.

 

(g)                                  French RSU Plan: Rules of the Abbott Laboratories 2009 Incentive Stock Program for Grants of Units in France.

 

(h)                                 Program:  Collectively the Abbott Laboratories 2009 Incentive Stock Program and French RSU Plan.

 

(i)                                     Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

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(iv)                              For purposes of calculating service under this Section 1(i), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement, that Employee will continue to be treated as meeting the definition of Retirement.

 

(j)                                    Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Delivery Dates and Shareholder Rights.  The Delivery Dates for Shares underlying the Units are the respective dates on which the Shares are payable to the Employee after the Restrictions on such Units lapse pursuant to Section 4 below.  Shares shall be issued from the Company’s available treasury shares.  Prior to the Delivery Date(s):

 

(a)                                 the Employee shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;

 

(b)                                 the Employee shall not be permitted to vote the Shares underlying the Units; and

 

(c)                                  the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.

 

Subject to the requirements of local law, the Employee shall receive cash payments equal to the dividends and distributions paid on Shares underlying the Units (the “Dividend Equivalents”) (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 and on the same date as if each Unit were a Share; provided, however, that no Dividend Equivalents shall be payable to or for the benefit of the Employee with respect to dividends or distributions the record date for which occurs on or after the date the Employee has forfeited the Units, or the date the Restrictions on the Units have lapsed.

 

3.                                      Restrictions.  The Units are subject to the forfeiture and sale and transfer provisions in Sections 5 and 6 below.  Units are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on two-thirds of the Units will lapse on the second anniversary of the Grant Date and the Restrictions on the remaining

 

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Units will lapse on the third anniversary of the Grant Date so that, on the third anniversary of the Grant Date, 100% of the Units are no longer subject to the Restrictions.  Subject to subsections (b), (c), and (d) below, Units for which Restrictions have lapsed shall be settled in the form of Shares on the date(s) on which such Restrictions lapse (each, a “Delivery Date”).  In no event shall a Delivery Date occur prior to the second anniversary of the Grant Date, or such other period as required for the vesting period applicable to French qualified Units under Section L. 225-197-1 of the French Commercial Code, as amended, or the relevant sections of the French Tax Code or the French Social Security Code, as amended, to benefit from the specific French tax and social security regime.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement but may lapse thereafter in accordance with the provisions of subsection 4(a) above, and any Units not previously settled on a Delivery Date shall be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above, subject to French law as described in subsection 4(a), occurring after the date of such Retirement.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date shall become immediately transferable to the Employee’s heirs.  The Company shall issue the Shares subject to the Units to the Employee’s heirs, at their request, if such request occurs within six (6) months after the date of the Employee’s death.  If the Employee’s heirs do not request the issuance of the Shares underlying the Units, the Units shall expire and be forfeited six (6) months after the date of the Employee’s death.  The Employee’s heirs are not subject to the sale restrictions set forth in Section 6.

 

(d)                                 Disability.  The Restrictions shall lapse on the date of the Employee’s Disability and any Units not previously settled on a Delivery Date shall be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Disability.  In this case, any Shares issued pursuant to the Units prior to such Disability shall no longer be subject to the sale restrictions set forth in Section 6.

 

5.                                      Forfeiture of Units.  In the event of the Employee’s Termination for any reason other than Retirement, death, or Disability (including, without limitation, Termination for Gross or Willful Misconduct as defined under French labor rules), any Units with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  However, in the event that the Employee is terminated by the Company or its Subsidiaries, the Company may, in its sole discretion, cause Restrictions on some or all of the Units not previously settled on a Delivery Date to

 

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lapse and be settled in the form of Shares on the Delivery Dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.  In accepting this Award, the Employee acknowledges that in the event of a Termination described in this Section, the Employee’s right to vest in the Units under the Program, if any, will terminate effective as of the date that the Employee is no longer actively employed.

 

6.                                      Restriction on Sale or Transfer of Shares.

 

(a)                                 No sale or transfer of Shares issued pursuant to the Units held by the Employee shall occur prior to the relevant anniversary of the Delivery Date and, in no case, prior to the second anniversary of each Delivery Date or such other period as is required to comply with the minimum mandatory holding period applicable to Shares underlying French-qualified Units under Section L. 225-197-1 of the French Commercial Code, as amended, or under the French Tax Code or French Social Security Code, as amended, except in case of the Employee’s death or Disability.

 

(b)                                 The Shares underlying the Units cannot be sold during Closed Periods, so long as those Closed Periods are applicable to shares underlying French-qualified Units.

 

7.                                      Withholding Taxes.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries:

 

(i)                                     make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restrictions or settlement of the Units, the issuance of shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such

 

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issuance and the receipt of any dividends and/or any dividend equivalents; and

 

(ii)                                  do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.

 

Further, if the Employee has become subject to tax and/or social insurance contributions in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

8.                                      Employee’s Account.  Shares issued to the Employee pursuant to the French-qualified Units shall be recorded and held in the name of the Employee in an account with the Company, the transfer agent for the Company’s Shares or a broker, or in such other manner as the Company may otherwise determine to ensure compliance with applicable French law, including any necessary holding periods.  In this respect, the Employee hereby authorizes and directs UBS Financial Services Inc. (“UBS”), or its successor, to transfer as soon as practicable Shares resulting from any settlement of the Units to Banque Transatlantique, or, with prior notification to the Employee, to such other designee of the Company.

 

9.                                      Nature of Grant.  In accepting this Award, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Units and the Shares subject to the Units are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its

 

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Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

(iii)                               not part of the Employee’s normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments, and in no event should they be considered compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Award resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

10.                               No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

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11.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

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(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legitimate reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               Form of Payment.  The Company will settle the Employee’s Units in the form of Shares.

 

13.                               Private Placement.  The grant of this Award is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Award is not subject to the supervision of the local securities authorities.

 

14.                               Exchange Controls.  As a condition of this Award, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

16.                               Code Section 409A.  Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend the Award to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

To the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A and applicable guidance issued thereunder, the Employee shall not be

 

9


 

deemed to have had a Termination unless the Employee has incurred a “separation from service” as defined in Treasury Regulation §1.409A-1(h), and amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Employee’s Termination (including Retirement) shall instead be paid on the first business day after the date that is six months following the Employee’s Termination (or upon the Employee’s death, if earlier).

 

Although this Agreement and the payments provided hereunder are intended to be exempt from or to otherwise comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the payments provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

18.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and to consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

19.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company,

 

10


 

the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

20.                               Electronic Delivery.  The Company may, in its sole discretion, deliver by electronic means any documents related to current or future participation in the Program.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

21.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

22.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

23.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

24.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

11


 

25.                               Language Consent.  By signing and returning this document containing the terms and conditions of your Unit grant, you confirm that you have read and understood the documents relating to this grant (the Program, the French RSU Plan and this Agreement) which were provided to you in the English language.  You accept the terms of those documents accordingly.  En signant et renvoyant le présent document décrivant les termes et conditions de votre attribution d’Actions Gratuites, vous confirmez ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan, le Sous-Plan pour la France et le Contrat d’Attribution) qui vous ont été communiqués en langue anglaise.  Vous en acceptez les termes en connaissance de cause.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

12



Exhibit 10.50

 

ABBOTT LABORATORIES

 

RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Award (the “Award”) of «NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(e)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(f)                                   Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(g)                                  Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(h)                                 Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(i)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(j)                                    Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

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·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(j), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(k)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                      Restrictions.  The Shares are subject to the forfeiture provisions in Sections 5 and 6 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.  Subject to the provisions of Section 5 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on one-third of the Shares will lapse on each of the first three anniversaries of the Grant Date until, on the third anniversary of the Grant Date, 100% of the Shares are no longer subject to the Restrictions.

 

(b)                                 Retirement.  Upon the Employee’s Termination due to Retirement, any Restrictions remaining after the date of such Retirement shall continue to lapse on the anniversaries of the Grant Date as set forth in subsection 4(a) above.

 

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(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                      Effect of Certain Bad Acts.  Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than Retirement, death, or Disability, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Award back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

4


 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

10.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

11.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing

 

5


 

purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

13.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

14.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

6


 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

16.                               Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

8



Exhibit 10.51

 

ABBOTT LABORATORIES
RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Award (the “Award”) of «NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                                 Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                  Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)            a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)           the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)          a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic

 

2


 

basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)         the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(f)                                   Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                  Controlled Group:

 

(i)            Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)           during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(h)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

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(i)                                     Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(j)                                    Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(k)                                 Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(l)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(m)                             Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)           Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)          For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(m), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this

 

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Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(n)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                      Restrictions.  The Shares are subject to the forfeiture provisions in Sections 6 and 7 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c), (d) or Section 5 occurs.

 

4.                                      Lapse of Restrictions.  Subject to the provisions of Section 6 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on one-third of the Shares will lapse on each of the first three anniversaries of the Grant Date until, on the third anniversary of the Grant Date, 100% of the Shares are no longer subject to the Restrictions.

 

(b)                                 Retirement.  Upon the Employee’s Termination due to Retirement, any Restrictions remaining after the date of such Retirement shall continue to lapse on the anniversaries of the Grant Date as set forth in subsection 4(a) above.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Award, the Restrictions shall lapse on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for

 

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Change in Control Good Reason, the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 5 shall supersede Section 13(a)(iii) of the Plan.

 

6.                                      Effect of Certain Bad Acts.  If Section 5 does not apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary. If Section 5 does apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                      Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than those set forth in subsections 4(b), (c), (d) or Section 5, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.

 

8.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Award back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

9.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

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(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

10.                               No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

11.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

12.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)            voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)           authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing

 

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purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)          request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)          oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

13.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

14.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

15.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

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16.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

17.                               Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

18.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

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20.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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Exhibit 10.52

 

ABBOTT LABORATORIES

PERFORMANCE RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Award (the “Award”) of « NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Performance Restricted Stock Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any

 


 

activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(e)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(f)                                   Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(g)                                  Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(h)                                 Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(i)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(j)                                    Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

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(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(j), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(k)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                      Restrictions.  The Shares are subject to the forfeiture provisions in Sections 5 and 6 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.  Subject to the provisions of Section 5 below:

 

(a)                                 Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

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(i)            the Restrictions on one-third of the Shares will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)           the Restrictions on an additional one-third of the total number of Shares will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)          the Restrictions on an additional one-third of the total number of Shares will lapse on the last business day of February 201    , provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                              any Shares for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on the last business day of February 201     and/or 201    , provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Shares will vest in any one year.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a) above.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                      Effect of Certain Bad Acts.  Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than Retirement, death, or Disability, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.

 

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7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Award back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

10.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

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11.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)            voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)           authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

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(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)          request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)          oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

13.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

14.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

16.                               Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is

 

7


 

subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

8


 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

9



Exhibit 10.53

 

ABBOTT LABORATORIES
PERFORMANCE RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Award (the “Award”) of «NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                    Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                               Agreement:  This Performance Restricted Stock Agreement.

 

(b)                               Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                             material breach by the Employee of the Code of Business Conduct;

 

(B)                             material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                             commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                             wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                              failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                               Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                   a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)                                the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                             a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                            the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                               the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

2


 

(vi)                            the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                         the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                      the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change and Control Good Reason exists shall be conclusive.

 

(f)                                 Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                Controlled Group:

 

(i)                                   Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(h)                               Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(i)                                   Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

3


 

(j)                                  Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(k)                               Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(l)                                   Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(m)                           Retirement:

 

(i)                                   Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                        age 50 with 10 years of service;

 

·                                        age 65 with at least three years of service; or

 

·                                        age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                        age 55 with 10 years of service; or

 

·                                        age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                        age 55 with 10 years of service; or

 

·                                        age 65 with at least three years of service.

 

(iv)                            For purposes of calculating service under this Section 1(m), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                               If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(n)                               Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                    Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to

 

4


 

 

vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                    Restrictions.  The Shares are subject to the forfeiture provisions in Sections 6 and 7 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c), (d) or Section 5 occurs.

 

4.                                    Lapse of Restrictions.  Subject to the provisions of Section 6 below:

 

(a)                               Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

(i)                                   the Restrictions on one-third of the Shares will lapse on the last business day of February 201  , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)                                the Restrictions on an additional one-third of the total number of Shares will lapse on the last business day of February 201  , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)                             the Restrictions on an additional one-third of the total number of Shares will lapse on the last business day of February 201  , provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                            any Shares for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on the last business day of February 201   and/or 201  , provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Shares will vest in any one year.

 

(b)                               Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a) above.

 

(c)                                Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

(d)                               Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                    Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Award, the Restrictions shall lapse on the date of the Change in

 

5


 

Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control or was initiated by the Employee for Change in Control Good Reason , the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 5 shall supersede Section 13(a)(iii) and (v) of the Plan.

 

6.                                    Effect of Certain Bad Acts.  If Section 5 does not apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary. If Section 5 does apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                    Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than those set forth in subsections 4 (b), (c), (d) or Section 5, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee for any reason other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.

 

8.                                    Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                               tendering a cash payment;

 

(b)                               having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                tendering Shares received in connection with the Award back to the Company; or

 

(d)                               delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

9.                                    No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

6


 

(a)                               form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                               confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

10.                             No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

11.                             No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

12.                             Data Privacy.

 

(a)                               Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                   voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                               Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes

 

7


 

sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                               The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                   obtain confirmation as to the existence of the Data;

 

(ii)                                verify the content, origin and accuracy of the Data;

 

(iii)                             request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                            oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

                                              The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

13.                             No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

14.                             Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

15.                             Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

16.                             Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax

 

8


 

withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

17.                             Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

18.                             Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                             Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

20.                             Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

*                                         *                                         *

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

[NAME]

 

 

[TITLE]

 

9



Exhibit 10.54

 

ABBOTT LABORATORIES

PERFORMANCE RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Award (the “Award”) of « NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Performance Restricted Stock Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any

 


 

activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(e)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(f)                                   Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(g)                                  Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(h)                                 Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(i)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(j)                                    Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

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(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(j), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(k)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                      Restrictions.  The Shares are subject to the forfeiture provisions in Sections 5 and 6 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) occurs.

 

4.                                      Lapse of Restrictions.  Subject to the provisions of Section 5 below:

 

(a)                                 Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

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(i)                                     the Restrictions on one-third of the Shares will lapse on «M_1st_yr_vest», provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)                                  the Restrictions on an additional one-third of the total number of Shares will lapse on «M_2nd_yr_vest», provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)                               the Restrictions on an additional one-third of the total number of Shares will lapse on «M_3rd_yr_vest», provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                              any Shares for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on <<month and date of grant>>, «4th_yr_vest» and/or «5th_yr_vest», provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Shares will vest in any one year.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a) above.

 

(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                      Effect of Certain Bad Acts.  Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than Retirement, death, or Disability, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.

 

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7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Award back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

10.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan,

 

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investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

11.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation,

 

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administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

13.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

14.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

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16.                               Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

 

Miles D. White

 

 

 

Chairman and Chief Executive Officer

 

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Exhibit 10.55

 

ABBOTT LABORATORIES

PERFORMANCE RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Performance Restricted Stock Award (the “Award”) of «NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.  This Award is intended to conform with the qualified performance-based compensation requirements of Section 162(m) of the Code and the regulations thereunder, to the extent applicable, and shall be construed accordingly.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Performance Restricted Stock Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)           to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any

 


 

activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

(c)                                  Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                                 Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                  Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)            a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)           the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)          a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

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(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)         the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(f)                                   Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                  Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)           during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(h)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested

 

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or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(i)                                     Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(j)                                    Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(k)                                 Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(l)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(m)                             Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(m), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

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(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(n)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                      Restrictions.  The Shares are subject to the forfeiture provisions in Sections 6 and 7 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until an event or combination of events described in subsections 4(a), (b), (c), (d) or Section 5 occurs.

 

4.                                      Lapse of Restrictions.  Subject to the provisions of Section 6 below:

 

(a)                                 Based on Performance.  While the Employee is employed with the Company or its Subsidiaries:

 

(i)            the Restrictions on one-third of the Shares will lapse on the last business day of February 201   provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(ii)           the Restrictions on an additional one-third of the total number of Shares will lapse on the last business day of February 201  , provided the Company’s prior year return on equity is a minimum of 10 percent;

 

(iii)          the Restrictions on an additional one-third of the total number of Shares will lapse on the last business day of February 201  , provided the Company’s prior year return on equity is a minimum of 10 percent; and

 

(iv)                              any Shares for which Restrictions have not previously lapsed on the dates described in subsections 4(a)(i), (ii), and (iii) above shall remain outstanding and the Restrictions shall lapse on the last business day of February 201   and/or 201  , provided that the Company’s applicable prior year return on equity is a minimum of 10 percent, and provided further that no more than one-third of the Shares will vest in any one year.

 

(b)                                 Retirement.  The Restrictions shall continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a) above.

 

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(c)                                  Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

(d)                                 Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Award, the Restrictions shall lapse on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 5 shall supersede Section 13(a)(iii) and (v) of the Plan.

 

6.                                      Effect of Certain Bad Acts.  If Section 5 does not apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary. If Section 5 does apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                      Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than those set forth in subsections 4(b), (c), (d) or Section 5, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the dates set forth in subsection 4(a) above as if the Employee had remained employed on such dates.

 

8.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

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(c)                                  tendering Shares received in connection with the Award back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

9.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

10.                               No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

11.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

12.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

7


 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)          request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)          oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

8


 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

13.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

14.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

15.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

16.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

17.                               Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

18.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or

 

9


 

any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

19.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

20.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

10



Exhibit 10.56

 

ABBOTT LABORATORIES

RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Award (the “Award”) of « NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(d)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(e)                                  Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(f)                                   Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(g)                                  Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(h)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(i)                                     Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.

 

2.                                      Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                      Restrictions.  The Shares are subject to the forfeiture provisions in Sections 5 and 6 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until the earliest to occur of the events described in subsection 4(a), (b), or (c).

 

4.                                      Lapse of Restrictions.  Subject to the provisions of Section 5 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on 100% of the Shares will lapse on the third anniversary of the Grant Date.

 

(b)                                 Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

2


 

(c)                                  Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                      Effect of Certain Bad Acts.  Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.

 

6.                                      Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than death or Disability, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  In the event that the Employee is terminated by the Company other than for Cause, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the date set forth in subsection 4(a) above as if the Employee had remained employed on such date.

 

7.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Award back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

3


 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

10.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

11.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according

 

4


 

to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

13.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties

 

5


 

regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

14.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

16.                               Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and

 

6


 

each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*     *     *

 

7


 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

8



Exhibit 10.57

 

ABBOTT LABORATORIES
RESTRICTED STOCK AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a Restricted Stock Award (the “Award”) of «NoShares12345» Shares.

 

The Award is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Award are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Restricted Stock Agreement.

 

(b)                                 Cause:  Cause shall mean the following, as determined by the Company in its sole discretion:

 

(i)                                     material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(A)                               material breach by the Employee of the Code of Business Conduct;

 

(B)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(C)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(D)                               wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(E)                                failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(ii)                                  to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 


 

(c)                                  Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(d)                                 Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(e)                                  Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                     a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)                                  the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                               a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic

 

2


 

basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                           the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(f)                                   Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(g)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(h)                                 Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(i)                                     Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(j)                                    Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(k)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

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(l)                                     Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.

 

2.                                      Grant of Shares and Shareholder Rights.  Shares shall be issued from the Company’s available treasury shares.  Subject to the conditions below, the Employee shall have all the rights of a shareholder with respect to the Shares (and any securities of the Company which may be issued with respect to the Shares by virtue of any stock split, combination, stock dividend or recapitalization, which securities shall be deemed to be “Shares” hereunder) including the right to vote and to receive all cash dividends or other cash distributions paid or made with respect to the Shares regardless of whether the Restrictions described below are in effect.

 

3.                                      Restrictions.  The Shares are subject to the forfeiture provisions in Sections 6 and 7 below.  Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “Restrictions”) until the earliest to occur of the events described in subsection 4(a), (b), (c) or Section 5.

 

4.                                      Lapse of Restrictions.  Subject to the provisions of Section 6 below:

 

(a)                                 Passage of Time.  While the Employee is employed with the Company or its Subsidiaries, the Restrictions on 100% of the Shares will lapse on the third anniversary of the Grant Date.

 

(b)                                 Death.  The Restrictions shall lapse on the date of the Employee’s Termination due to death.

 

(c)                                  Disability.  The Restrictions shall lapse on the date the Employee incurs twelve consecutive months of Disability.

 

5.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Award with an award of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Award, the Restrictions shall lapse on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Award, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, the Restrictions shall lapse on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 5 shall supersede Section 13(a)(iii) of the Plan.

 

6.                                      Effect of Certain Bad Acts.  If Section 5 does not apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee engages in activity that constitutes Cause, whether or not the Employee experiences a Termination or

 

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remains employed with the Company or a Subsidiary. If Section 5 does apply, Shares with respect to which Restrictions have not lapsed shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Board, the Employee engages in an activity that constitutes Change in Control Cause.

 

7.                                      Forfeiture of Shares.  In the event of the Employee’s Termination for any reason other than those set forth in subsections 4(b), (c) or Section 5, any Shares with respect to which Restrictions have not lapsed as of the date of Termination shall be forfeited without consideration to the Employee or the Employee’s Representative.  If the Company terminates the Employee other than for Cause and such termination is not covered by Section 5, the Company may, in its sole discretion, cause Restrictions on some or all of the Shares to lapse on the date set forth in subsection 4(a) above as if the Employee had remained employed on such date.

 

8.                                      Withholding Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:

 

(a)                                 tendering a cash payment;

 

(b)                                 having the Company withhold Shares from the Shares to be delivered to satisfy the minimum applicable withholding tax;

 

(c)                                  tendering Shares received in connection with the Award back to the Company; or

 

(d)                                 delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares deliverable to the Employee pursuant to this Agreement or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee, such amount as may be necessary in the opinion of the Company to satisfy all such taxes, requirements and withholding obligations.  If the Company withholds for tax purposes from the Shares otherwise to be delivered to the Employee, the Employee is deemed to have been issued the full number of Shares underlying the Award, subject to the lapse of Restrictions as set forth in this Agreement.

 

9.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

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10.                               No Contract as of Right.  The Award does not create any contractual or other right to receive additional Awards or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

11.                               No Right to Compensation.  Unless expressly provided by the Company in writing, any value associated with the Award is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, insurance plan, investment or stock purchase plan, pension, retirement, or any other employee benefits, or similar payments under plans of the Company or any of its Subsidiaries.

 

12.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

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(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

13.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

14.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

15.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

16.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration

 

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requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

17.                               Code Section 409A.  The Award is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Award is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

18.                               Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

19.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.

 

20.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

21.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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Exhibit 10.58

 

ABBOTT LABORATORIES
NON-QUALIFIED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) an Option (the “Option”) to purchase a total of «NoShares12345» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Non-Qualified Stock Option Agreement.

 

(b)                                 Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(c)                                  Controlled Group:

 

(i)                                  Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                               during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(d)                                 Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(e)                                  Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 


 

(f)                                   Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(g)                                  Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(h)                                 Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

(i)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(j)                                    Retirement:

 

(i)                                  Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                               Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                            For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(j), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(k)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

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2.                                      Term of Option.  Subject to Sections 5 and 6, the Employee may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date (the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date (or any earlier expiration of the Option pursuant to Sections 5 and 6), it shall be canceled and forfeited.

 

3.                                      Vesting.  The Option shall vest and become exercisable as follows:

 

(a)                                 on the first anniversary of the Grant Date, one-third of the total number of Shares may be purchased;

 

(b)                                 on the second anniversary of the Grant Date, two-thirds of the total number of Shares may be purchased; and

 

(c)                                  on the third anniversary of the Grant Date, the Option may be exercised in full.

 

The Option is not earned and the Employee has no right to purchase the underlying Shares until an event described above occurs.  The vesting described above is cumulative, so that at each vesting date an additional amount of Shares is available for purchase and remains available until the Option’s Expiration Date or such earlier date determined pursuant to Section 5 or 6 below.

 

4.                                      Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                  General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee or the Employee’s Representative.

 

(ii)                               Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                            Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the

 

3


 

Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  The Option may be exercised only by:

 

(i)                                  delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Employee having a then Fair Market Value equal to the Exercise Price;

 

(ii)                               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 Exercise Price;

 

(iii)                            a combination of (i) and (ii) above; or

 

(iv)                           any other manner approved by the Committee from time to time.

 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

(c)                                  Payment of Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)                                  tendering a cash payment;

 

(ii)                               having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)                            tendering Shares received in connection with the Option back to the Company; or

 

(iv)                           delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Employee upon any exercise of the Option or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.                                      Effect of Termination or Death on the Option.

 

(a)                              Termination due to Retirement.  Subject to Section 6 below, in the event of Termination due to Retirement, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last

 

4


 

date on which the Option may be exercised is the day prior to the Expiration Date.

 

(b)                              Termination due to Disability.  Subject to Section 6 below, in the event of Termination due to Disability, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(c)                               Termination due to Death of the Employee.  In the event of the death of the Employee during employment, the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(d)                              Termination for Reason Other than Retirement, Disability or Death.

 

(i)                                  Options Granted Within Nine Months of Termination.  Any Option granted less than nine months prior to a Termination other than for Retirement, Disability or death shall be cancelled and forfeited immediately upon such Termination.

 

(ii)                               Options Granted Nine Months or More Prior to Termination.  Subject to Section 6 below, an Option granted nine months or more prior to a Termination for any reason other than Retirement, Disability or death, will continue to vest and shall be exercisable to the extent permitted by Section 3 for a three-month period after the Employee’s effective date of Termination, but in no event shall such Option be exercised on or after the Expiration Date.  In the event of the death of the Employee during the three-month period after the Employee’s effective date of Termination, the Option shall continue to vest and be exercisable for a three-month period measured from the date of death, but in no event shall such Option be exercised on or after the Expiration Date.

 

6.                                      Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee:

 

(a)                                 commits a material breach of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(i)                                 material breach by the Employee of the Code of Business Conduct;

 

(ii)                              material breach by the Employee of the Employee’s Employee Agreement;

 

(iii)                           commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

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(iv)                          wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(v)                             failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(b)                                 to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

7.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

8.                                      No Contract as of Right.  The grant of an Option under the Program does not create any contractual or other right to receive additional Options or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Option grants, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

9.                                      No Right to Compensation.  Neither this Option, Shares issued upon its exercise, any excess of market value over Exercise Price, nor any other rights, benefits, values or interest resulting from the granting of the Option shall be considered as compensation for purposes of any pension or retirement plan, insurance plan, investment or stock purchase plan, or any other employee benefit plan of the Company or any of its Subsidiaries.  Unless expressly provided by the Company in writing, any value associated with the Option is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, pension or retirement benefits, or similar payments.

 

10.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer

 

6


 

of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                  voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                               authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                              Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                               The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                              The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                  obtain confirmation as to the existence of the Data;

 

(ii)                               verify the content, origin and accuracy of the Data;

 

(iii)                            request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

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(iv)                           oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

12.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

13.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

14.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

15.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code

 

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Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

16.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

17.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

18.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*       *       *

 

9


 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

10



Exhibit 10.59

 

ABBOTT LABORATORIES

NON-QUALIFIED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) an Option (the “Option”) to purchase a total of «NQSOs» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Non-Qualified Stock Option Agreement.

 

(b)                                 Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(c)                                  Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(d)                                 Change in Control Good Reason:  shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                   a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 


 

(ii)                                the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                             a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                            the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                               the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                            the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                         the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                      the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(e)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(f)                                   Controlled Group:

 

2


 

(i)                                   Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(g)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(h)                                 Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(i)                                     Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(j)                                    Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(k)                                 Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

(l)                                     Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(m)                             Retirement:

 

(i)                                   Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                        age 50 with 10 years of service;

 

·                                        age 65 with at least three years of service; or

 

·                                        age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

3


 

(iii)                             For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iv)                            For purposes of calculating service under this Section 1(m), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                               If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(n)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Term of Option.  Subject to Sections 5,6 and 7, the Employee may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date (the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date (or any earlier expiration of the Option pursuant to Sections 5, 6 and 7), it shall be canceled and forfeited.

 

3.                                      Vesting.  The Option shall vest and become exercisable as follows:

 

(a)                                 on the first anniversary of the Grant Date, one-third of the total number of Shares may be purchased;

 

(b)                                 on the second anniversary of the Grant Date, two-thirds of the total number of Shares may be purchased; and

 

(c)                                  on the third anniversary of the Grant Date, the Option may be exercised in full.

 

The Option is not earned and the Employee has no right to purchase the underlying Shares until an event described above occurs.  The vesting described above is cumulative, so that at each vesting date an additional amount of Shares is available for purchase and remains available until the Option’s Expiration Date or such earlier date determined pursuant to Section 5, 6 or 7 below.

 

4.                                      Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

4


 

(i)                                   General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee or the Employee’s Representative.

 

(ii)                                Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                             Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  The Option may be exercised only by:

 

(i)                                   delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Employee having a then Fair Market Value equal to the Exercise Price;

 

(ii)                                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 Exercise Price;

 

(iii)                             a combination of (i) and (ii) above; or

 

(iv)                            any other manner approved by the Committee from time to time.

 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

(c)                                  Payment of Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)                                   tendering a cash payment;

 

(ii)                                having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)                             tendering Shares received in connection with the Option back to the Company; or

 

5


 

(iv)                            delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Employee upon any exercise of the Option or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.                                      Effect of Termination or Death on the Option.

 

(a)                                 Termination due to Retirement.  Subject to Section 7 below, in the event of Termination due to Retirement, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(b)                                 Termination due to Disability.  Subject to Section 7 below, in the event of Termination due to Disability, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(c)                                  Termination due to Death of the Employee.  In the event of the death of the Employee during employment, the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(d)                                 Termination for Reason Other than under Subsection 5(a), (b), (c) or Section 6.

 

(i)                                   Options Granted Within Nine Months of Termination.  Any Option granted less than nine months prior to a Termination for any reason other than for those set forth in subsections 5(a), (b), (c) or Section 6 shall be cancelled and forfeited immediately upon such Termination.

 

(ii)                                Options Granted Nine Months or More Prior to Termination.  Subject to Section 7 below, an Option granted nine months or more prior to a Termination for any reason other than those set forth in subsections 5(a), (b), (c) or Section 6, will continue to vest and shall be exercisable to the extent permitted by Section 3 for a three-month period after the Employee’s effective date of Termination, but in no event shall such Option be exercised on or after the Expiration Date.  In the event of the death of the Employee during the three-month period after the Employee’s effective date of Termination, the Option shall continue to vest and be exercisable for a three-month period measured from the date of death, but in no event shall such Option be exercised on or after the Expiration Date.

 

6.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Option with options of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new option will vest

 

6


 

according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Option, this Option will be fully vested on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Option, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, this Option shall become fully vested on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 6 shall supersede Section 13(a)(i)of the Plan.

 

7.                                      Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate with respect to (a) and (b), or, the sole opinion and discretion of the Board with respect to (c), the Employee:

 

(a)                                 if Section 6 does not apply, commits a material breach of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(i)                                   material breach by the Employee of the Code of Business Conduct;

 

(ii)                                material breach by the Employee of the Employee’s Employee Agreement;

 

(iii)                             commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(iv)                            wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(v)                               failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(b)                                 if Section 6, does not apply, to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries; or

 

(c)                                  if Section 6 does apply, the Employee engages in an activity that is deemed to constitute Change in Control Cause.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

7


 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      No Contract as of Right.  The grant of an Option under the Program does not create any contractual or other right to receive additional Options or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Option grants, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

10.                               No Right to Compensation.  Neither this Option, Shares issued upon its exercise, any excess of market value over Exercise Price, nor any other rights, benefits, values or interest resulting from the granting of the Option shall be considered as compensation for purposes of any pension or retirement plan, insurance plan, investment or stock purchase plan, or any other employee benefit plan of the Company or any of its Subsidiaries.  Unless expressly provided by the Company in writing, any value associated with the Option is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, pension or retirement benefits, or similar payments.

 

11.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                   voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those

 

8


 

persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                   obtain confirmation as to the existence of the Data;

 

(ii)                                verify the content, origin and accuracy of the Data;

 

(iii)                             request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                            oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

13.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

14.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

15.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax

 

9


 

withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

16.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

10



Exhibit 10.60

 

ABBOTT LABORATORIES
NON-QUALIFIED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) an Option (the “Option”) to purchase a total of «NQSOs» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.             Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)           Agreement:  This Non-Qualified Stock Option Agreement.

 

(b)           Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(c)           Controlled Group:

 

(i)            Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)           during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(d)           Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(e)           Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(f)            Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(g)           Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

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(h)           Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(i)            Retirement:

 

(i)            Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

(A)          age 50 with 10 years of service;

 

(B)          age 65 with at least three years of service; or

 

(C)          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)           Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

(A)          age 55 with 10 years of service; or

 

(B)          age 65 with at least three years of service.

 

(iii)          For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

(A)          age 55 with 10 years of service; or

 

(B)          age 65 with at least three years of service.

 

(iv)          For purposes of calculating service under this Section 1(i), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)           If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(j)            Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.             Term of Option.  Subject to Sections 5 and 6, the Employee may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date

 

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(the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date (or any earlier expiration of the Option pursuant to Sections 5 and 6), it shall be canceled and forfeited.

 

3.             Vesting.  The Option shall vest and become exercisable as follows:

 

(a)           on the first anniversary of the Grant Date, one-third of the total number of Shares may be purchased;

 

(b)           on the second anniversary of the Grant Date, two-thirds of the total number of Shares may be purchased; and

 

(c)           on the third anniversary of the Grant Date, the Option may be exercised in full.

 

The Option is not earned and the Employee has no right to purchase the underlying Shares until an event described above occurs.  The vesting described above is cumulative, so that at each vesting date an additional amount of Shares is available for purchase and remains available until the Option’s Expiration Date or such earlier date determined pursuant to Section 5 or 6 below.

 

4.             Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)           Who May Hold/Exercise the Option.

 

(i)            General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee or the Employee’s Representative.

 

(ii)           Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)          Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)           Method of Exercise.  Subject to the requirements of local law, the Option may be exercised only by:

 

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(i)            delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Employee having a then Fair Market Value equal to the Exercise Price;

 

(ii)           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 Exercise Price;

 

(iii)          a combination of (i) and (ii) above; or

 

(iv)          any other manner approved by the Committee from time to time.

 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

(c)           Payment of Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)            tendering a cash payment;

 

(ii)           having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)          tendering Shares received in connection with the Option back to the Company; or

 

(iv)          delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Employee upon any exercise of the Option or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.             Effect of Termination or Death on the Option.  By accepting this Option grant, the Employee acknowledges that, except as otherwise provided in this Agreement, in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Option under the Program, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Option grant.

 

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(a)           Termination due to Retirement.  Subject to Section 6 below, in the event of Termination due to Retirement, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(b)           Termination due to Disability.  Subject to Section 6 below, in the event of Termination due to Disability, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(c)           Termination due to Death of the Employee.  In the event of the death of the Employee during employment, the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(d)           Termination for Reason Other than Retirement, Disability or Death.

 

(i)            Options Granted Within Nine Months of Termination.  Any Option granted less than nine months prior to a Termination other than for Retirement, Disability or death shall be cancelled and forfeited immediately upon such Termination.

 

(ii)           Options Granted Nine Months or More Prior to Termination.  Subject to Section 6 below, an Option granted nine months or more prior to a Termination for any reason other than Retirement, Disability or death, will continue to vest and shall be exercisable to the extent permitted by Section 3 for a three-month period after the Employee’s effective date of Termination, but in no event shall such Option be exercised on or after the Expiration Date.  In the event of the death of the Employee during the three-month period after the Employee’s effective date of Termination, the Option shall continue to vest and be exercisable for a three-month period measured from the date of death, but in no event shall such Option be exercised on or after the Expiration Date.

 

6.             Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee:

 

(a)           commits a material breach of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(i)            material breach by the Employee of the Code of Business Conduct;

 

(ii)           material breach by the Employee of the Employee’s employment contract, if any;

 

(iii)          commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

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(iv)          wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(v)           failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(b)           to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

7.             No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)           form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)           confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)           interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

8.             Nature of Grant.  In accepting this Option grant, the Employee acknowledges that:

 

(a)           The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)           This Option award is a one-time benefit and does not create any contractual or other right to receive future grants of Options, benefits in lieu of Options, or other Program benefits in the future, even if Options have been granted repeatedly in the past;

 

(c)           All decisions with respect to future Option grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)           Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)           The Employee is voluntarily participating in the Program;

 

(f)            The Option and Shares subject to the Option are:

 

(i)            extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)           not intended to replace any pension rights or compensation;

 

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(iii)          not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)           The future value of the Shares underlying the Option is unknown and cannot be predicted with certainty;

 

(h)           In consideration of this Option award, no claim or entitlement to compensation or damages shall arise from the Option resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)            The Option and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)            Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Option, the amount realized upon exercise of the Option or the amount realized upon a subsequent sale of any Shares acquired upon exercise of the Option, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

9.             Data Privacy.

 

(a)           Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)            voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)           authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

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(b)           Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)           The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)           The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)            obtain confirmation as to the existence of the Data;

 

(ii)           verify the content, origin and accuracy of the Data;

 

(iii)          request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)          oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

10.                               Private Placement.  This Option grant is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Option grant is not subject to the supervision of the local securities authorities.

 

11.                               Exchange Controls.  As a condition to this Option grant, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

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12.          Compliance with Applicable Laws and Regulations.

 

(a)           The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)           Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the issuance of Shares upon exercise of the Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

13.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

14.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own

 

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personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

15.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Option and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

16.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

17.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

18.                               Addendum.  This Option grant shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

19.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

20.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by

 

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the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

21.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

22.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

23.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

By

 

 

 

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
NON-QUALIFIED STOCK OPTION AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Option is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary and advisable to comply with local law or to facilitate administration of the Program.

 

AUSTRALIA

 

1.                                      Option Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Option is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.                                      Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Option.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Option, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

3.                                      Right to Exercise.  Notwithstanding anything in the Agreement or Program to the contrary, if the Option vests when the Fair Market Value per Share is equal to or less than the Exercise Price, the Employee may not exercise the vested Option.  The vested Option may be exercised only starting on the business day following the first day on which the Fair Market Value per Share exceeds the Exercise Price of the Option.  For the avoidance of doubt, this provision also applies to any Option held by an Employee who transfers to Australia after the Option is granted, as determined by the Committee in its sole discretion.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Option, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.                                      English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

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2.                                      Exercise of the Option — No Tendering Previously-Owned Shares.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement or Program to the contrary, if the Employee is resident in Canada, the Employee may not tender Shares that the Employee owns to pay the Exercise Price or taxes in connection with the Option.

 

CHILE

 

Private Placement.  The following provision shall replace Section 10 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Option hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

1.                                      Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

2.                                      Foreign Exchange Control Laws.  As a condition of the Option, the Employee understands and agrees that, due to the exchange control laws in China, the Employee will be required to immediately repatriate the cash proceeds resulting from the cashless exercise of the Option to China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Notwithstanding anything to the contrary in the Program or the Agreement, in the event of an Employee’s Termination other than due to Retirement, the Employee shall be required to exercise the Option (to the extent outstanding, vested and otherwise permitted under the Agreement) and/or sell all Shares issued pursuant to the Program no later than 90 days after the date of Termination (or such other period as may be required by the State Administration of Foreign Exchange (“SAFE”)), and repatriate the sales proceeds to China in the manner designated by the Company.  Notwithstanding the foregoing, in the event of an Employee’s Termination by reason of Retirement, the Employee shall be required to exercise the Option

 

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(to the extent outstanding, vested and otherwise permitted under the Agreement) and/or sell all Shares issued pursuant to the Program no later than 180 days after the date of such Retirement (or such other period as may be required by the SAFE), and repatriate the sales proceeds to China in the manner designated by the Company.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Option in accordance with Chinese law including, without limitation, any applicable SAFE rules, regulations and requirements.

 

CROATIA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

DENMARK

 

Treatment of Options upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Option upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding anything in Section 4(c) of the Agreement to the contrary, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.                                      Exercise of Option.  If, for any reason, the Employee exercises the Option within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

2.                                      IMPORTANT NOTICE.  WARNING:  The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Option and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to

 

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the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials pertaining to the Option, the Employee should obtain independent professional advice.

 

3.                                      Wages.  The Option and Shares underlying the Option do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

INDIA

 

Repatriation Requirements.  As a condition to this Option grant, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of the Option, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

ITALY

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

MEXICO

 

1.                                      Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Option does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Option as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.                                      Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Agreement and this Addendum.  As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Option is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Option is not part of the Employee’s regular or expected compensation for purposes

 

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of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any awards, under the Program as a result of such Termination.

 

PAKISTAN

 

1.                                      Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

2.                                      Repatriation Requirements.  As a condition of this Option grant, the Employee agrees to repatriate all sales proceeds attributable to the cashless exercise of the Option acquired under the Program in accordance with local foreign exchange rules and regulations.

 

3.                                      Exchange Control Obligations.  To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan.  As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to exercising an Option or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from the failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

ROMANIA

 

1.                                      Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.                                      English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificǎri, înştiinţǎri legate direct sau indirect de acest Contract sǎ fie redactate sau efectuate doar în limba englezǎ.

 

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RUSSIA

 

1.                                      Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Option in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.                                      Repatriation Requirements.  As a condition of this Option grant, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Option under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of the prospectuses would not apply.  The Employee should note that, as a result, the Option is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Option in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.                                      Withholding Taxes.  The following provision supplements Section 4(c) of the Agreement:

 

By accepting the Option, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon exercise of the Option.  If the Employee fails to advise the Employer of the gain realized upon exercise of the Option, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.                                      Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

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SPAIN

 

Acknowledgement of Discretionary Nature of the Program; No Vested Rights.  By accepting the Option grant, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Options under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Option is granted on the assumption and condition that the Option and the Shares acquired upon exercise of the Option shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Option grant shall be null and void.

 

The Employee understands and agrees that, as a condition of the Option grant, unless otherwise provided in Section 5 of the Agreement, any unvested Option as of the date the Employee ceases active employment, and any vested portion of the Option not exercised within the post-termination exercise period set out in the Agreement, will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Option.

 

SRI LANKA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

SWEDEN

 

Exercise Procedures.  Notwithstanding any provision in the Agreement to the contrary, if the Employee is a resident in Sweden, the Company may not limit the exercise method of the Option only to a cashless exercise.

 

UNITED KINGDOM

 

1.                                      Payment of Taxes.  The following provision supplements Section 4(c) of the Agreement.

 

If payment or withholding of the income tax due in connection with the Option is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue

 

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& Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 4(c) of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.                                      Exclusion of Claim. The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to exercise the Option, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Option.  Upon the grant of the Option, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

VENEZUELA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

VIETNAM

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

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Exhibit 10.61

 

ABBOTT LABORATORIES

NON-QUALIFIED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) an Option (the “Option”) to purchase a total of «NQSOs» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, applicable Company policies and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Non-Qualified Stock Option Agreement.

 

(b)                                 Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(c)                                  Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(d)                                 Change in Control Good Reason:  shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                     a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

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(ii)                                  the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                               a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                           the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(e)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

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(f)                                   Controlled Group:

 

(i)                                     Abbott and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of subsections 414 (b), (c), or (m) of the Code) with Abbott; and

 

(ii)                                  during the period of the TAP Pharmaceutical Products Inc. (“TAP”) joint venture between Takeda Pharmaceutical Company Limited and Abbott ending April 30, 2008, TAP and any corporation, partnership and proprietorship under common control (as defined above) with TAP.

 

(g)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(h)                                 Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(i)                                     Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(j)                                    Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

(k)                                 Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(l)                                     Retirement:

 

(i)                                     Except as provided under (iii) below, for employees hired by the Controlled Group prior to January 1, 2004, Retirement means any of the following:

 

·                                          age 50 with 10 years of service;

 

·                                          age 65 with at least three years of service; or

 

·                                          age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.

 

(ii)                                  Except as provided under (iii) below, for employees hired by the Controlled Group after December 31, 2003, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

·                                          age 65 with at least three years of service.

 

(iii)                               For participants in the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees, Retirement means any of the following:

 

·                                          age 55 with 10 years of service; or

 

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·                                          age 65 with at least three years of service.

 

(iv)                              For purposes of calculating service under this Section 1(l), except as otherwise provided by the Committee or its delegate, service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group.

 

(v)                                 If an Employee has a Termination and (A) as of the date of that Termination met the definition of Retirement, and (B) is subsequently rehired by a member of the Controlled Group, then for purposes of this Agreement that Employee will continue to be treated as meeting the definition of Retirement.

 

(m)                             Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 

2.                                      Term of Option.  Subject to Sections 5, 6 and 7, the Employee may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date (the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date (or any earlier expiration of the Option pursuant to Sections 5, 6 and 7), it shall be canceled and forfeited.

 

3.                                      Vesting.  The Option shall vest and become exercisable as follows:

 

(a)                                 on the first anniversary of the Grant Date, one-third of the total number of Shares may be purchased;

 

(b)                                 on the second anniversary of the Grant Date, two-thirds of the total number of Shares may be purchased; and

 

(c)                                  on the third anniversary of the Grant Date, the Option may be exercised in full.

 

The Option is not earned and the Employee has no right to purchase the underlying Shares until an event described above occurs.  The vesting described above is cumulative, so that at each vesting date an additional amount of Shares is available for purchase and remains available until the Option’s Expiration Date or such earlier date determined pursuant to Section 5, 6 or 7 below.

 

4.                                      Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                     General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee or the Employee’s Representative.

 

(ii)                                  Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee or the person or

 

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persons to whom rights under the Option have passed by will or the laws of descent or distribution.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                               Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  Subject to the requirements of local law, the Option may be exercised only by:

 

(i)                                     delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Employee having a then Fair Market Value equal to the Exercise Price;

 

(ii)                                  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 Exercise Price;

 

(iii)                               a combination of (i) and (ii) above; or

 

(iv)                              any other manner approved by the Committee from time to time.

 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

(c)                                  Payment of Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)                                     tendering a cash payment;

 

(ii)                                  having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)                               tendering Shares received in connection with the Option back to the Company; or

 

(iv)                              delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Employee upon any exercise of the Option or (to the extent permitted

 

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by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.                                      Effect of Termination or Death on the Option.  By accepting this Option grant, the Employee acknowledges that, except as otherwise provided in this Agreement, in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Option under the Program, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Option grant.

 

(a)                                 Termination due to Retirement.  Subject to Section 7 below, in the event of Termination due to Retirement, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(b)                                 Termination due to Disability.  Subject to Section 7 below, in the event of Termination due to Disability, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(c)                                  Termination due to Death of the Employee.  In the event of the death of the Employee during employment, the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.

 

(d)                                 Termination for Reason Other than under Subsection 5(a), (b), (c) or Section 6 .

 

(i)                                     Options Granted Within Nine Months of Termination.  Any Option granted less than nine months prior to a Termination for any reason other than those set forth in subsections 5(a), (b), (c) or Section 6 shall be cancelled and forfeited immediately upon such Termination.

 

(ii)                                  Options Granted Nine Months or More Prior to Termination.  Subject to Section 7 below, an Option granted nine months or more prior to a Termination for any reason other than those set forth in subsections 5(a),(b), (c) or Section 6, will continue to vest and shall be exercisable to the extent permitted by Section 3 for a three-month period after the Employee’s effective date of Termination, but in no event shall such Option be exercised on or after the Expiration Date.  In the event of the death of the Employee during the three-month period after the Employee’s effective date of Termination, the Option shall continue to vest and be exercisable for a three-month period measured from the date of death, but in no event shall such Option be exercised on or after the Expiration Date.

 

6.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Option with options of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new option will vest

 

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according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Option, this Option will be fully vested on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Option, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, this Option shall become fully vested on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 6 shall supersede Section 13(a)(i) of the Plan.

 

7.                                      Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate with respect to (a) and (b) or, in the sole opinion and discretion of the Board with respect to (c), the Employee:

 

(a)                                 if Section 6 does not apply, commits a material breach of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(i)                                     material breach by the Employee of the Code of Business Conduct;

 

(ii)                                  material breach by the Employee of the Employee’s employment contract, if any;

 

(iii)                               commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(iv)                              wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(v)                                 failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or

 

(b)                                 if Section 6 does not apply, to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries; or

 

(c)                                  if Section 6 does apply, the Employee engages in an activity that is deemed to constitute Change in Control Cause.

 

8.                                     No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

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9.                                      Nature of Grant.  In accepting this Option grant, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Option award is a one-time benefit and does not create any contractual or other right to receive future grants of Options, benefits in lieu of Options, or other Program benefits in the future, even if Options have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Option grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Option and Shares subject to the Option are:

 

(i)                                     extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                  not intended to replace any pension rights or compensation;

 

(iii)                               not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Option is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of this Option award, no claim or entitlement to compensation or damages shall arise from the Option resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Option and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Option, the amount realized upon exercise of the Option or the amount realized upon a subsequent sale of any Shares acquired upon exercise of the Option, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

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10.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

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(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               Private Placement.  This Option grant is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Option grant is not subject to the supervision of the local securities authorities.

 

12.                               Exchange Controls.  As a condition to this Option grant, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

13.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the issuance of Shares upon exercise of the Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

14.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

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Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

15.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

16.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Option and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

17.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

18.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

19.                               Addendum.  This Option grant shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

20.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other

 

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provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

21.                               Entire Agreement.  This Agreement, the Program, the Program prospectus, the Program administrative rules, and any applicable Company policies constitute the entire agreement between the Employee and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

22.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

23.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

24.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*     *     *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
NON-QUALIFIED STOCK OPTION AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Option is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary and advisable to comply with local law or to facilitate administration of the Program.

 

AUSTRALIA

 

1.                                      Option Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Option is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.                                      Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Option.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Option, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

3.                                      Right to Exercise.  Notwithstanding anything in the Agreement or Program to the contrary, if the Option vests when the Fair Market Value per Share is equal to or less than the Exercise Price, the Employee may not exercise the vested Option.  The vested Option may be exercised only starting on the business day following the first day on which the Fair Market Value per Share exceeds the Exercise Price of the Option.  For the avoidance of doubt, this provision also applies to any Option held by an Employee who transfers to Australia after the Option is granted, as determined by the Committee in its sole discretion.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Option, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.                                      English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

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2.                                      Exercise of the Option — No Tendering Previously-Owned Shares.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement or Program to the contrary, if the Employee is resident in Canada, the Employee may not tender Shares that the Employee owns to pay the Exercise Price or taxes in connection with the Option.

 

CHILE

 

Private Placement.  The following provision shall replace Section 11 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Option hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

1.                                      Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

2.                                      Foreign Exchange Control Laws.  As a condition of the Option, the Employee understands and agrees that, due to the exchange control laws in China, the Employee will be required to immediately repatriate the cash proceeds resulting from the cashless exercise of the Option to China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Notwithstanding anything to the contrary in the Program or the Agreement, in the event of an Employee’s Termination other than due to Retirement, the Employee shall be required to exercise the Option (to the extent outstanding, vested and otherwise permitted under the Agreement) and/or sell all Shares issued pursuant to the Program no later than 90 days after the date of Termination (or such other period as may be required by the State Administration of Foreign Exchange (“SAFE”)), and repatriate the sales proceeds to China in the manner designated by the Company.  Notwithstanding the foregoing, in the event of an Employee’s Termination by reason of Retirement, the Employee shall be required to exercise the Option

 

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(to the extent outstanding, vested and otherwise permitted under the Agreement) and/or sell all Shares issued pursuant to the Program no later than 180 days after the date of such Retirement (or such other period as may be required by the SAFE), and repatriate the sales proceeds to China in the manner designated by the Company.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Option in accordance with Chinese law including, without limitation, any applicable SAFE rules, regulations and requirements.

 

CROATIA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

DENMARK

 

Treatment of Options upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Option upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding anything in Section 4(c) of the Agreement to the contrary, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.                                      Exercise of Option.  If, for any reason, the Employee exercises the Option within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

2.                                      IMPORTANT NOTICE.  WARNING:  The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Option and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to

 

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the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials pertaining to the Option, the Employee should obtain independent professional advice.

 

3.                                      Wages.  The Option and Shares underlying the Option do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

INDIA

 

Repatriation Requirements.  As a condition to this Option grant, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of the Option, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

ITALY

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

MEXICO

 

1.                                      Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Option does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Option as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.                                      Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Agreement and this Addendum.   As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Option is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Option is not part of the Employee’s regular or expected compensation for purposes

 

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of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any awards, under the Program as a result of such Termination.

 

PAKISTAN

 

1.                                      Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

2.                                      Repatriation Requirements.  As a condition of this Option grant, the Employee agrees to repatriate all sales proceeds attributable to the cashless exercise of the Option acquired under the Program in accordance with local foreign exchange rules and regulations.

 

3.                                      Exchange Control Obligations.  To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan.  As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to exercising an Option or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from the failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

ROMANIA

 

1.                                      Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.                                      English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar în limba engleză.

 

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RUSSIA

 

1.                                      Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Option in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.                                      Repatriation Requirements.  As a condition of this Option grant, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Option under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of the prospectuses would not apply.  The Employee should note that, as a result, the Option is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Option in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.                                      Withholding Taxes.  The following provision supplements Section 4(c) of the Agreement:

 

By accepting the Option, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon exercise of the Option.  If the Employee fails to advise the Employer of the gain realized upon exercise of the Option, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.                                      Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

Acknowledgement of Discretionary Nature of the Program; No Vested Rights.  By accepting the Option grant, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

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The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Options under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Option is granted on the assumption and condition that the Option and the Shares acquired upon exercise of the Option shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Option grant shall be null and void.

 

The Employee understands and agrees that, as a condition of the Option grant, unless otherwise provided in Sections 5 or 6 of the Agreement, any unvested Option as of the date the Employee ceases active employment, and any vested portion of the Option not exercised within the post-termination exercise period set out in the Agreement, will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Option.

 

SRI LANKA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

SWEDEN

 

Exercise Procedures.  Notwithstanding any provision in the Agreement to the contrary, if the Employee is a resident in Sweden, the Company may not limit the exercise method of the Option only to a cashless exercise.

 

UNITED KINGDOM

 

1.                                      Payment of Taxes.  The following provision supplements Section 4(c) of the Agreement.

 

If payment or withholding of the income tax due in connection with the Option is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 4(c) of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her

 

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by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.                                      Exclusion of Claim. The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to exercise the Option, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Option.  Upon the grant of the Option, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

VENEZUELA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

VIETNAM

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

20



Exhibit 10.62

 

ABBOTT LABORATORIES
NON-QUALIFIED REPLACEMENT STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) an Option (the “Option”) to purchase a total of «NoShares12345» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program with respect to an option (the “Original Option”), the original term of which was set to expire on the «Expiration_Date» (the “Expiration Date”).  The Option is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Non-Qualified Replacement Stock Option Agreement.

 

(b)                                 Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(c)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(d)                                 Employee Agreement:  The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.

 

(e)                                  Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(f)                                   Option:  The Non-Qualified Replacement Stock Option granted pursuant to this Agreement.

 

(g)                                  Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(h)                                 Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.

 


 

 

2.                                      Exercise Restrictions.  This Option may, but need not, be exercised in installments, but only within the time periods and subject to the conditions described below.  This Option may be exercised only after six months have elapsed after the Grant Date.  In no event shall this Option be exercisable on or after the date on which the Original Option would have terminated or at any other time when the Original Option would not have been exercisable.

 

(a)                                 Termination of Employment Before Six Months After Grant Date.  Subject to Section 3, in the event of the Employee’s Termination before six months have elapsed after the Grant Date, then the determination of whether and upon what conditions this Option may be exercised shall be made pursuant to the provisions that would have governed the exercise of the Original Option in the event of Termination before the Original Option became exercisable.

 

(b)                                 Termination of Employment Six Months or More After the Grant Date.  Subject to Section 3, in the event of the Employee’s Termination when six months or more have elapsed following the Grant Date, then the determination of whether and upon what conditions this Option may be exercised shall be made pursuant to the provisions that would have governed the exercise of the Original Option in the event of Termination after the Original Option became exercisable.

 

3.                                      Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee:

 

(a)                                 commits a material breach of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(i)                                  material breach by the Employee of the Code of Business Conduct;

 

(ii)                               material breach by the Employee of the Employee’s Employee Agreement;

 

(iii)                            commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(iv)                           wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(v)                              failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s disability); or

 

(b)           to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

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4.                                      Exercise of the Option.  Subject to Section 2 above, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                  General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee or the Employee’s Representative.

 

(ii)                               Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                            Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  The Option may be exercised only by:

 

(i)                                  delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Employee having a then Fair Market Value equal to the Exercise Price;

 

(ii)                               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 Exercise Price;

 

(iii)                            a combination of (i) and (ii) above; or

 

(iv)                           any other manner approved by the Committee from time to time.

 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

3


 

(c)                                  Payment of Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)                                  tendering a cash payment;

 

(ii)                               having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)                            tendering Shares received in connection with the Option back to the Company; or

 

(iv)                           delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Employee upon any exercise of the Option or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.                                      Replacement of Shares Used to Pay for Exercise of Option.  In the event the Exercise Price of the Shares covered by this Option or any taxes due on its exercise are paid by the surrender of other Shares or, for payment of withholding taxes, by withholding of Shares, the Employee will be granted an option (the “Replacement Option”) to purchase a number of Shares equal to the number of Shares surrendered and/or withheld, provided the then Fair Market Value of the Shares covered by this Option is at least twenty-five percent (25%) higher than such Exercise Price.  The Exercise Price under the Replacement Option will be the Fair Market Value of the Shares covered by the Replacement Option on the grant date of the Replacement Option.  The Replacement Option will be a nonqualified stock Option, first exercisable six (6) months after the Replacement Option grant date, with a term equal to the remainder of the term of the Original Option.  An additional Replacement Option will not be granted upon the exercise of a previously issued Replacement Option if that previously issued Replacement Option is exercised in the same calendar year that it was granted.

 

6.                                      Change in the Number of Issued Shares.  In the event there is a change in the number of issued Shares without new consideration to the Company (such as by stock dividends or stock splits), then (i) the number of Shares at the time unexercised under this Option shall be changed in proportion to such change in issued Shares; and (ii) the Exercise Price for the unexercised portion of the Option shall be adjusted so that the aggregate consideration payable to the Company upon the purchase of all Shares not theretofore purchased shall not be changed.  If the outstanding Shares are combined with or changed into another kind of stock of the Company or into securities of another corporation, whether through recapitalization, sale, merger, consolidation, spin-off, etc., the Company

 

4


 

shall cause adequate provision to be made whereby the person or persons entitled to exercise this Option shall thereafter be entitled to receive, upon exercise of any portion of the Option, the securities which that person would have been entitled to receive for Shares acquired through exercise of the same portion of the Option immediately prior to the effective date of such recapitalization, reorganization, sale, merger, consolidation, spin-off, etc.  If appropriate, due adjustment shall be made in the per share or per unit price of the securities that may be purchased on exercise of this Option following the recapitalization, reorganization, sale, merger, consolidation, spin-off, etc.

 

7.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

8.                                      No Contract as of Right.  Except as provided in Sections 5 and 6 above, the grant of an Option under the Program does not create any contractual or other right to receive additional Options or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Option grants, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

9.                                      No Right to Compensation.  Neither this Option, Shares issued upon its exercise, any excess of market value over Exercise Price, nor any other rights, benefits, values or interest resulting from the granting of the Option shall be considered as compensation for purposes of any pension or retirement plan, insurance plan, investment or stock purchase plan, or any other employee benefit plan of the Company or any of its Subsidiaries.  Unless expressly provided by the Company in writing, any value associated with the Option is an item of compensation outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, or end-of-service payments, bonuses, long-service awards, pension or retirement benefits, or similar payments.

 

10.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer

 

5


 

of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                  voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                               authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                  obtain confirmation as to the existence of the Data;

 

(ii)                               verify the content, origin and accuracy of the Data;

 

(iii)                            request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

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(iv)                           oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

12.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

13.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

14.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

15.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code

 

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Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

16.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

17.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

18.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*       *       *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

9



Exhibit 10.63

 

ABBOTT LABORATORIES
NON-QUALIFIED REPLACEMENT STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) an Option (the “Option”) to purchase a total of «NoShares12345» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program with respect to an option (the “Original Option”), the original term of which was set to expire on the «Expiration_Date» (the “Expiration Date”).  The Option is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Non-Qualified Replacement Stock Option Agreement.

 

(b)                                 Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(c)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.

 

(d)                                 Employee’s Representative:  The Employee’s legal guardian or other legal representative.

 

(e)                                  Option:  The Non-Qualified Replacement Stock Option granted pursuant to this Agreement.

 

(f)                                   Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(g)                                  Termination:  A severance of employment for any reason (including retirement) from the Company and all Subsidiaries.  Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.

 


 

2.                                      Exercise Restrictions.  This Option may, but need not, be exercised in installments, but only within the time periods and subject to the conditions described below.  This Option may be exercised only after six months have elapsed after the Grant Date.  In no event shall this Option be exercisable on or after the date on which the Original Option would have terminated or at any other time when the Original Option would not have been exercisable.

 

(a)                                 Termination of Employment Before Six Months After Grant Date.  Subject to Section 3, in the event of the Employee’s Termination before six months have elapsed after the Grant Date, then the determination of whether and upon what conditions this Option may be exercised shall be made pursuant to the provisions that would have governed the exercise of the Original Option in the event of Termination before the Original Option became exercisable.

 

(b)                                 Termination of Employment Six Months or More After the Grant Date.  Subject to Section 3, in the event of the Employee’s Termination when six months or more have elapsed following the Grant Date, then the determination of whether and upon what conditions this Option may be exercised shall be made pursuant to the provisions that would have governed the exercise of the Original Option in the event of Termination after the Original Option became exercisable.

 

3.                                      Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee:

 

(a)                                 commits a material breach of the terms and conditions of the Employee’s employment, including, but not limited to:

 

(i)                                     material breach by the Employee of the Code of Business Conduct;

 

(ii)                                  material breach by the Employee of the Employee’s employment contract, if any;

 

(iii)                             commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(iv)                              wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(v)                                 failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s disability); or

 

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(b)                                 to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

4.                                      Exercise of the Option.  Subject to Section 2 above, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                   General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee or the Employee’s Representative.

 

(ii)                                Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                             Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  Subject to the requirements of local law, the Option may be exercised only by:

 

(i)                                   delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Employee having a then Fair Market Value equal to the Exercise Price;

 

(ii)                                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 Exercise Price;

 

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(iii)                             a combination of (i) and (ii) above; or

 

(iv)                            any other manner approved by the Committee from time to time.

 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

(c)                                  Payment of Taxes.  The Employee may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)                                   tendering a cash payment;

 

(ii)                                having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)                             tendering Shares received in connection with the Option back to the Company; or

 

(iv)                            delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Employee upon any exercise of the Option or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Employee such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.                                      Replacement of Shares Used to Pay for Exercise of Option.  Subject to the requirements of local law, in the event the Exercise Price of the Shares covered by this Option or any taxes due on its exercise are paid by the surrender of other Shares or, for payment of withholding taxes, by withholding of Shares, the Employee will be granted an option (the “Replacement Option”) to purchase a number of Shares equal to the number of Shares surrendered and/or withheld, provided the then Fair Market Value of the Shares covered by this Option is at least twenty-five percent (25%) higher than such Exercise Price.  The Exercise Price under the Replacement Option will be the Fair Market Value of the Shares covered by the Replacement Option on the grant date of the Replacement Option.  The Replacement Option will be a nonqualified stock Option, first exercisable six (6) months after the Replacement Option grant date, with a term equal to the remainder of the term of the Original Option.  An additional Replacement Option will not be granted upon the exercise of a previously issued Replacement Option if that previously issued Replacement Option is exercised in the same calendar year that it was granted.

 

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6.                                      Change in the Number of Issued Shares.  In the event there is a change in the number of issued Shares without new consideration to the Company (such as by stock dividends or stock splits), then (i) the number of Shares at the time unexercised under this Option shall be changed in proportion to such change in issued Shares; and (ii) the Exercise Price for the unexercised portion of the Option shall be adjusted so that the aggregate consideration payable to the Company upon the purchase of all Shares not theretofore purchased shall not be changed.  If the outstanding Shares are combined with or changed into another kind of stock of the Company or into securities of another corporation, whether through recapitalization, sale, merger, consolidation, spin-off, etc., the Company shall cause adequate provision to be made whereby the person or persons entitled to exercise this Option shall thereafter be entitled to receive, upon exercise of any portion of the Option, the securities which that person would have been entitled to receive for Shares acquired through exercise of the same portion of the Option immediately prior to the effective date of such recapitalization, reorganization, sale, merger, consolidation, spin-off, etc.  If appropriate, due adjustment shall be made in the per share or per unit price of the securities that may be purchased on exercise of this Option following the recapitalization, reorganization, sale, merger, consolidation, spin-off, etc.

 

7.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

8.                                      Nature of Grant.  In accepting this Option grant, the Employee acknowledges that:

 

(a)                                 The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(b)                                 This Option award is a one-time benefit and does not create any contractual or other right to receive future grants of Options, benefits in lieu of Options, or other Program benefits in the future, even if Options have been granted repeatedly in the past;

 

(c)                                  All decisions with respect to future Option grants, if any, and their terms and conditions, will be made by the Committee, in its sole discretion;

 

(d)                                 Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;

 

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(e)                                  The Employee is voluntarily participating in the Program;

 

(f)                                   The Option and Shares subject to the Option are:

 

(i)                                   extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;

 

(ii)                                not intended to replace any pension rights or compensation;

 

(iii)                             not part of the Employee’s normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;

 

(g)                                  The future value of the Shares underlying the Option is unknown and cannot be predicted with certainty;

 

(h)                                 In consideration of this Option award, no claim or entitlement to compensation or damages shall arise from the Option resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;

 

(i)                                     The Option and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and

 

(j)                                    Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Option, the amount realized upon exercise of the Option or the amount realized upon a subsequent sale of any Shares acquired upon exercise of the Option, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

9.                                      Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to

 

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participate in the Program.  As such (where required under applicable law), the Employee:

 

(i)                                   voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                   obtain confirmation as to the existence of the Data;

 

(ii)                                verify the content, origin and accuracy of the Data;

 

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(iii)                             request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                            oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

10.                               Private Placement.  This Option grant is not intended to be a public offering of securities in the Employee’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Option grant is not subject to the supervision of the local securities authorities.

 

11.                               Exchange Controls.  As a condition to this Option grant, the Employee agrees to comply with any applicable foreign exchange rules and regulations.

 

12.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the issuance of Shares upon exercise of the Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further,

 

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if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

13.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will  comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

14.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

15.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Option and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any

 

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and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

16.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

17.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

18.                               Addendum.  This Option grant shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Program.  The Addendum constitutes part of this Agreement.

 

19.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

20.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

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21.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

22.                               Language.  If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

23.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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ADDENDUM TO THE ABBOTT LABORATORIES
NON-QUALIFIED REPLACEMENT STOCK OPTION AGREEMENT

 

In addition to the terms and conditions set forth in the Agreement, the Option is subject to the following terms and conditions.  All defined terms contained in this Addendum shall have the same meaning as set forth in the Program.  If the Employee is employed in a country identified in the Addendum, the additional terms and conditions for such country shall apply.  If the employee transfers residence and/or employment to a country identified in the Addendum, the additional terms and conditions for such country shall apply to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary and advisable to comply with local law or to facilitate administration of the Program.

 

AUSTRALIA

 

1.             Option Conditioned on Satisfaction of Regulatory Obligations.  If the Employee is: (a) a director of a Subsidiary incorporated in Australia; or (b) a person who is a management-level executive of a Subsidiary incorporated in Australia and who also is a director of a Subsidiary incorporated outside of Australia, the grant of the Option is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.

 

2.             Australian Offer Document.  In addition to the Agreement and the Program, the Employee must review the Australian Offer Document and the Australian Addendum to the Program for additional important information pertaining to the Option.  Both of these documents can be accessed via the UBS website at www.ubs.com/onesource/abt.  By accepting the Option, the Employee acknowledges and confirms that the Employee has reviewed these documents.

 

3.             Right to Exercise.  Notwithstanding anything in the Agreement or Program to the contrary, if the Option vests when the Fair Market Value per Share is equal to or less than the Exercise Price, the Employee may not exercise the vested Option.  The vested Option may be exercised only starting on the business day following the first day on which the Fair Market Value per Share exceeds the Exercise Price of the Option.  For the avoidance of doubt, this provision also applies to any Option held by an Employee who transfers to Australia after the Option is granted, as determined by the Committee in its sole discretion.

 

BRAZIL

 

Labor Law Acknowledgment. The Employee agrees, for all legal purposes, (i) the benefits provided under the Agreement and the Program are the result of commercial transactions unrelated to the Employee’s employment; (ii) the Agreement and the Program are not a part of the terms and conditions of the Employee’s employment; and (iii) the income from the Option, if any, is not part of the Employee’s remuneration from employment.

 

CANADA

 

1.             English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

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2.             Exercise of the Option — No Tendering Previously-Owned Shares.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement or Program to the contrary, if the Employee is resident in Canada, the Employee may not tender Shares that the Employee owns to pay the Exercise Price or taxes in connection with the Option.

 

CHILE

 

Private Placement.  The following provision shall replace Section 10 of the Agreement:

 

In accordance with Circular 99 of 2001, from Chile’s Superintendence of Securities, the grant of the Option hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.  As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Program is not subject to the supervision of the local securities authorities.

 

CHINA

 

1.             Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

2.             Foreign Exchange Control Laws.  As a condition of the Option, the Employee understands and agrees that, due to the exchange control laws in China, the Employee will be required to immediately repatriate the cash proceeds resulting from the cashless exercise of the Option to China.

 

The Employee understands and agrees that the repatriation of sales proceeds may need to be effected through a special exchange control account established by the Company or its Subsidiaries, and the Employee hereby consents and agrees that sales proceeds from the sale of Shares acquired under the Program may be transferred to such account by the Company on the Employee’s behalf prior to being delivered to the Employee.  The sales proceeds may be paid to the Employee in U.S. dollars or local currency at the Company’s discretion.  If the sales proceeds are paid to the Employee in U.S. dollars, the Employee understands that the Employee will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account.  If the sales proceeds are paid to the Employee in local currency, the Employee acknowledges that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the dividends and proceeds to local currency due to exchange control restrictions.  The Employee agrees to bear any currency fluctuation risk between the time the Shares are sold and the net proceeds are converted into local currency and distributed to the Employee.  The Employee further agrees to comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future in order to facilitate compliance with exchange control requirements in China.  The Employee agrees to be subject to these restrictions even after Termination.

 

Notwithstanding anything to the contrary in the Program or the Agreement, in the event of an Employee’s Termination, the Employee shall be required to exercise the Option (to the extent outstanding, vested and otherwise permitted under the Agreement) and sell all Shares issued pursuant to the Program no later than earliest of (a) the Original Option termination date, (b) subject to Section 2, the deadline for exercising the Original Option in the event of Termination and (c) 180 days after the date of Termination, or such shorter period as may be required by the SAFE.  The resulting sales proceeds shall be repatriated to

 

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China in the manner designated by the Company.  Any Options that remain unexercised after such date shall expire.

 

Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest or dividends or other losses the Employee may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Program, the Agreement and the Option in accordance with Chinese law including, without limitation, any applicable SAFE rules, regulations and requirements.

 

CROATIA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

DENMARK

 

Treatment of Options upon Termination.  Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Option upon Termination shall be governed by the Act on Stock Options in Employment Relations.

 

FINLAND

 

Withholding of Tax-Related Items.  Notwithstanding anything in Section 4(c) of the Agreement to the contrary, if the Employee is a local national of Finland, any Tax-Related Items shall be withheld only in cash from the Employee’s regular salary/wages or other amounts payable to the Employee in cash, or such other withholding methods as may be permitted under the Program and allowed under local law.

 

FRANCE

 

English Language.  The parties to the Agreement acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.

 

HONG KONG

 

1.             Exercise of Option.  If, for any reason, the Employee exercises the Option within six months of the Grant Date, the Employee agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Grant Date.

 

2.             IMPORTANT NOTICE.  WARNING:  The contents of the Agreement, the Addendum, the Program, and all other materials pertaining to the Option and/or the Program have not been reviewed by any regulatory authority in Hong Kong.  The Employee is hereby advised to exercise caution in relation to the offer thereunder.  If the Employee has any doubts about any of the contents of the aforesaid materials pertaining to the Option, the Employee should obtain independent professional advice.

 

3.             Wages.  The Option and Shares underlying the Option do not form part of the Employee’s wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

 

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INDIA

 

Repatriation Requirements.  As a condition to this Option grant, the Employee agrees to repatriate all sales proceeds and dividends attributable to Shares acquired under the Program in accordance with local foreign exchange rules and regulations.

 

ISRAEL

 

Indemnification for Tax Liabilities.  As a condition of the grant of the Option, the Employee expressly consents and agrees to indemnify the Company and/or its Subsidiaries and hold them harmless from any and all liability attributable to taxes, interest or penalties thereon, including without limitation, liabilities relating to the necessity to withhold any taxes.

 

ITALY

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

MEXICO

 

1.             Commercial Relationship.  The Employee expressly acknowledges that the Employee’s participation in the Program and the Company’s grant of the Option does not constitute an employment relationship between the Employee and the Company.  The Employee has been granted the Option as a consequence of the commercial relationship between the Company and the Company’s Subsidiary in Mexico that employs the Employee, and the Company’s Subsidiary in Mexico is the Employee’s sole employer.  Based on the foregoing: (a) the Employee expressly acknowledges that the Program and the benefits derived from participation in the Program do not establish any rights between the Employee and the Subsidiary in Mexico that employs the Employee; (b) the Program and the benefits derived from participation in the Program are not part of the employment conditions and/or benefits provided by the Subsidiary in Mexico that employs the Employee; and (c) any modifications or amendments of the Program or benefits granted thereunder by the Company, or a termination of the Program by the Company, shall not constitute a change or impairment of the terms and conditions of the Employee’s employment with the Subsidiary in Mexico.

 

2.             Extraordinary Item of Compensation.  The Employee expressly recognizes and acknowledges that the Employee’s participation in the Program is a result of the discretionary and unilateral decision of the Company, as well as the Employee’s free and voluntary decision to participate in the Program in accord with the terms and conditions of the Program, the Agreement and this Addendum.   As such, the Employee acknowledges and agrees that the Company may, in its sole discretion, amend and/or discontinue the Employee’s participation in the Program at any time and without any liability.  The value of the Option is an extraordinary item of compensation outside the scope of the Employee’s employment contract, if any.  The Option is not part of the Employee’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Subsidiary in Mexico that employs the Employee.

 

NETHERLANDS

 

Waiver of Termination Rights.  The Employee waives any and all rights to compensation or damages as a result of a Termination, insofar as those rights result or may result from: (a) the loss or diminution in

 

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value of such rights or entitlements under the Program; or (b) the Employee ceasing to have rights, or ceasing to be entitled to any awards, under the Program as a result of such Termination.

 

PAKISTAN

 

1.             Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

2.             Repatriation Requirements.  As a condition of this Option grant, the Employee agrees to repatriate all sales proceeds attributable to the cashless exercise of the Option acquired under the Program in accordance with local foreign exchange rules and regulations.

 

3.             Exchange Control Obligations.  To the extent applicable, the Employee is required to comply with certain consent and reporting requirements to the State Bank of Pakistan (Pakistan’s central bank) under the exchange control laws of Pakistan.  As the exchange control regulations can change frequently and at times, without notice, the Employee should consult his or her legal advisor prior to exercising an Option or selling Shares under the Program to ensure compliance with current regulations.  Neither the Company nor its Subsidiary in Pakistan accept any liability for any fine or penalties resulting from the failure of the Employee to comply with applicable laws.

 

PHILIPPINES

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

ROMANIA

 

1.             Termination.  Notwithstanding anything to the contrary in the Program or the Agreement, a Termination shall include the situation where the Employee’s employment contract is terminated as a result of the Employee’s application for retirement to the Romanian House of Pensions.

 

2.             English Language. The Employee hereby expressly agrees that this Agreement, the Program as well as all documents, notices and proceedings entered into, relating directly or indirectly hereto, be drawn up or communicated only in the English language. Angajatul consimte în mod expres prin prezentul ca acest Contract, Programul precum şi orice alte documente, notificări, înştiinţări legate direct sau indirect de acest Contract să fie redactate sau efectuate doar  în limba engleză.

 

RUSSIA

 

1.             Sale or Transfer of Shares.  Notwithstanding anything to the contrary in the Program or the Agreement, the Employee shall not be permitted to sell or otherwise dispose of the Shares acquired pursuant to the Option in Russia.  The Employee may sell the Shares only through a broker established and operating outside Russia.

 

2.             Repatriation Requirements.  As a condition of this Option grant, the Employee agrees to promptly repatriate all funds, including (but not limited to) sales proceeds, attributable to Shares acquired under the Program to a foreign currency account at an authorized bank in Russia in accordance with local foreign

 

17


 

exchange rules and regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SINGAPORE

 

Qualifying Person Exemption.  The grant of the Option under the Program is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (the “SFA”).  The Program has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority pursuant to any legislation in Singapore.  Accordingly, statutory liability under the SFA in relation to the content of the prospectuses would not apply.  The Employee should note that, as a result, the Option is subject to section 257 of the SFA and the Employee will not be able to make: (a) any subsequent sale of the Shares in Singapore; or (b) any offer of such subsequent sale of the Shares subject to the Option in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.

 

SOUTH AFRICA

 

1.             Withholding Taxes.  The following provision supplements Section 4(c) of the Agreement:

 

By accepting the Option, the Employee agrees to notify the Company’s local affiliate in South Africa that employs the Employee (the “Employer”) of the amount of any gain realized upon exercise of the Option.  If the Employee fails to advise the Employer of the gain realized upon exercise of the Option, the Employee may be liable for a fine.  The Employee will be responsible for paying any difference between the actual tax liability and the amount withheld.

 

2.             Exchange Control Obligations.  The Employee is solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.  As the Exchange Control Regulations change frequently and without notice, the Employee should consult the Employee’s legal advisor prior to the acquisition or sale of Shares under the Program to ensure compliance with current Exchange Control Regulations.  Neither the Company nor any of its Subsidiaries shall be liable for any fines or penalties resulting from the Employee’s failure to comply with applicable laws.

 

SPAIN

 

Acknowledgement of Discretionary Nature of the Program; No Vested Rights.  By accepting the Option grant, the Employee consents to participation in the Program and acknowledges receipt of a copy of the Program.

 

The Employee understands that the Company has unilaterally, gratuitously and in its sole discretion granted Options under the Program to individuals who may be employees of the Company or its Subsidiaries throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Subsidiaries on an ongoing basis.  Consequently, the Employee understands that the Option is granted on the assumption and condition that the Option and the Shares acquired upon exercise of the Option shall not become a part of any employment contract (either with the Company or any of its Subsidiaries) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Employee understands that this grant would not be made to the Employee but for the assumptions and conditions referenced above; thus, the Employee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Option grant shall be null and void.

 

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The Employee understands and agrees that, as a condition of the Option grant, unless otherwise provided in the Agreement, any unvested Option as of the date the Employee ceases active employment, and any vested portion of the Option not exercised within the applicable post-termination exercise period, will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of Termination.  The Employee acknowledges that the Employee has read and specifically accepts the conditions referred to in the Agreement regarding the impact of a Termination on the Option.

 

SRI LANKA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

SWEDEN

 

Exercise Procedures.  Notwithstanding any provision in the Agreement to the contrary, if the Employee is a resident in Sweden, the Company may not limit the exercise method of the Option only to a cashless exercise.

 

UNITED KINGDOM

 

1.             Payment of Taxes.  The following provision supplements Section 4(c) of the Agreement.

 

If payment or withholding of the income tax due in connection with the Option is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by the Employee to the Subsidiary in the United Kingdom that employs the Employee (the “Employer”), effective as of the Due Date.  The Employee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 4(c) of the Agreement.  Notwithstanding the foregoing, if the Employee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), he or she shall not be eligible for a loan from the Company to cover the income tax liability.  In the event that the Employee is a director or executive officer and the income tax is not collected from or paid by him or her by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Employee on which additional income tax and national insurance contributions (“NICs”) will be payable.  The Employee will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or the Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.             Exclusion of Claim. The Employee acknowledges and agrees that the Employee will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from the Employee’s ceasing to have rights under or to be entitled to exercise the Option, whether or not as a result of Termination (whether the Termination is in breach of contract or otherwise), or from the loss or diminution in value of the Option.  Upon the grant of the Option, the Employee shall be deemed to have waived irrevocably any such entitlement.

 

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VENEZUELA

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

VIETNAM

 

Mandatory Full Cashless Exercise.  Notwithstanding Section 4 of the Agreement or any other provision in the Agreement to the contrary, the Option may be exercised only by using the cashless method, except as otherwise determined by the Committee.  Only full cashless exercise (net proceeds remitted to the Employee in cash) will be permitted.  Cash, cashless sell-to-cover, or stock swap methods of exercise are prohibited.

 

20



Exhibit 10.64

 

ABBOTT LABORATORIES

NON-EMPLOYEE DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name», (the “Director”) an Option (the “Option”) to purchase a total of «NQSOs» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Director are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Non-Employee Director Non-Qualified Stock Option Agreement.

 

(b)                                 Data:  Certain personal information about the Director held by the Company and the Subsidiary for which the Director provides services (if applicable), including (but not limited to) the Director’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Director’s favor, for the purpose of managing and administering the Program.

 

(c)                                  Director’s Representative:  The Director’s legal guardian or other legal representative.

 

(d)                                 Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

(e)                                  Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(f)                                   Termination:  A termination from service with the Board of Directors of the Company and all Subsidiaries.

 

2.                                      Term of Option.  The Director may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date (the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date, it shall be canceled and forfeited.

 

3.                                      Vesting.  The Option is 100% vested on the Grant Date.

 


 

4.                                      Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                     General Rule - Exercise by Director Only.  During the lifetime of the Director, the Option may be exercised only by the Director or the Director’s Representative.

 

(ii)                                  Death Exception.  If the Director dies, then the Option may be exercised only by the executor or administrator of the estate of the Director or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution, and only on or before the day prior to the Expiration Date.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                               Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than: (A) by will or the laws of descent and distribution; or (B) by the Director as a gift to the Director’s spouse, child or grandchild (the Director’s “Immediate Family”) or to a family trust, a family partnership, a family limited liability company, or a similar arrangement for the benefit of members of the Director’s Immediate Family.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  The Option may be exercised only by:

 

(i)                                     delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Director having a then Fair Market Value equal to the Exercise Price;

 

(ii)                                  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 Exercise Price;

 

(iii)                               a combination of (i) and (ii) above; or

 

(iv)                              any other manner approved by the Committee from time to time.

 

2


 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

(c)                                  Payment of Taxes.  The Director may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)                                     tendering a cash payment;

 

(ii)                                  having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)                               tendering Shares received in connection with the Option back to the Company; or

 

(iv)                              delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Director upon any exercise of the Option or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Director such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.                                      No Right to Continued Service.  This Agreement and the Director’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form a contractual relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Director any right to continue in the service of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Director’s service at any time.

 

6.                                      No Contract as of Right.  The grant of an Option under the Program does not create any contractual or other right to receive additional Options or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Director.  Future Option grants, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

7.                                      Data Privacy

 

(a)                                   Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Director’s personal Data is necessary for the Company’s administration of the Program and the Director’s participation in the Program.  The Director’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Director:

 

3


 

(i)                                   voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Director’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Director’s behalf to a broker or other third party with whom the Director may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                   Data may be provided by the Director or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Director’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Director’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Director’s participation in the Program.

 

(c)                                    The Company will transfer Data as necessary for the purpose of implementation, administration and management of the Director’s participation in the Program, and the Company and the Subsidiary that is served by the Director (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

(d)                                   The Director may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                   obtain confirmation as to the existence of the Data;

 

(ii)                                verify the content, origin and accuracy of the Data;

 

(iii)                             request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                            oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Director’s participation in the Program.

 

4


 

The Director may seek to exercise these rights by contacting the Company’s corporate human resources department.

 

8.                                      No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Director’s participation in the Program or the Director’s acquisition or sale of the underlying Shares.  The Director is hereby advised to consult with the Director’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

9.                                      Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Director and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

10.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Director, the Director’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

11.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

12.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Director’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Director (or any other individual claiming a benefit through the Director) for any tax, interest, or penalties the Director may owe as a result

 

5


 

of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Director from the obligation to pay any taxes pursuant to Code Section 409A.

 

13.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Director, the Director’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

14.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

15.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*     *     *

 

6


 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

7



Exhibit 10.65

 

ABBOTT LABORATORIES
NON-EMPLOYEE DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name», (the “Director”) an Option (the “Option”) to purchase a total of «NoShares12345» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the Fair Market Value of the Shares on the Grant Date.

 

The Option is granted under the Program and is subject to the provisions of the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Program shall control.

 

The terms and conditions of the Option granted to the Director are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.

 

(a)                                 Agreement:  This Non-Employee Director Non-Qualified Stock Option Agreement.

 

(b)                                 Data:  Certain personal information about the Director held by the Company and the Subsidiary for which the Director provides services (if applicable), including (but not limited to) the Director’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Director’s favor, for the purpose of managing and administering the Program.

 

(c)                                  Director’s Representative:  The Director’s legal guardian or other legal representative.

 

(d)                                 Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

(e)                                  Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(f)                                   Termination:  A termination from service with the Board of Directors of the Company and all Subsidiaries.

 

2.                                      Term of Option.  The Director may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date (the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date, it shall be canceled and forfeited.

 


 

3.                                      Vesting.  The Option is 100% vested on the Grant Date.

 

4.                                      Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                     General Rule - Exercise by Director Only.  During the lifetime of the Director, the Option may be exercised only by the Director or the Director’s Representative.

 

(ii)                                  Death Exception.  If the Director dies, then the Option may be exercised only by the executor or administrator of the estate of the Director or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution, and only on or before the day prior to the Expiration Date.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                               Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than: (A) by will or the laws of descent and distribution; or (B) by the Director as a gift to the Director’s spouse, child or grandchild (the Director’s “Immediate Family”) or to a family trust, a family partnership, a family limited liability company, or a similar arrangement for the benefit of members of the Director’s Immediate Family.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  Subject to the requirements of local law, the Option may be exercised only by:

 

(i)                                     delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Director having a then Fair Market Value equal to the Exercise Price;

 

(ii)                                  delivery of a properly-executed exercise notice together with a copy of irrevocable instructions to a broker to deliver promptly to the

 

2


 

Company the amount of sale or loan proceeds to pay the Exercise Price;

 

(iii)                               a combination of (i) and (ii) above; or

 

(iv)                              any other manner approved by the Committee from time to time.

 

Each method of exercise requires payment of the full amount of any federal, state, local or other applicable taxes which the Company believes are required to be withheld and paid with respect to such exercise, as described below.

 

(c)                                  Payment of Taxes.  The Director may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:

 

(i)                                     tendering a cash payment;

 

(ii)                                  having the Company withhold Shares from the Option exercised to satisfy the minimum applicable withholding tax;

 

(iii)                               tendering Shares received in connection with the Option back to the Company; or

 

(iv)                              delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

The Company shall have the right and is hereby authorized to withhold from the Shares transferable to the Director upon any exercise of the Option or (to the extent permitted by applicable law, including without limitation Code Section 409A) from any other compensation or other amount owing to the Director such amount as may be necessary in the opinion of the Company to satisfy all such tax and withholding obligations.

 

5.                                      No Right to Continued Service.  This Agreement and the Director’s participation in the Program is not and shall not be interpreted to:

 

(a)                                 form a contractual relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Director any right to continue in the service of the Company or any of its Subsidiaries; or

 

(c)                                  interfere with the ability of the Company or its Subsidiaries to terminate the Director’s service at any time.

 

6.                                      No Contract as of Right.  The grant of an Option under the Program does not create any contractual or other right to receive additional Options or other Program Benefits.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Director.  Future Option grants, if any, and their terms and conditions, will be at the sole discretion of the Committee.

 

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7.                                      Data Privacy

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Director’s personal Data is necessary for the Company’s administration of the Program and the Director’s participation in the Program.  The Director’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program.  As such (where required under applicable law), the Director:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Director’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Director’s behalf to a broker or other third party with whom the Director may elect to deposit any Shares acquired pursuant to the Program.

 

(b)                                 Data may be provided by the Director or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Director’s participation in the Program.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Director’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Director’s participation in the Program.

 

(c)                                  The Company will transfer Data as necessary for the purpose of implementation, administration and management of the Director’s participation in the Program, and the Company and the Subsidiary that served by the Director (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program.  These recipients may be located throughout the world.

 

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(d)                                   The Director may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                   obtain confirmation as to the existence of the Data;

 

(ii)                                verify the content, origin and accuracy of the Data;

 

(iii)                             request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                            oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Director’s participation in the Program.

 

The Director may seek to exercise these rights by contacting the Company’s corporate human resources department.

 

8.                                      Private Placement.  This Option grant is not intended to be a public offering of securities in the Director’s country.  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Option grant is not subject to the supervision of the local securities authorities.

 

9.                                      Exchange Controls.  As a condition to this Option grant, the Director agrees to comply with any applicable foreign exchange rules and regulations.

 

10.                               Exchange Rate Fluctuations.  Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Option, the amount realized upon exercise of the Option or the amount realized upon a subsequent sale of any Shares acquired upon exercise of the Option, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

11.                               Compliance with Applicable Laws and Regulations.

 

(a)                                 The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

(b)                                 Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Director’s participation in the Program and legally applicable to the Director or deemed by the Company or its Subsidiaries to be an appropriate charge to the Director even if technically due by the Company or its Subsidiaries (“Tax-Related Items”),

 

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the Director acknowledges that the ultimate liability for all Tax-Related Items is and remains the Director’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Director further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the issuance of Shares upon exercise of the Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Director’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Director has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Director acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

12.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Director’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the Benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the Benefits provided hereunder will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Director (or any other individual claiming a benefit through the Director) for any tax, interest, or penalties the Director may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Director from the obligation to pay any taxes pursuant to Code Section 409A.

 

13.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Director’s participation in the Program or the Director’s acquisition or sale of the underlying Shares.  The Director is hereby advised to consult with the Director’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.

 

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14.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Director’s participation in the Program, on the Option and on any Shares acquired under the Program, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Program, and to require the Director to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Director agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Director’s country.  In addition, the Director agrees to take any and all actions as may be required to comply with the Director’s personal obligations under local laws, rules and regulations in the Director’s country.

 

15.                               Determinations.  Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Director, the Director’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

16.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means.  The Director hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

17.                               Addendum.  This Option grant shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Director’s country.  Any such Addendum shall constitute part of this Agreement.

 

18.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

19.                               Entire Agreement.  This Agreement and the Program constitute the entire agreement between the Director and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or

 

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written, between the parties regarding the Option.  Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.

 

20.                               Succession.  This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Director, the Director’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.

 

21.                               Language.  If the Director has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

22.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*              *              *

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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Exhibit 10.66

 

ABBOTT LABORATORIES
UK APPROVED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a UK Approved Option (the “Option”) to purchase a total of «NoShares12345» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the fair market value of the Shares on the Grant Date.

 

The Option is granted under the United Kingdom Share Option Plan (the “Plan”), a sub-plan of the Program, and is subject to the provisions of the Plan, the Program, the Program prospectus, the Program administrative rules, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the Plan, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Plan shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Plan.

 

(a)                                 Agreement:  This UK Approved Stock Option Agreement.

 

(b)                                 Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

(c)                                  Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Plan.

 

(d)                                 Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(e)                                  Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

(f)                                   Plan: The United Kingdom Share Option Plan.

 

(g)                                  Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(h)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 


 

2.                                      Term of Option.  Subject to Sections 5 and 6, the Employee may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date (the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date (or any earlier expiration of the Option pursuant to Sections 5 and 6), it shall be canceled and forfeited.

 

3.                                      Vesting.  Subject to Rules C3-7 and D of the Plan, the Option shall vest and become exercisable as follows:

 

(a)                                 on the first anniversary of the Grant Date, one-third of the total number of Shares (rounded up) may be purchased;

 

(b)                                 on the second anniversary of the Grant Date, two-thirds of the total number of Shares (rounded up) may be purchased; and

 

(c)                                  on the third anniversary of the Grant Date, the Option may be exercised in full.

 

The vesting described above is cumulative, so that at each vesting date an additional amount of Shares is available for purchase and remains available until the Option’s Expiration Date or such earlier date determined pursuant to Section 5 or 6 below.

 

4.                                      Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                     General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee.

 

(ii)                                  Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                               Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the

 

2


 

provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  Subject to the requirements of local law, the Option may be exercised only by delivery to the designated employee or agent of the Company:

 

(i)                                     a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised; and

 

(ii)                                  evidence to the satisfaction of the Company that it has received or will receive as soon as practicable payment in full of the Exercise Price for the Shares over which the Option is exercised by one or a combination of the following;

 

(A)                     payment in cash or cleared funds;

 

(B)                     a copy of irrevocable instructions to a broker in connection with a cashless exercise facility acceptable to the Company authorizing the broker to deliver promptly to the Company the amount to pay the Exercise Price by arranging for the sale of a sufficient number of Shares acquired or to be acquired upon exercise of the Option to realize the Exercise Price from proceeds of the sale of the Shares;

 

(C)                     the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Exercise Price as soon as reasonably practicable by arranging for the sale of a sufficient number of the Shares acquired or to be acquired upon exercise of the Option (on the Employee’s behalf and at the Employee’s direction pursuant to this authorization) to realize the Exercise Price from proceeds of the sale of the Shares;

 

(D)                     the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Exercise Price from the Employee by deduction from salary or any other payment otherwise payable to the Employee;

 

plus, in each case, payment of the full amount of any Tax-Related Items in accordance with Section 4(c) below.  In the event the Option is being exercised by a person or persons other than the Employee, such person shall furnish the appropriate tax clearances, proof of the right of such person or persons to exercise the Option, and other pertinent data as the Company may deem necessary.

 

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(c)                                  Payment of Taxes.

 

(i)                                     Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Plan and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the issuance of Shares upon exercise of the Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

(ii)                                  In the event the Plan loses Revenue approval or the exercise of this Option is in circumstances which do not qualify for tax favorable treatment, the Employee agrees to pay or to make adequate arrangements to satisfy all Tax Related Items. The Tax Related Items may be satisfied by one or a combination of the following:

 

(A)                         payment in cash or cleared funds;

 

(B)                         a copy of irrevocable instructions to a broker in connection with a cashless exercise facility acceptable to the Company authorizing the broker to deliver promptly to the Company the amount to pay the Tax Related Items by arranging for the sale of a sufficient number of Shares acquired or to be acquired upon exercise of the Option to realize the Tax Related Items from proceeds of the sale of the Shares;

 

(C)                         the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Tax Related Items as

 

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soon as reasonably practicable by arranging for the sale of a sufficient number of the Shares acquired or to be acquired upon exercise of the Option (on the Employee’s behalf and at the Employee’s direction pursuant to this authorization) to realize the Tax Related Items from proceeds of the sale of the Shares;

 

(D)                         the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Tax Related Items from the Employee by deduction from salary or any other payment otherwise payable to the Employee.

 

Unless the Employee makes arrangements satisfactory to the Company to pay the amount of any Tax Related Items due prior to or at the time of exercise, the Company may establish appropriate procedures to obtain payment of the Tax Related Items due from the Employee in accordance with this Section 4(c)(ii).

 

(iii)                               If payment or withholding is not made within 90 days of the event giving rise to the Tax Related Items or such other period as required under U.K. law (the “Due Date”), the Employee agrees that the amount of any uncollected Tax Related Items shall (assuming the Employee is not a director or executive officer of the Company within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934 (as amended)), constitute a loan owed by the Employee to the Subsidiary, effective on the Due Date.  The Employee agrees that the loan will bear interest at the then-current Official Rate of the Revenue and it will be immediately due and repayable, and the Company and/or the Subsidiary may recover it at any time thereafter by any of the means referred to above.

 

(iv)                              The Employee understands that the Company may refuse to deliver the Shares acquired under the Plan if the Employee fails to comply with obligations in connection with the Tax Related Items delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

5.                                      Effect of Termination or Death on the Option.  By accepting this Option grant, the Employee acknowledges that, except as otherwise provided in this Agreement, in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Option under the Plan, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall, acting fairly and reasonably, have the

 

5


 

exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Option grant.

 

(a)                                 Termination Prior to First Anniversary of Grant Date.  Termination before the first anniversary of the Grant Date will terminate all rights under the Option, unless the Option vests and becomes exercisable on or after the first anniversary of the Grant Date pursuant to Sections 5(b), 5(c) or 5(d) below.

 

(b)                                 Termination Other than due to Retirement, Disability or Death.  Subject to Section 6 below, in the event of Termination other than due to Retirement, Disability or death, the Option shall be exercisable to the extent permitted by Section 3 within three (3) months after the Employee’s effective date of Termination.  To the extent the Option is not exercised prior to the Expiration Date, it shall be deemed canceled and forfeited.

 

(c)                                  Termination due to Retirement or Disability.  Subject to Sections 5(d)(iii) and 6 below, in the event of Termination due to Retirement or Disability, this Option shall become immediately vested and exercisable on the date of termination. The Option shall lapse upon the earlier of six (6) months after the Employee’s effective date of Termination and the Expiration Date.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

(d)                                 Death of the Employee.

 

(i)                                     Death During Employment.  Subject to Section 6 below, in the event of the death of the Employee during employment, this Option will vest in full and may be exercised before the earlier of twelve (12) months after the Employee’s death and the Expiration Date; and provided further that this Option may only be exercised by the executor or administrator of the estate of the Employee.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

(ii)                                  Death During the Three Month Period After Termination other than due to Retirement, Disability or Death.  Subject to Section 6 below, in the event of the death of the Employee during the three (3) month period after Termination other than due to Retirement, Disability or death referred to in Section 5(b) above, then the Option shall be exercisable to the extent permitted by Section 3 for a three (3) month period after the date of death, but in no event shall such Option be exercised on or after the Expiration Date.  An Option shall only be exercised by the executor or administrator of the estate of the Employee.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

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(iii)                               Death During the Period After Termination Due to Retirement or Disability.  In the event of the death of the Employee after such Employee’s Termination due to Retirement or Disability as set forth in Section 5(c) above, then the Option shall have become fully vested and exercisable and may be exercised before the earlier of twelve (12) months of the date of death and the Expiration Date.  An Option may only be exercised by the executor or administrator of the estate of the Employee.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

6.                                      Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, acting fairly and reasonably, the Employee:

 

(a)                                 engages in a material breach of the Code of Business Conduct;

 

(b)                                 commits an act of fraud, embezzlement, or theft in connection with the Employee’s duties or in the course of the Employee’s employment;

 

(c)                                  wrongfully discloses secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(d)                                 to the extent permitted by applicable law, engages, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.

 

7.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Plan is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries;

 

(c)                                  entitle the Employee to any remuneration or benefits not set forth in the Plan or this Agreement or other agreement; or

 

(d)                                 interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

8.                                      Nature of Right.  In accepting this Option grant, the Employee acknowledges that:

 

(a)                                 The grant of an Option under the Plan is voluntary and occasional and does not create any contractual or other right to receive additional Options or other Plan Benefits, even if Options have been granted repeatedly in the past.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Option grants, if any, and their terms and conditions, will be at the sole discretion of the Committee;

 

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(b)                                 the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(c)                                  the Employee is voluntarily participating in the Plan;

 

(d)                                 the future value of the underlying Shares is unknown and cannot be predicted with certainty;

 

(e)                                  in consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from the Option resulting from Termination of the Employee’s employment with Company or its Subsidiaries (for any reason whatsoever and whether or not in breach of local labor laws) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim; and

 

(f)                                   neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Option, the amount realized upon exercise of the Option or the amount realized upon a subsequent sale of any Shares acquired upon exercise of the Option, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

9.                                      No Right of Compensation.  In accepting this Option grant, the Employee acknowledges that neither this Option, Shares issued upon its exercise, any excess of market value over Exercise Price, nor any other rights, benefits, values or interest resulting from the granting of the Option shall be considered as compensation for purposes of any pension or retirement plan, insurance plan, investment or stock purchase plan, or any other employee benefit plan of the Company or any of its Subsidiaries, and the Option and the Shares subject to the Option are not intended to replace any pension rights or compensation.  Unless expressly provided by the Company in writing, any value associated with the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries and is outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation or salary for any purpose, including, but not limited to, for purposes of calculating any severance, resignation, redundancy, dismissal or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or welfare benefits, or similar payments, and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any of its Subsidiaries.

 

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10.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Plan and the Employee’s participation in the Plan.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Plan.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Plan.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Plan.  Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Employee’s participation in the Plan.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Plan, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

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(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and the Employee’s participation in the Plan.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

11.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

12.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the benefits provided hereunder will be exempt from or otherwise comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

13.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Plan or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the

 

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Employee’s own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the Plan.

 

14.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

15.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

16.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, acting fairly and reasonably, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

17.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

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Exhibit 10.67

 

ABBOTT LABORATORIES
UK APPROVED STOCK OPTION AGREEMENT

 

On this «Grant_Day» day of «Grant_Month», 201     (the “Grant Date”), Abbott Laboratories hereby grants to «First Name» «MI» «Last Name» (the “Employee”) a UK Approved Option (the “Option”) to purchase a total of «NQSOs» Shares, at the price of $«Option_Price» per Share (the “Exercise Price”), such price being not less than 100% of the fair market value of the Shares on the Grant Date.

 

The Option is granted under the United Kingdom Share Option Plan (the “Plan”), a sub-plan of the Program, and is subject to the provisions of the Plan, the Program, the Program prospectus, the Program administrative rules, applicable Company policies, and the terms and conditions set forth in this Agreement.  In the event of any inconsistency among the provisions of this Agreement, the Plan, the provisions of the Program, the Program prospectus, and the Program administrative rules, the Plan shall control.

 

The terms and conditions of the Option granted to the Employee are as follows:

 

1.                                      Definitions.  To the extent not defined herein, capitalized terms shall have the same meaning as in the Plan.

 

(a)                                 Agreement.  This UK Approved Stock Option Agreement.

 

(b)                                 Change in Control Agreement:  An Agreement Regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee, if any.

 

(c)                                  Change in Control Cause: shall mean the occurrence of any of the following circumstances during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control: the willful engaging by the Employee in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this definition, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for Change in Control Cause unless and until the Company delivers to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

(d)                                 Change in Control Good Reason: shall mean the occurrence of any of the following circumstances without the Employee’s express written consent during the period that begins six months immediately before a Change in Control and ends two years immediately following such Change in Control:

 

(i)                                     a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was,

 


 

immediately prior to the Change in Control, an Employee officer of a public company, the Employee ceasing to be an Employee officer of a public company;

 

(ii)                                  the failure by the Company to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

 

(iii)                               a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

 

(iv)                              the failure by the Company to award the Employee an annual bonus in any year which is at least equal to the annual bonus, awarded to the Employee under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control;

 

(v)                                 the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;

 

(vi)                              the failure by the Company to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability, vacation, Employee automobile, Employee tax or financial advice benefits or club dues;

 

(vii)                           the relocation of the Company’s principal Employee offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Employee to be based anywhere other than the location where the Employee primarily performs services for the Company immediately prior to the Change in Control except for required travel for the Company’s business to an extent substantially consistent with the Employee’s business travel obligations immediately prior to the Change in Control; or

 

(viii)                        the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform any Change in Control Agreement.

 

For purposes of any determination regarding the existence of Change in Control Good Reason, any good faith determination by the Employee that Change in Control Good Reason exists shall be conclusive.

 

(e)                                  Code of Business Conduct:  The Company’s Code of Business Conduct, as amended from time to time.

 

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(f)                                   Data:  Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Plan.

 

(g)                                  Disability:  Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.

 

(h)                                 Option:  The Non-Qualified Stock Option granted pursuant to this Agreement.

 

(i)                                     Plan: The United Kingdom Share Option Plan.

 

(j)                                    Program:  The Abbott Laboratories 2009 Incentive Stock Program.

 

(k)                                 Termination:  A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries.

 

2.                                      Term of Option.  Subject to Sections 5, 6 and 7, the Employee may exercise all or a portion of the vested Option at any time prior to the 10th anniversary of the Grant Date (the “Expiration Date”); provided that the Option may be exercised with respect to whole Shares only.  In no event shall the Option be exercisable on or after the Expiration Date.  To the extent the Option is not exercised prior to the Expiration Date (or any earlier expiration of the Option pursuant to Sections 5, 6 and 6), it shall be canceled and forfeited.

 

3.                                      Vesting.  Subject to Rules C3-7 and D of the Plan, the Option shall vest and become exercisable as follows:

 

(a)                                 on the first anniversary of the Grant Date, one-third of the total number of Shares (rounded up) may be purchased;

 

(b)                                 on the second anniversary of the Grant Date, two-thirds of the total number of Shares (rounded up) may be purchased; and

 

(c)                                  on the third anniversary of the Grant Date, the Option may be exercised in full.

 

The vesting described above is cumulative, so that at each vesting date an additional amount of Shares is available for purchase and remains available until the Option’s Expiration Date or such earlier date determined pursuant to Section 5, 6 or 7 below.

 

4.                                     Exercise of the Option.  To the extent vested, the Option may be exercised in whole or in part as follows:

 

(a)                                 Who May Hold/Exercise the Option.

 

(i)                                   General Rule - Exercise by Employee Only.  During the lifetime of the Employee, the Option may be exercised only by the Employee.

 

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(ii)                                Death Exception.  If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee.  Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.

 

(iii)                             Transferability.  Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of descent and distribution.  It may not be assigned, transferred (except by will or the laws of descent and distribution), pledged or hypothecated in any way, whether by operation of law or otherwise, and shall not be subject to execution, attachment, or similar process.  Any attempt at assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any attachment or similar process upon such Option, shall be null and void.

 

(b)                                 Method of Exercise.  Subject to the requirements of local law, the Option may be exercised only by delivery to the designated employee or agent of the Company:

 

(i)                                     a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised; and

 

(ii)                                  evidence to the satisfaction of the Company that it has received or will receive as soon as practicable payment in full of the Exercise Price for the Shares over which the Option is exercised by one or a combination of the following;

 

(A)                               payment in cash or cleared funds;

 

(B)                               a copy of irrevocable instructions to a broker in connection with a cashless exercise facility acceptable to the Company authorizing the broker to deliver promptly to the Company the amount to pay the Exercise Price by arranging for the sale of a sufficient number of Shares acquired or to be acquired upon exercise of the Option to realize the Exercise Price from proceeds of the sale of the Shares;

 

(C)                               the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Exercise Price as soon as reasonably practicable by arranging for the sale of a sufficient number of the Shares acquired or to be acquired upon exercise of the Option (on the Employee’s behalf and at the Employee’s direction pursuant to this authorization) to realize the Exercise Price from proceeds of the sale of the Shares;

 

(D)                               the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Exercise Price from the Employee by deduction from salary or any other payment otherwise payable to the Employee;

 

plus, in each case, payment of the full amount of any Tax-Related Items in accordance with Section 4(c) below.  In the event the Option is being exercised by a person or persons other than the Employee, such person shall furnish the appropriate tax clearances, proof of the right of such person or persons to

 

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exercise the Option, and other pertinent data as the Company may deem necessary.

 

(c)                                  Payment of Taxes.

 

(i)                                   Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Plan and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries.  The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the issuance of Shares upon exercise of the Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

(ii)                                 In the event the Plan loses Revenue approval or the exercise of this Option is in circumstances which do not qualify for tax favorable treatment, the Employee agrees to pay or to make adequate arrangements to satisfy all Tax Related Items. The Tax Related Items may be satisfied by one or a combination of the following:

 

(A)                               payment in cash or cleared funds;

 

(B)                               a copy of irrevocable instructions to a broker in connection with a cashless exercise facility acceptable to the Company authorizing the broker to deliver promptly to the Company the amount to pay the Tax Related Items by arranging for the sale of a sufficient number of Shares acquired or to be acquired upon exercise of the Option to realize the Tax Related Items from proceeds of the sale of the Shares;

 

(C)                               the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Tax Related Items as soon as reasonably practicable by arranging for the sale of a sufficient number of the Shares acquired or to be acquired upon exercise of the Option (on the Employee’s behalf and at the Employee’s direction pursuant to this authorization) to realize the Tax Related Items from proceeds of the sale of the Shares;

 

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(D)                               the Employee authorizing the Company, the Subsidiary or their authorized agent to collect the Tax Related Items from the Employee by deduction from salary or any other payment otherwise payable to the Employee.

 

Unless the Employee makes arrangements satisfactory to the Company to pay the amount of any Tax Related Items due prior to or at the time of exercise, the Company may establish appropriate procedures to obtain payment of the Tax Related Items due from the Employee in accordance with this Section 4(c)(ii).

 

(iii)                             If payment or withholding is not made within 90 days of the event giving rise to the Tax Related Items or such other period as required under U.K. law (the “Due Date”), the Employee agrees that the amount of any uncollected Tax Related Items shall (assuming the Employee is not a director or executive officer of the Company within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934 (as amended)), constitute a loan owed by the Employee to the Subsidiary, effective on the Due Date.  The Employee agrees that the loan will bear interest at the then-current Official Rate of the Revenue and it will be immediately due and repayable, and the Company and/or the Subsidiary may recover it at any time thereafter by any of the means referred to above.

 

(iv)                            The Employee understands that the Company may refuse to deliver the Shares acquired under the Plan if the Employee fails to comply with obligations in connection with the Tax Related Items delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.

 

5.                                      Effect of Termination or Death on the Option.  By accepting this Option grant, the Employee acknowledges that, except as otherwise provided in this Agreement, in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Option under the Plan, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law) and that the Committee shall, acting fairly and reasonably, have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of this Option grant.

 

(a)                                 Termination Prior to First Anniversary of Grant Date.  Termination before the first anniversary of the Grant Date will terminate all rights under the Option, unless the Option vests and becomes exercisable on or after the first anniversary of the Grant Date pursuant to subsections 5(b),(c) or (d) or Section 6 below.

 

(b)                                 Termination For Any Reason Other than Those Set Forth in Subsections 5(c), (d) or Section 6.  Subject to Section 7 below, in the event of Termination other than those set forth in subsections 5(c), (d) or Section 6, the Option shall be exercisable to the extent permitted by Section 3 within three (3) months after the Employee’s effective date of Termination.  To the extent the Option is not exercised prior to the Expiration Date, it shall be deemed canceled and forfeited.

 

(c)                                  Termination due to Retirement or Disability.  Subject to Sections 5(d)(iii) and 7 below, in the event of Termination due to Retirement or Disability, this Option shall become immediately vested and exercisable on the date of termination. The Option shall

 

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lapse upon the earlier of six (6) months after the Employee’s effective date of Termination and the Expiration Date.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

(d)                                 Death of the Employee.

 

(i)                                   Death During Employment.  Subject to Section 7 below, in the event of the death of the Employee during employment, this Option will vest in full and may be exercised before the earlier of twelve (12) months after the Employee’s death and the Expiration Date; and provided further that this Option may only be exercised by the executor or administrator of the estate of the Employee.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

(ii)                                Death During the Three Month Period After Termination other than due to Retirement, Disability or Death.  Subject to Section 7 below, in the event of the death of the Employee during the three (3) month period after Termination other than due to Retirement, Disability or death referred to in Section 5(b) above, then the Option shall be exercisable to the extent permitted by Section 3 for a three (3) month period after the date of death, but in no event shall such Option be exercised on or after the Expiration Date.  An Option shall only be exercised by the executor or administrator of the estate of the Employee.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

(iii)                             Death During the Period After Termination Due to Retirement or Disability.  In the event of the death of the Employee after such Employee’s Termination due to Retirement or Disability as set forth in Section 5(c) above, then the Option shall have become fully vested and exercisable and may be exercised before the earlier of twelve (12) months of the date of death and the Expiration Date.  An Option may only be exercised by the executor or administrator of the estate of the Employee.  To the extent the Option is not exercised before it lapses, it shall be deemed canceled and forfeited.

 

6.                                      Change in Control.  In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “Surviving Entity”) may assume, convert or replace this Option with options of at least equal value (determined using the same value for purchasing Company shares as used for purchasing Company shares not subject to this Agreement on the date of the Change in Control) with terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new option will vest according to the terms of the applicable award agreement.  If the Surviving Entity does not assume, convert or replace this Option, this Option will be fully vested on the date of the Change in Control.  If the Surviving Entity does assume, convert or replace this Option, then in the event the Employee’s Termination (i) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (ii) was initiated by the Company (or the Surviving Entity) for a reason other than Change in Control Cause or was initiated by the Employee for Change in Control Good Reason, this Option shall become fully vested on the later of the date of the Change in Control and the date of the Employee’s Termination.  The provisions of this Section 6 shall supersede any conflicting provisions of the Plan.

 

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7.                                      Effect of Certain Bad Acts.  The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate with respect to (a) and (b), or, in the sole opinion and discretion of or the Board with respect to (c), acting fairly and reasonably, the Employee:

 

(a)                                 if Section 6 does not apply, engages in a material breach of the Code of Business Conduct; commits an act of fraud, embezzlement, or theft in connection with the Employee’s duties or in the course of the Employee’s employment; wrongfully discloses secret processes or confidential information of the Company or any of its Subsidiaries; or

 

(b)                                 if Section 6 does not apply, to the extent permitted by applicable law, engages, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries; or

 

(c)                                  if Section 6 does apply, engages in an activity that is deemed to constitute Change in Control Cause.

 

8.                                      No Right to Continued Employment.  This Agreement and the Employee’s participation in the Plan is not and shall not be interpreted to:

 

(a)                                 form an employment contract or relationship with the Company or its Subsidiaries;

 

(b)                                 confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries;

 

(c)                                  entitle the Employee to any remuneration or benefits not set forth in the Plan or this Agreement or other agreement; or

 

(d)                                 interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.

 

9.                                      Nature of Right.  In accepting this Option grant, the Employee acknowledges that:

 

(a)                                 The grant of an Option under the Plan is voluntary and occasional and does not create any contractual or other right to receive additional Options or other Plan Benefits, even if Options have been granted repeatedly in the past.  Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee.  Future Option grants, if any, and their terms and conditions, will be at the sole discretion of the Committee;

 

(b)                                 the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

(c)                                  the Employee is voluntarily participating in the Plan;

 

(d)                                 the future value of the underlying Shares is unknown and cannot be predicted with certainty;

 

(e)                                  in consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from the Option resulting from Termination of the Employee’s employment with Company or its Subsidiaries (for any reason whatsoever and whether or

 

8


 

not in breach of local labor laws) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim; and

 

(f)                                   neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Option, the amount realized upon exercise of the Option or the amount realized upon a subsequent sale of any Shares acquired upon exercise of the Option, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.

 

10.                               No Right of Compensation.  In accepting this Option grant, the Employee acknowledges that neither this Option, Shares issued upon its exercise, any excess of market value over Exercise Price, nor any other rights, benefits, values or interest resulting from the granting of the Option shall be considered as compensation for purposes of any pension or retirement plan, insurance plan, investment or stock purchase plan, or any other employee benefit plan of the Company or any of its Subsidiaries, and the Option and the Shares subject to the Option are not intended to replace any pension rights or compensation.  Unless expressly provided by the Company in writing, any value associated with the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries and is outside the scope of the Employee’s employment contract, if any, and shall not be deemed part of the Employee’s normal or expected compensation or salary for any purpose, including, but not limited to, for purposes of calculating any severance, resignation, redundancy, dismissal or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or welfare benefits, or similar payments, and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any of its Subsidiaries.

 

11.                               Data Privacy.

 

(a)                                 Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Plan and the Employee’s participation in the Plan.  The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Plan.  As such (where required under applicable law), the Employee:

 

(i)                                     voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and

 

(ii)                                  authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Plan.

 

(b)                                 Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Plan.  Data processing will take place through

 

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electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence.  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Employee’s participation in the Plan.

 

(c)                                  The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Plan, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan.  These recipients may be located throughout the world.

 

(d)                                 The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:

 

(i)                                     obtain confirmation as to the existence of the Data;

 

(ii)                                  verify the content, origin and accuracy of the Data;

 

(iii)                               request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and

 

(iv)                              oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and the Employee’s participation in the Plan.

 

The Employee may seek to exercise these rights by contacting his or her local human resources manager.

 

12.                               Compliance with Applicable Laws and Regulations.  The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.

 

13.                               Code Section 409A.  The Option is intended to be exempt from the requirements of Code Section 409A.  The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent.  If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.

 

Although this Agreement and the benefits provided hereunder are intended to be exempt from the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement or the benefits provided hereunder will be exempt from or otherwise comply with Code Section 409A or any other provision of federal, state, local, or non-United States law.  None of the Company, its Subsidiaries, or their respective directors, officers, employees or advisers

 

10


 

shall be liable to the Employee (or any other individual claiming a benefit through the Employee) for any tax, interest, or penalties the Employee may owe as a result of compensation paid under this Agreement, and the Company and its Subsidiaries shall have no obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Code Section 409A.

 

14.                               No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Plan or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the Plan.

 

15.                               Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Employee’s participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company or its Subsidiaries determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  The Employee agrees to take any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country.  In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.

 

16.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

17.                               Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.  To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, acting fairly and reasonably, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

 

18.                               Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of Illinois without giving effect to any state’s conflict of laws principles.

 

*                                         *                                         *

 

11


 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the grant date above set forth.

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By

 

 

 

Miles D. White

 

 

Chairman and Chief Executive Officer

 

12



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Exhibit 12

Abbott Laboratories
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)
(dollars in millions)

 
   2013   2012   2011   2010   2009  

EARNINGS FROM CONTINUING OPERATIONS ADD (DEDUCT)

   $ 2,383   $ 579   $ 1,126   $ 281   $ 975  

Taxes on earnings from continuing operations

     138     (274 )   110     355     51  

Amortization of capitalized interest, net of capitalized interest

     (7 )   (3 )   (2 )   —     (3 )

Noncontrolling interest

     13     12     10     9     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

EARNINGS FROM CONTINUING OPERATIONS AS ADJUSTED

   $ 2,527   $ 314   $ 1,244   $ 645   $ 1,023  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

FIXED CHARGES

                                

Interest on long-term and short-term debt

     157     347     359     375     352  

Capitalized interest cost

     17     13     11     8     10  

Rental expense representative of an interest factor

     96     106     102     92     77  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

TOTAL FIXED CHARGES

     270     466     472     475     439  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

TOTAL ADJUSTED EARNINGS FROM CONTINUING OPERATIONS AVAILABLE FOR PAYMENT OF FIXED CHARGES

   $ 2,797   $ 780   $ 1,716   $ 1,120   $ 1,462  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

RATIO OF EARNINGS FROM CONTINUING OPERATIONS TO FIXED CHARGES

     10.4     1.7     3.6     2.4     3.3  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

NOTE: For the purpose of calculating this ratio, (i) earnings from continuing operations have been calculated by adjusting earnings from continuing operations for taxes on earnings from continuing operations; interest expense; amortization of capitalized interest, net of capitalized interest; noncontrolling interest; and the portion of rentals representative of the interest factor, (ii) Abbott considers one-third of rental expense to be the amount representing return on capital, and (iii) fixed charges comprise total interest expense, including capitalized interest and such portion of rentals.



QuickLinks

Abbott Laboratories Computation of Ratio of Earnings to Fixed Charges (Unaudited) (dollars in millions)

Exhibit 21

 

SUBSIDIARIES OF ABBOTT LABORATORIES

 

The following is a list of subsidiaries of Abbott Laboratories.  Abbott Laboratories is not a subsidiary of any other corporation.  Where ownership of a subsidiary is less than 100% by Abbott Laboratories or an Abbott Laboratories’ subsidiary, such has been noted by designating the percentage of ownership.

 

Domestic Subsidiaries

 

Incorporation

 

 

 

Abbott Administration Inc.

 

Delaware

 

 

 

Abbott Biologicals, LLC

 

Delaware

 

 

 

Abbott Cardiovascular Inc.

 

Delaware

 

 

 

Abbott Cardiovascular Systems Inc.

 

California

 

 

 

Abbott Delaware Inc.

 

Delaware

 

 

 

Abbott Diabetes Care Inc.

 

Delaware

 

 

 

Abbott Diabetes Care Sales Corporation

 

Delaware

 

 

 

Abbott Equity Investments LLC

 

Delaware

 

 

 

Abbott Exchange Inc.

 

Delaware

 

 

 

Abbott Health Products, LLC

 

Delaware

 

 

 

Abbott International LLC

 

Delaware

 

 

 

Abbott Laboratories Inc.

 

Delaware

 

 

 

Abbott Laboratories International LLC

 

Illinois

 

 

 

Abbott Laboratories Pacific Ltd.

 

Illinois

 

 

 

Abbott Laboratories Residential Development Fund, Inc.

 

Illinois

 

 

 

Abbott Laboratories Services Corp.

 

Illinois

 

 

 

Abbott Management LLC

 

Delaware

 

 

 

Abbott Medical Optics Inc.

 

Delaware

 

 

 

Abbott Molecular Inc.

 

Delaware

 

 

 

Abbott Nutrition Manufacturing Inc.

 

Delaware

 

 

 

Abbott Personnel Inc.

 

Delaware

 

 

 

Abbott Point of Care Inc.

 

Delaware

 

 

 

Abbott Procurement LLC

 

Delaware

 

 

 

Abbott Products Operations, LLC

 

Delaware

 

 

 

Abbott Resources Inc.

 

Delaware

 

 

 

Abbott Resources International Inc.

 

Delaware

 


 

Abbott Universal LLC

 

Delaware

 

 

 

Abbott Vascular Inc.

 

Delaware

 

 

 

Abbott Vascular Solutions Inc.

 

Indiana

 

 

 

Abbott Ventures Inc.

 

Delaware

 

 

 

AMO Development, LLC

 

Delaware

 

 

 

AMO Holdings, Inc.

 

Delaware

 

 

 

AMO Manufacturing USA, LLC

 

Delaware

 

 

 

AMO Nominee Holdings, LLC

 

Delaware

 

 

 

AMO Sales and Service, Inc.

 

Delaware

 

 

 

AMO Spain Holdings, LLC

 

Delaware

 

 

 

AMO U.K. Holdings, LLC

 

Delaware

 

 

 

AMO US Holdings, Inc.

 

Delaware

 

 

 

AMO USA Sales Holdings, Inc.

 

Delaware

 

 

 

AMO USA, LLC

 

Delaware

 

 

 

AMO WaveFront Sciences, LLC

 

New Mexico

 

 

 

Bioabsorbable Vascular Solutions, Inc.

 

Delaware

 

 

 

CMM Transportation, Inc.

 

Delaware

 

 

 

CynoGen Inc.

 

Delaware

 

 

 

Evalve International, Inc.

 

Delaware

 

 

 

Evalve, Inc.

 

Delaware

 

 

 

Fournier Pharma Corp.

 

Delaware

 

 

 

Ibis Biosciences, Inc.

 

Delaware

 

 

 

IDEV Technologies, Inc.

 

Delaware

 

 

 

IMTC Technologies, Inc.

 

Delaware

 

 

 

Integrated Vascular Systems, Inc.

 

Delaware

 

 

 

Lake Forest Investments LLC

 

Delaware

 

 

 

Midwest Properties LLC

 

Delaware

 

 

 

Murex Diagnostics, Inc.

 

Delaware

 

 

 

Natural Supplement Association, Incorporated

 

Colorado

 

 

 

North Shore Properties, Inc.

 

Delaware

 

 

 

OptiMedica Corporation

 

Delaware

 


 

PDD II, LLC

 

Delaware

 

 

 

PDD, LLC

 

Delaware

 

 

 

Quest Vision Technology, Inc.

 

California

 

 

 

Starlims Corporation

 

Florida

 

 

 

Swan-Myers, Incorporated

 

Indiana

 

 

 

Tobal Products Incorporated

 

Illinois

 

 

 

Visiogen, Inc.

 

Delaware

 

 

 

X Technologies Inc.

 

Delaware

 

 

 

ZonePerfect Nutrition Company

 

Delaware

 

Foreign Subsidiaries

 

Incorporation

 

 

 

 

 

Abbott Products Algerie EURL

 

Algeria

 

 

 

 

 

 

 

Abbott Laboratories Argentina Sociedad Anonima

 

Argentina

 

 

 

 

 

 

 

Murex Argentina S.A.

 

Argentina

 

( 65%)

 

 

 

 

 

Abbott Australasia Pty Ltd

 

Australia

 

 

 

 

 

 

 

Abbott Products Pty Ltd

 

Australia

 

 

 

 

 

 

 

AMO Australia Pty Limited

 

Australia

 

 

 

 

 

 

 

IDEV Medical Technologies Pty Ltd

 

Australia

 

 

 

 

 

 

 

STARLIMS Australasia Pty Ltd

 

Australia

 

 

 

 

 

 

 

Abbott Gesellschaft m.b.H.

 

Austria

 

 

 

 

 

 

 

Abbott Bahamas Overseas Businesses Corporation

 

Bahamas

 

 

 

 

 

 

 

Abbott Holdings Ltd. (Bahamas)

 

Bahamas

 

 

 

 

 

 

 

Abbott Laboratories (Bangladesh) Limited

 

Bangladesh

 

 

 

 

 

 

 

Murex Diagnostics International Inc.

 

Barbados

 

 

 

 

 

 

 

Abbott Belgian Investments SPRL

 

Belgium

 

 

 

 

 

 

 

Abbott Belgian Pension Fund A.S.B.L.

 

Belgium

 

 

 

 

 

 

 

Abbott SA

 

Belgium

 

 

 

 

 

 

 

Abbott Products SA

 

Belgium

 

 

 

 

 

 

 

Abbott Vascular International BVBA

 

Belgium

 

 

 

 

 

 

 

Abbott Bermuda Holding Ltd.

 

Bermuda

 

 

 


 

Abbott Diagnostics International, Ltd

 

Bermuda

 

 

 

 

 

 

 

Abbott Healthcare (Puerto Rico) Ltd.

 

Bermuda

 

 

 

 

 

 

 

Abbott Ireland

 

Bermuda

 

 

 

 

 

 

 

Abbott Strategic Opportunities Limited

 

Bermuda

 

 

 

 

 

 

 

Abbott društvo sa ogranicenom odgovornošcu za trgovinu i usluge

 

Bosnia

 

 

 

 

 

 

 

Abbott Laboratorios do Brasil Ltda.

 

Brazil

 

 

 

 

 

 

 

Vistatek Participacoes S.A.

 

Brazil

 

 

 

 

 

 

 

Vistatek Produtos Oticos S.A.

 

Brazil

 

 

 

 

 

 

 

Abbott Products EOOD

 

Bulgaria

 

 

 

 

 

 

 

Abbott (Cambodia) LLC

 

Cambodia

 

 

 

 

 

 

 

Abbott International Corporation

 

Canada

 

 

 

 

 

 

 

Abbott Laboratories, Limited/Laboratoires Abbott, Limitee

 

Canada

 

 

 

 

 

 

 

Abbott Point of Care Canada Limited

 

Canada

 

 

 

 

 

 

 

Abbott Products Canada Inc.

 

Canada

 

 

 

 

 

 

 

Abbott Products Inc.

 

Canada

 

 

 

 

 

 

 

AMO Canada Company

 

Canada

 

 

 

 

 

 

 

Fournier Pharma, Inc.

 

Canada

 

 

 

 

 

 

 

Starlims Canada, Inc.

 

Canada

 

 

 

 

 

 

 

AMO Global Holdings

 

Cayman Islands

 

 

 

 

 

 

 

AMO Ireland

 

Cayman Islands

 

 

 

 

 

 

 

AMO Puerto Rico Manufacturing, Inc.

 

Cayman Islands

 

 

 

 

 

 

 

VISX

 

Cayman Islands

 

 

 

 

 

 

 

Abbott Laboratories de Chile Limitada

 

Chile

 

 

 

 

 

 

 

Abbott Laboratories de Colombia, S.A.

 

Colombia

 

 

 

 

 

 

 

Abbott Healthcare Costa Rica, S.A.

 

Costa Rica

 

 

 

 

 

 

 

Abbott Vascular Limitada

 

Costa Rica

 

 

 

 

 

 

 

Abbott Laboratories d.o.o.

 

Croatia

 

 

 

 

 

 

 

Abbott Overseas Subsidiary Holding (Cyprus) Limited

 

Cyprus

 

 

 

 

 

 

 

Abbott Laboratories, s.r.o.

 

Czech Republic

 

 

 

 

 

 

 

Abbott Laboratories A/S

 

Denmark

 

 

 

 

 

 

 

AMO Denmark

 

Denmark

 

 

 

 

 

 

 

Abbott Laboratorios del Ecuador Cia. Ltda.

 

Ecuador

 

 

 


 

Abbott Healthcare LLC

 

Egypt

 

 

 

 

 

 

 

Abbott Limited Egypt LLC

 

Egypt

 

 

 

 

 

 

 

Abbott Products Egypt LLC

 

Egypt

 

 

 

 

 

 

 

Abbott Products Limited

 

Egypt

 

 

 

 

 

 

 

Abbott, S.A. de C.V.

 

EL Salvador

 

 

 

 

 

 

 

Abbott Oy

 

Finland

 

 

 

 

 

 

 

Abbott France Instruments S.A.S.

 

France

 

 

 

 

 

 

 

Abbott France S.A.S.

 

France

 

 

 

 

 

 

 

Abbott Healthcare SAS

 

France

 

 

 

 

 

 

 

Abbott Products S.A.S.

 

France

 

 

 

 

 

 

 

AMO France S.A.S.

 

France

 

 

 

 

 

 

 

Fournier Industrie et Sante

 

France

 

 

 

 

 

 

 

Laboratoires Fournier S.A.S.

 

France

 

 

 

 

 

 

 

STARLIMS France S.A.S.

 

France

 

 

 

 

 

 

 

Vivasol SNC

 

France

 

 

 

 

 

 

 

Abbott Arzneimittel GmbH

 

Germany

 

 

 

 

 

 

 

Abbott Diagnostics GmbH

 

Germany

 

 

 

 

 

 

 

Abbott GmbH & Co. KG

 

Germany

 

 

 

 

 

 

 

Abbott Holding GmbH

 

Germany

 

 

 

 

 

 

 

Abbott Laboratories GmbH

 

Germany

 

 

 

 

 

 

 

Abbott Management GmbH

 

Germany

 

 

 

 

 

 

 

Abbott Vascular Deutschland GmbH

 

Germany

 

 

 

 

 

 

 

Abbott Vascular Instruments Deutschland GmbH

 

Germany

 

 

 

 

 

 

 

AMO Germany GmbH

 

Germany

 

 

 

 

 

 

 

Fournier Pharma GmbH

 

Germany

 

 

 

 

 

 

 

Starlims Germany GmbH

 

Germany

 

 

 

 

 

 

 

IDEV Technologies GmbH

 

Germany

 

 

 

 

 

 

 

Abbott Asia (Gibraltar) Limited

 

Gibraltar

 

 

 

 

 

 

 

Abbott Asia Subsidiary (Gibraltar) Limited

 

Gibraltar

 

 

 

 

 

 

 

Abbott Holding (Gibraltar) Limited

 

Gibraltar

 

 

 

 

 

 

 

Abbott Holding Subsidiary (Gibraltar) Limited

 

Gibraltar

 

 

 

 

 

 

 

Abbott Laboratories (Hellas) S.A.

 

Greece

 

 

 

 

 

 

 

Abbott Laboratorios, S.A.

 

Guatemala

 

 

 


 

Abbott Laboratories Limited

 

Hong Kong

 

 

 

 

 

 

 

AMO Asia Limited

 

Hong Kong

 

 

 

 

 

 

 

Starlims Asia Pacific Limited

 

Hong Kong

 

 

 

 

 

 

 

Abbott Laboratories (Hungary) Health Products and Medical Equipment Trading and Servicing Limited Liability Company

 

Hungary

 

 

 

 

 

 

 

Abbott Healthcare Private Limited

 

India

 

 

 

 

 

 

 

Abbott India Limited

 

India

 

(74.99%)

 

 

 

 

 

Abbott Medical Optics Private Limited

 

India

 

 

 

 

 

 

 

Abbott Truecare Pharma Private Limited

 

India

 

 

 

 

 

 

 

Abind Healthcare Pvt. Ltd.

 

India

 

 

 

 

 

 

 

PT. Abbott Indonesia

 

Indonesia

 

(99%)

 

 

 

 

 

PT. Abbott Products Indonesia

 

Indonesia

 

 

 

 

 

 

 

Abbott Healthcare Products Limited

 

Ireland

 

 

 

 

 

 

 

Abbott Ireland Limited

 

Ireland

 

 

 

 

 

 

 

Abbott Laboratories Vascular Enterprises

 

Ireland

 

 

 

 

 

 

 

Abbott Laboratories, Ireland, Limited

 

Ireland

 

 

 

 

 

 

 

Abbott Mature Products International Limited

 

Ireland

 

 

 

 

 

 

 

Abbott Mature Products Management Limited

 

Ireland

 

 

 

 

 

 

 

Abbott Nutrition Limited

 

Ireland

 

 

 

 

 

 

 

Abbott Products

 

Ireland

 

 

 

 

 

 

 

AMO International Holdings

 

Ireland

 

 

 

 

 

 

 

AMO Ireland Export Ltd.

 

Ireland

 

 

 

 

 

 

 

AMO Ireland Finance

 

Ireland

 

 

 

 

 

 

 

AMO Regional Holdings

 

Ireland

 

 

 

 

 

 

 

Salviac Limited

 

Ireland

 

 

 

 

 

 

 

Abbott Medical Laboratories LTD

 

Israel

 

 

 

 

 

 

 

STARLIMS Technologies LTD

 

Israel

 

 

 

 

 

 

 

L.I.M.S. Management Systems

 

Israel

 

 

 

 

 

 

 

L.I.M.S. Holdings 2000 Ltd.

 

Israel

 

 

 

 

 

 

 

Abbott S.r.l.

 

Italy

 

 

 

 

 

 

 

Abbott Vascular Knoll-Ravizza S.p.A.

 

Italy

 

 

 

 

 

 

 

AMO Italy Srl

 

Italy

 

 

 


 

Autonomous Employee Welfare Fund for Abbott S.p.A. Dirigenti

 

Italy

 

 

 

 

 

 

 

Abbott West Indies Limited

 

Jamaica

 

(51%)

 

 

 

 

 

Abbott Japan Co., Ltd.

 

Japan

 

 

 

 

 

 

 

Abbott Vascular Japan Co., Ltd.

 

Japan

 

 

 

 

 

 

 

AMO Japan K.K.

 

Japan

 

 

 

 

 

 

 

Optimedica Japan

 

Japan

 

 

 

 

 

 

 

Abbott Korea Limited

 

Korea, South

 

 

 

 

 

 

 

Abbott Laboratories Baltics SIA

 

Latvia

 

 

 

 

 

 

 

Abbott Middle East S.A.R.L.

 

Lebanon

 

 

 

 

 

 

 

UAB “Abbott Laboratories”

 

Lithuania

 

 

 

 

 

 

 

Abbott Healthcare Luxembourg S.ar.l.

 

Luxembourg

 

 

 

 

 

 

 

Abbott International Luxembourg S.ar.l.

 

Luxembourg

 

 

 

 

 

 

 

Abbott Investments Luxembourg S.à.r.l.

 

Luxembourg

 

 

 

 

 

 

 

Abbott Overseas Luxembourg S.a r.l.

 

Luxembourg

 

 

 

 

 

 

 

Abbott Products Luxembourg S.a r.l.

 

Luxembourg

 

 

 

 

 

 

 

Abbott South Africa Luxembourg S.ar.l.

 

Luxembourg

 

 

 

 

 

 

 

Abbott Holding Subsidiary (Gibraltar) Ltd Luxembourg S.C.S.

 

Luxembourg

 

 

 

 

 

 

 

Abbott Laboratories (Malaysia) Sdn. Bhd.

 

Malaysia

 

 

 

 

 

 

 

AMO Malta

 

Malta

 

 

 

 

 

 

 

Abbott Laboratories de Mexico, S.A. de C.V.

 

Mexico

 

 

 

 

 

 

 

Abbott Laboratories (Mozambique), Limitada

 

Mozambique

 

 

 

 

 

 

 

Abbott B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Biologicals B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Healthcare B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Healthcare Products B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Holdings B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Knoll Investments B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Laboratories B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Logistics B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Nederland C.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Netherlands Investments B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott PR Holdings B.V.

 

Netherlands

 

 

 


 

Abbott Vascular Netherlands B.V.

 

Netherlands

 

 

 

 

 

 

 

AbbVie Venezuela B.V.*

 

Netherlands

 

 

 

 

 

 

 

AMO Groningen B.V.

 

Netherlands

 

 

 

 

 

 

 

AMO Netherlands B.V.

 

Netherlands

 

 

 

 

 

 

 

Duphar International Research B.V.

 

Netherlands

 

 

 

 

 

 

 

EAS International B.V.

 

Netherlands

 

 

 

 

 

 

 

IDEV Technologies B.V.

 

Netherlands

 

 

 

 

 

 

 

IMTC Finance B.V.

 

Netherlands

 

 

 

 

 

 

 

IMTC Holdings B.V.

 

Netherlands

 

 

 

 

 

 

 

Octrooibureau Zoan B.V.

 

Netherlands

 

 

 

 

 

 

 

STARLIMS Netherlands B.V.

 

Netherlands

 

 

 

 

 

 

 

Abbott Laboratories NZ Limited

 

New Zealand

 

 

 

 

 

 

 

STARLIMS New Zealand Limited

 

New Zealand

 

 

 

 

 

 

 

Abbott Norge AS

 

Norway

 

 

 

 

 

 

 

AMO Norway AS

 

Norway

 

 

 

 

 

 

 

Abbott Laboratories (Pakistan) Limited

 

Pakistan

 

(78.84%)

 

 

 

 

 

Abbott Laboratories, C.A.

 

Panama

 

 

 

 

 

 

 

Abbott Overseas, S.A.

 

Panama

 

 

 

 

 

 

 

AMO (Hangzhou) Co., Ltd.

 

People’s Republic of China

 

 

 

 

 

 

 

Abbott (Guangzhou) Nutritionals Co., Ltd.

 

People’s Republic of China

 

 

 

 

 

 

 

Abbott (Jiaxing) Nutrition Co. Ltd.

 

People’s Republic of China

 

 

 

 

 

 

 

Abbott Laboratories Trading (Shanghai) Co., Ltd.

 

People’s Republic of China

 

 

 

 

 

 

 

Abbott Medical Devices Trading (Shanghai) Co., Ltd.

 

People’s Republic of China

 

 

 

 

 

 

 

AMO (Shanghai) Medical Devices Trading Co., Ltd.

 

People’s Republic of China

 

 

 

 

 

 

 

Shanghai Abbott Pharmaceutical Co., Ltd.

 

People’s Republic of China

 

(75%)

 

 

 

 

 

Abbott Laboratorios S.A.

 

Peru

 

 

 

 

 

 

 

Abbott Laboratories (Philippines)

 

Philippines

 

 

 

 

 

 

 

Abbott Products (Philippines) Inc.

 

Philippines

 

 

 

 

 

 

 

Abbott Laboratories Poland Sp z.o.o.

 

Poland

 

 

 

 

 

 

 

Abbott Products Sp. z o.o.

 

Poland

 

 

 

 

 

 

 

Abbott Laboratorios, Limitada

 

Portugal

 

 

 

 

 

 

 

Abbottfarma - Promocao de Produtos Farmaceuticos, L da

 

Portugal

 

 

 

 

 

 

 

Premier - Promocao de Produtos Farmaceuticos, L da

 

Portugal

 

 

 


 

Abbott Laboratories (Puerto Rico) Incorporated

 

Puerto Rico

 

 

 

 

 

 

 

Abbott Products Romania S.R.L.

 

Romania

 

 

 

 

 

 

 

Abbott Products Limited Liability Company

 

Russia

 

 

 

 

 

 

 

Limited Liability Company “Abbott Laboratories”

 

Russia

 

 

 

 

 

 

 

Abbott Laboratories (Singapore) Private Limited

 

Singapore

 

 

 

 

 

 

 

Abbott Manufacturing Singapore Private Limited

 

Singapore

 

 

 

 

 

 

 

AMO Singapore Pte. Limited

 

Singapore

 

 

 

 

 

 

 

Starlims (SEA) PTE. LTD.

 

Singapore

 

 

 

 

 

 

 

3A Pharma Singapore Pte. Limited

 

Singapore

 

 

 

 

 

 

 

Abbott Laboratories Slovakia s.r.o.

 

Slovakia

 

 

 

 

 

 

 

Abbott Laboratories druzba za farmacijo in diagnostiko d.o.o.

 

Slovenia

 

 

 

 

 

 

 

Abbott Laboratories South Africa (Pty) Ltd.

 

South Africa

 

 

 

 

 

 

 

Experimental & Applied Sciences Africa (Proprietary) Limited

 

South Africa

 

 

 

 

 

 

 

Abbott Laboratories, S.A.

 

Spain

 

 

 

 

 

 

 

AMO Manufacturing Spain, S.L.

 

Spain

 

 

 

 

 

 

 

STARLIMS Ibérica, S.A.

 

Spain

 

 

 

 

 

 

 

Abbott Medical Optics Norden AB

 

Sweden

 

 

 

 

 

 

 

Abbott Scandinavia AB

 

Sweden

 

 

 

 

 

 

 

Advanced Medical Optics Uppsala AB

 

Sweden

 

 

 

 

 

 

 

Abbott AG

 

Switzerland

 

 

 

 

 

 

 

Abbott Finance Company SA

 

Switzerland

 

 

 

 

 

 

 

Abbott Laboratories SA

 

Switzerland

 

 

 

 

 

 

 

Abbott Products Operations AG

 

Switzerland

 

 

 

 

 

 

 

AMO Switzerland GmbH

 

Switzerland

 

 

 

 

 

 

 

Abbott Fund Tanzania Limited

 

Tanzania

 

 

 

 

 

 

 

Abbott Laboratories Ltd.

 

Thailand

 

 

 

 

 

 

 

Abbott Laboratuarlari Ithalat Ihracat Ve Ticaret Limited Sirketi

 

Turkey

 

 

 

 

 

 

 

Limited Liability Company “Abbott Ukraine”

 

Ukraine

 

 

 

 

 

 

 

Abbott (UK) Finance Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott (UK) Holdings Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Asia Holdings Limited

 

United Kingdom

 

 

 


 

Abbott Asia Investments Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Australasia Holdings Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Capital India Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Diabetes Care Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Equity Holdings Unlimited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Healthcare Products Ltd.

 

United Kingdom

 

 

 

 

 

 

 

Abbott Iberian Investments (2) Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Iberian Investments Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Laboratories Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Laboratories Trustee Company Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Vascular Devices (2) Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Vascular Devices Limited

 

United Kingdom

 

 

 

 

 

 

 

AMO United Kingdom Limited

 

United Kingdom

 

 

 

 

 

 

 

British Colloids

 

United Kingdom

 

 

 

 

 

 

 

Experimental and Applied Sciences UK Limited

 

United Kingdom

 

 

 

 

 

 

 

Fournier Pharmaceuticals Limited

 

United Kingdom

 

 

 

 

 

 

 

Knoll (UK) Investments Unlimited

 

United Kingdom

 

 

 

 

 

 

 

Mansbridge Pharmaceuticals Ltd.

 

United Kingdom

 

 

 

 

 

 

 

Murex Biotech Limited

 

United Kingdom

 

 

 

 

 

 

 

STARLIMS Europe Limited

 

United Kingdom

 

 

 

 

 

 

 

Abbott Laboratories Uruguay S.A.

 

Uruguay

 

 

 

 

 

 

 

Abbott Laboratories C.A.

 

Venezuela

 

 

 

 

 

 

 

AbbVie Pharmaceuticals SCA *

 

Venezuela

 

 

 

 

 

 

 

3A Nutrition (Vietnam) Company Limited

 

Vietnam

 

 

 

 

 

 

 

Abbott Trading Company, Inc.

 

Virgin Islands

 

 

 

* Indicates subsidiary will be distributed to AbbVie Inc. in 2014 or thereafter

 



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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We consent to the incorporation by reference in Registration Statement No. 333-158782 on Form S-8 for the Abbott Laboratories 2009 Incentive Stock Program; Registration Statement Nos. 333-09071, 333-43381, 333-69547, 333-93253, 333-52768, 333-74228, 333-102178, 333-109250, 333-124850, and 333-158782 on Form S-8 for the Abbott Laboratories 1996 Incentive Stock Program; Registration Statement Nos. 333-74220, 333-102179, 333-124851, 333-153200, and 333-169886 on Form S-8 for the Abbott Laboratories Deferred Compensation Plan; Registration Statement Nos. 33-26685, 33-50452, 33-51585, 33-56897, 33-65127, 333-19511, 333-43383, 333-69579, 333-93257, 333-74224, 333-102180, 333-109253, 333-124849, 333-141116, 333-153198, and 333-169888 on Form S-8 for the Abbott Laboratories Stock Retirement Program and Trusts; Registration Statement No. 333-158124 on Form S-8 for the Amended and Restated Advanced Medical Optics, Inc. 2002 Incentive Compensation Plan, as amended, the 2004 Stock Incentive Plan, as amended and restated, the Advanced Medical Optics, Inc. 2005 Incentive Compensation Plan, the VISX, Incorporated 2001 Nonstatutory Stock Option Plan, the VISX, Incorporated 2000 Stock Plan, the VISX, Incorporated 1995 Director Option and Stock Deferral Plan, as amended and restated, and the VISX, Incorporated 1995 Stock Plan, as amended; and Registration Statement Nos. 333-109132, 333-132104, 333-157290, and 333-158128 on Form S-3 of our reports dated February 21, 2014, relating to the financial statements and financial statement schedule of Abbott Laboratories and subsidiaries (the "Company"), and the effectiveness of the Company's internal control over financial reporting (which reports express an unqualified opinion and include an explanatory paragraph regarding the distribution of the shares of AbbVie Inc. to the Company's shareholders and the Company's change to the year end of its foreign subsidiaries), appearing in this Annual Report on Form 10-K of Abbott Laboratories for the year ended December 31, 2013.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 21, 2014



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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Exhibit 31.1

Certification of Chief Executive Officer
Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))

I, Miles D. White, certify that:

/s/ MILES D. WHITE
 Miles D. White,
Chairman of the Board and
Chief Executive Officer		    

Date: February 21, 2014
 
 



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Exhibit 31.2

Certification of Chief Financial Officer
Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))

I, Thomas C. Freyman, certify that:

/s/ THOMAS C. FREYMAN
 Thomas C. Freyman,
Executive Vice President, Finance
and Chief Financial Officer		    

Date: February 21, 2014
 
 



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Exhibit 32.1

Certification Pursuant To
18 U.S.C. Section 1350
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002

        In connection with the Annual Report of Abbott Laboratories (the "Company") on Form 10-K for the period ended December 31, 2013 as filed with the Securities and Exchange Commission (the "Report"), I, Miles D. White, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

/s/ MILES D. WHITE
 Miles D. White,
Chairman of the Board and
Chief Executive Officer		    

Date: February 21, 2014
 
 

A signed original of this written statement required by Section 906 has been provided to Abbott Laboratories and will be retained by Abbott Laboratories and furnished to the Securities and Exchange Commission or its staff upon request.



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Exhibit 32.2

Certification Pursuant To
18 U.S.C. Section 1350
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002

        In connection with the Annual Report of Abbott Laboratories (the "Company") on Form 10-K for the period ended December 31, 2013 as filed with the Securities and Exchange Commission (the "Report"), I, Thomas C. Freyman, Executive Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

/s/ THOMAS C. FREYMAN
 Thomas C. Freyman,
Executive Vice President, Finance
and Chief Financial Officer		    

Date: February 21, 2014
 
 

A signed original of this written statement required by Section 906 has been provided to Abbott Laboratories and will be retained by Abbott Laboratories and furnished to the Securities and Exchange Commission or its staff upon request.



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