1986
\nABBOTT LABORATORIES
\nMANAGEMENT INCENTIVE PLAN
\n(as amended and restated effective January 1, 2008)<\/p>\n<\/p>\n
SECTION 1<\/strong><\/p>\n<\/p>\n INTRODUCTION<\/strong><\/p>\n<\/p>\n 1.1 BACKGROUND AND PURPOSES. This 1986 ABBOTT LABORATORIES MANAGEMENT (a) To provide greater incentive for (b) To attract and retain in the employ of 1.2 EFFECTIVE DATE AND FISCAL YEAR. The Plan became effective as of 1.3 ADMINISTRATION. The Plan will be administered by the Compensation 1.4 GRANDFATHERED AMOUNTS. Notwithstanding anything in the Plan to \n 1<\/p>\n <\/p>\n \n SECTION 2<\/strong><\/p>\n<\/p>\n ELIGIBILITY AND PARTICIPATION<\/strong><\/p>\n<\/p>\n 2.1 PERSONS ELIGIBLE FOR PARTICIPATION. Participation in the Plan 2.2 PARTICIPANTS. The term “participant,” as used in the Plan, shall 2.3 ACTIVE PARTICIPANTS. For each fiscal year, there shall be a group 2.4 INACTIVE PARTICIPANTS. Inactive participants shall consist of SECTION 3<\/strong><\/p>\n<\/p>\n MANAGEMENT INCENTIVE PLAN FUND<\/strong><\/p>\n<\/p>\n 3.1 BASE FOR MANAGEMENT INCENTIVE PLAN FUND. The “base earnings” for (a) The existence, issuance, sale, exchange, conversion or<\/p>\n \n 2<\/p>\n <\/p>\n \n retirement of any securities, other than common shares, of Abbott (whether (b) The issuance or retirement of any common shares or any changes in Any adjustments to be made in accordance with (a) and (b) above in 3.2 CONSOLIDATED NET INCOME. For the purposes of this Plan, for any (a) The exclusion of any charges for amortization or goodwill (b) The exclusion of any interest on debt securities which are (c) The deduction of any dividend requirement for preferred shares In the sole discretion of the Committee there shall also be excluded in the 3.3 DETERMINATION OF MANAGEMENT INCENTIVE PLAN AMOUNT FOR ANY YEAR. \n 3<\/p>\n <\/p>\n \n (a) an amount which, when treated as an expense currently deductible (b) an amount which, when treated as an expense currently deductible (c) an amount which equals 200 percent of the aggregate base For purposes of the Plan “base salary” means the amount of salary paid to 3.4 THE MANAGEMENT INCENTIVE PLAN FUND. The Management Incentive Plan SECTION 4<\/strong><\/p>\n<\/p>\n ALLOCATION OF MANAGEMENT INCENTIVE FUND<\/strong><\/p>\n<\/p>\n 4.1 ANNUAL ALLOCATION OF MANAGEMENT INCENTIVE FUND. As soon as \n 4<\/p>\n <\/p>\n \n (a) First, if the Chairman of the Board of Abbott shall be an active (b) Next, all or a part of the balance of such Fund may be allocated 4.2 COMMITTEE’S DISCRETION IN ALLOCATIONS. In making any allocations SECTION 5<\/strong><\/p>\n<\/p>\n PAYMENT OF AMOUNTS ALLOCATED TO PARTICIPANTS<\/strong><\/p>\n<\/p>\n 5.1 TIME OF PAYMENT. For fiscal years beginning after December 31, (a) current payment in cash to the participant, which payment shall (b) current payment of a portion in cash and deposited to a grantor (c) deferral of payment until such time and in such manner as 5.2 TIME OF ELECTION.<\/p>\n<\/p>\n (a) A participant must make the election \n 5<\/p>\n <\/p>\n \n of the year prior to the fiscal year during which the incentive compensation (b) Notwithstanding the timing requirements (c) Any election described in subsection 5.1 5.3 SEPARATE ACCOUNTS. The Committee shall establish accounts for (a) The Committee will maintain a “Deferred Account” in the name of (b) The Committee will maintain two separate Accounts, a “Pre-Tax 5.4 ADJUSTMENT OF DEFERRED ACCOUNTS. As of the end of each fiscal (a) FIRST, reduced by an amount equal to any (b) NEXT, increased by an amount equal to the \n 6<\/p>\n <\/p>\n \n (c) FINALLY, increased by an amount equal to 5.5 ADJUSTMENT OF PRE-TAX ACCOUNTS. As of the end of each fiscal (a) FIRST, reduced, in any year in which the participant is entitled (b) NEXT, increased by an amount equal to any allocation for that (c) FINALLY, increased by an amount equal to the interest earned for 5.6 ADJUSTMENT OF AFTER-TAX ACCOUNTS. As of the end of each fiscal (a) FIRST, reduced, in any year in which the participant is in (b) NEXT, increased by an amount equal to the allocation for that (c) FINALLY, increased by an amount equal to the interest earned for 5.7 INTEREST ACCRUALS ON ACCOUNTS.<\/p>\n<\/p>\n (a) As of the end of each fiscal year, a participant’s Deferred (i) the average of the “prime rate” of \n 7<\/p>\n (ii) plus two hundred twenty-five (225) basis points.<\/p>\n<\/p>\n (b) As of the end of each fiscal year, a participant’s After-Tax Account (c) This Interest and After-Tax Interest, as applicable, shall be credited 5.8 GUARANTEED RATE PAYMENTS. In addition to any allocation made to a 5.9 GRANTOR TRUST ASSETS. Each participant’s Grantor Trust assets shall be 5.10 DESIGNATION OF BENEFICIARIES. Subject to the conditions and (a) A nonfiduciary beneficiary shall have the right to designate a \n 8<\/p>\n <\/p>\n \n primary beneficiary, as the case may be, shall have expressly so provided in (b) A fiduciary beneficiary shall designate as a further Any beneficiary designation or grant of any power to any beneficiary under (iii) any one or more or all of the next of kin (including the (iv) the legal representative of the estate of the deceased 5.11 STATUS OF BENEFICIARIES. Following a participant’s death, the 5.12 NON-ASSIGNABILITY AND FACILITY OF PAYMENT. Amounts payable to 5.13 PAYER OF AMOUNTS ALLOCATED TO PARTICIPANTS. Any amount allocated \n 9<\/p>\n <\/p>\n \n paid by the employer (or such employer’s successor) by whom the participant 5.14 MANNER OF PAYMENT OF DEFERRED ACCOUNTS. Subject to subsection 5.15 PAYMENTS UPON TERMINATION FOLLOWING CHANGE IN CONTROL. 5.16 CHANGE IN CONTROL. A “Change in Control” shall be deemed to have (a) the date any Person is or becomes the Beneficial Owner, (b) the date the following individuals cease for any reason to \n 10<\/p>\n <\/p>\n \n contest, including but not limited to a consent solicitation, relating to the (c) the date on which there is consummated a merger or (d) the date the shareholders of Abbott approve a plan of complete Notwithstanding the foregoing, a “Change in Control” shall not be deemed to For purposes of this Plan: “Affiliate” shall have the meaning set forth in \n 11<\/p>\n <\/p>\n \n meaning set forth in Rule 13d-3 under the Exchange Act; “Exchange Act” shall 5.17 POTENTIAL CHANGE IN CONTROL. A “Potential Change in Control” (a) Abbott enters into an agreement, the consummation of which (b) Any Person (without regard to the exclusions set forth in (c) Any Person becomes the Beneficial Owner, directly or (d) The Board of Directors adopts a resolution to the effect that, 5.18 PROHIBITION AGAINST AMENDMENT. The provisions of subsections \n 12<\/p>\n <\/p>\n \n 5.19 ADMINISTRATOR’S CALCULATION OF GRANTOR TRUST DISTRIBUTIONS. The SECTION 6<\/strong><\/p>\n<\/p>\n MISCELLANEOUS<\/strong><\/p>\n<\/p>\n 6.1 RULES. The Committee may establish such rules and regulations as it may 6.2 MANNER OF ACTION BY COMMITTEE. A majority of the members of the 6.3 RELIANCE UPON ADVICE. The Board of Directors and the Committee may rely 6.4 TAXES. Any employer shall be entitled, if necessary or desirable, to 6.5 RIGHTS OF PARTICIPANTS. Employment rights of participants with Abbott \n 13<\/p>\n <\/p>\n \n participant established pursuant to subsection 5.2 are for the convenience of 6.6 TAX GROSS UP. In addition to the allocations provided under subsection 6.7 INCOME TAX ASSUMPTIONS. For purposes of Sections 5 and 6, a 6.8 SECTION 409A. To the extent applicable, it is intended that the Plan \n 14<\/p>\n <\/p>\n \n addition, for purposes of the Plan, each amount to be paid and each SECTION 7<\/strong><\/p>\n<\/p>\n AMENDMENT, TERMINATION AND CHANGE OF 7.1 AMENDMENT AND TERMINATION. The Plan will be effective from its 7.2 CHANGE OF CONDITIONS RELATING TO PAYMENTS. No change to the time or \n 15<\/p>\n <\/p>\n Exhibit A<\/strong><\/p>\n \n 1986<\/strong><\/p>\n ABBOTT LABORATORIES<\/strong><\/p>\n MANAGEMENT INCENTIVE PLAN<\/strong><\/p>\n<\/p>\n [The 1986 Abbott Laboratories Management Incentive Plan, as amended, as filed
\nINCENTIVE PLAN (the “Plan”) is a successor Plan to the 1961, 1971 and 1981
\nManagement Incentive Plans (the “Predecessor Plans”). This Plan is being
\nestablished by ABBOTT LABORATORIES (“Abbott”) for the following purposes:<\/p>\n<\/p>\n
\nparticipants in the Plan to attain and maintain the highest standards of
\nmanagerial performance by rewarding them for services rendered with
\ncompensation, in addition to their base salaries, in proportion to the success
\nof Abbott and to the participants’ respective contribution to such success; and\n<\/p>\n<\/p>\n
\nAbbott and its subsidiaries persons of outstanding competence.<\/p>\n<\/p>\n
\nJanuary 1, 1986 and is hereby amended and restated as of January 1, 2008, in
\naccordance with the requirements of Section 409A of the Internal Revenue Code of
\n1986, as amended (“Code Section 409A”). The term “fiscal year,” as used in this
\nPlan, means the fiscal period from time to time employed by Abbott for the
\npurpose of reporting earnings to shareholders.<\/p>\n<\/p>\n
\nCommittee (the “Committee”) appointed by the Board of Directors of Abbott (the
\n“Board of Directors”).<\/p>\n<\/p>\n
\nthe contrary, any amounts under the Plan that were earned and vested before
\nJanuary 1, 2005 (as determined in accordance with Code Section 409A) with
\nrespect to participants who retired before January 1, 2005 (“Grandfathered
\nAmounts”) shall be subject to the terms and conditions of the Plan as
\nadministered and as in effect on December 31, 2004. Amendments made to the Plan
\npursuant to this amendment and restatement or otherwise shall not affect the
\nGrandfathered Amounts unless expressly provided for in the amendment. The terms
\nand conditions applicable to the Grandfathered Amounts are set forth in
\nExhibit A attached hereto.<\/p>\n
\n
\nwill be limited to those Officers and managerial employees of Abbott and its
\nsubsidiaries who, from time to time, shall be selected as participants by the
\nCommittee.<\/p>\n<\/p>\n
\ninclude both active participants and inactive participants.<\/p>\n<\/p>\n
\nof active participants which, except as provided below, shall not exceed
\nforty-five persons and shall consist of those persons eligible for participation
\nwho shall have been designated as active participants and notified of that fact
\nby the Committee. If, as a result of the growth of Abbott and its subsidiaries
\nor changes in Abbott’s organization, the Board of Directors deems it
\nappropriate, the Board of Directors may, in its discretion, from time to time,
\nincrease the number of persons who may be designated as active participants for
\nany fiscal year beyond the limit of forty-five persons provided for above.
\nSelection as an active participant for any fiscal year shall not confer upon any
\nperson a right to be an active participant in any subsequent fiscal year, nor
\nshall it confer upon him the right to receive any allocation under the Plan,
\nother than amounts allocated to him by the Committee pursuant to the Plan, and
\nall such allocations shall be subject to all of the terms and conditions of the
\nPlan.<\/p>\n<\/p>\n
\nthose persons, including beneficiaries of deceased participants, if any, for
\nwhom an allocation shall have been made for a prior fiscal year under this Plan
\nor a Predecessor Plan, the payment of which was deferred and remains unpaid.
\nStatus as an inactive participant shall not preclude a person from also being an
\nactive participant during any fiscal year.<\/p>\n<\/p>\n
\ndetermining whether any portion of consolidated net income for any fiscal year
\nmay be allocated to the Management Incentive Plan Fund for such year shall be
\nthat amount of consolidated net income (as defined in subsection 3.2) which is
\nequal to 15 percent of the Abbott Common Shareholder’s Equity for such fiscal
\nyear. For this purpose, “Abbott Common Shareholders’ Equity” for any fiscal year
\nshall mean the Shareholders’ Investment, as reflected in the consolidated
\nbalance sheet of Abbott as of the close of the next preceding fiscal year, plus
\nor minus such adjustments thereof as may be determined by the Committee in order
\nto reflect:<\/p>\n<\/p>\n
\n
\ninvolving preferred stock, debt, convertible preferred stock or convertible debt
\nsecurities); and<\/p>\n<\/p>\n
\naccounting methods or period adopted by Abbott since the close of such next
\npreceding fiscal year.<\/p>\n<\/p>\n
\ndetermining Abbott Common Shareholders’ Equity for any fiscal year shall be
\ndetermined by the Committee after consultation with Abbott’s independent
\nauditors, and any determination made by the Committee after such consultation
\nshall be conclusive upon all persons.<\/p>\n<\/p>\n
\nfiscal year or period, the “consolidated net income” shall be the consolidated
\nnet income of Abbott and its subsidiaries, prepared in accordance with generally
\naccepted accounting principles, consistently applied, after provision for any
\ninterest accrued with respect to such period on account of deferred payments
\nunder this Plan or a Predecessor Plan, but before allowances for any amount to
\nbe allocated to the Management Incentive Plan Fund, both net of applicable
\nincome taxes, and after such adjustments for the following, as may be determined
\nby the Committee after consultation with Abbott’s independent auditors (all net
\nof applicable income taxes):<\/p>\n<\/p>\n
\narising out of acquisitions made for securities which, as a result of
\nadjustments made in determining Abbott Common Shareholders’ Equity pursuant to
\nsubsection 3.1, are treated as common share equivalents; and<\/p>\n<\/p>\n
\nconvertible into common shares of Abbott and which shall have been considered as
\ncommon share equivalents in determining Abbott Common Shareholders’ Equity
\npursuant to subsection 3.1 hereof; and<\/p>\n<\/p>\n
\nwhich has not been considered as common share equivalents in determining Common
\nShareholders’ Equity pursuant to subsection 3.1 hereof.<\/p>\n<\/p>\n
\ncalculation of “consolidated net income” unusual gains and losses and the tax
\neffects thereof, changes in generally accepted accounting principles and the tax
\neffects thereof and extraordinary gains and losses.<\/p>\n<\/p>\n
\nFor each fiscal year that consolidated net income exceeds base earnings, and as
\nsoon as practicable after ascertainment of that fact, the Committee shall
\ndetermine a tentative amount as the Management Incentive Plan Amount for that
\nyear, which tentative amount shall not exceed the lesser of:<\/p>\n
\n
\nfor income tax purposes in such year, would cause a 5 percent reduction in such
\nyear’s excess of consolidated net income over the base earnings for such year;
\nand<\/p>\n<\/p>\n
\nfor income tax purposes in such year, would cause a 1-1\/2 percent reduction in
\nsuch year’s consolidated net income; and<\/p>\n<\/p>\n
\nsalaries of all active participants for such year.<\/p>\n<\/p>\n
\neach active participant by Abbott and its subsidiaries for such year plus the
\nincludible portion (as described below) of any “Eligible Restricted Stock
\nAward,” as defined in Section 5-2 of the Abbott Laboratories Supplemental
\nPension Plan and does not include bonuses, other awards or any other
\ncompensation of any kind. The includible portion of a participant’s Eligible
\nRestricted Stock Award shall be the portion of the participant’s Eligible
\nRestricted Stock Award that is included in the participant’s final earnings
\nunder the Abbott Laboratories Supplemental Pension Plan for such year. Following
\ndetermination of such tentative Management Incentive Plan Amount, the Committee
\nshall report in writing the amount of such tentative amount to the Board of
\nDirectors. At the meeting of the Board of Directors coincident with or next
\nfollowing receipt by it of the Committee’s determination, the Board of Directors
\nshall have the power to approve or reduce, but not to increase, the tentative
\namount reported to it by the Committee. The amount approved by the Board of
\nDirectors shall be the Management Incentive Plan Amount for such year.<\/p>\n<\/p>\n
\nFund at any time shall consist of an amount equal to the aggregate of the
\nManagement Incentive Plan Amounts established pursuant to subsection 3.3 of this
\nPlan for all fiscal years during which this Plan shall have been operative, plus
\nthe amounts established as Management Incentive Plan Amounts for any prior
\nfiscal year pursuant to a Predecessor Plan, reduced by an amount equal to the
\naggregate of the amounts of awards which shall have been allocated to
\nparticipants in accordance with this Plan or a Predecessor Plan, and awards, or
\nany other compensation of any kind.<\/p>\n<\/p>\n
\npracticable after the close of each fiscal year, part or all of the amount then
\nin the Management Incentive Plan Fund (including the Management Incentive Plan
\nAmount for such fiscal year) will be allocated by the Committee among active
\nparticipants in the Plan for such fiscal year, having due regard for the
\npurposes for which the Plan was established, in the following manner and order:\n<\/p>\n
\n
\nparticipant for such year, the members of the Committee, other than the Chairman
\nof the Board, shall determine the amount, if any, to be allocated to the
\nChairman of the Board from such Fund for such year; and<\/p>\n<\/p>\n
\namong the active participants (other than the Chairman of the Board) for such
\nyear, in such amounts and proportions as the Committee shall determine provided,
\nhowever, that the amount allocated to any active participant for any year shall
\nnot exceed 200 percent of such participant’s base salary for that year.<\/p>\n<\/p>\n
\nin accordance with subsection 4.1 for any year, the discretion of the Committee
\nshall be absolute, and no active participants for any year, by reason of their
\ndesignation as such, shall be entitled to any particular amounts or any amount
\nwhatsoever.<\/p>\n<\/p>\n
\n1988, a participant shall direct the payment or deferral of an allocation made
\nto him pursuant to subsection 4.1 at the time specified in subsection 5.2
\n(subject to such conditions relating to the right of the participant to receive
\npayment of such amount as established by the Committee) by one or more of the
\nfollowing methods:<\/p>\n<\/p>\n
\nbe made no later than the last day of the “applicable 2 1\/2 month period”, as such
\nterm is defined in Treasury Regulation \u00a7 1.409A-1(b)(4)(i)(A);<\/p>\n<\/p>\n
\ntrust (the “Grantor Trust”) established by the participant (in a form which the
\nCommittee determines is substantially similar to the trust in Exhibit B) and the
\nbalance paid to the participant approximately equal to the participant’s
\naggregate federal, state and local individual income and employment taxes
\n(determined in accordance with subsection 6.7); provided that all payments or
\ncontributions to the Grantor Trust and participant contemplated by this
\nsubsection 5.1(b) shall be made no later than the last day of the “applicable 2
\n 1\/2 month period”, as such term is defined in Treasury Regulation
\n \u00a7 1.409A-1(b)(4)(i)(A); or<\/p>\n<\/p>\n
\ndetermined in accordance with subsection 5.14.<\/p>\n<\/p>\n
\ndescribed in subsection 5.1 by filing it with the Committee or its delegate on
\nor before December 31<\/p>\n
\n
\nis earned under the Plan.<\/p>\n<\/p>\n
\ndescribed above, an individual who newly becomes eligible to participate in the
\nPlan by being designated as a participant under subsection 2.1 (and who was not
\neligible to participate in any other plan that would be aggregated with the Plan
\nunder Treasury Regulation \u00a71.409A-1(c)) may make the an initial deferral
\nelection described in subsection 5.1 by filing it with the Committee or its
\ndelegate within the thirty (30) day period immediately following the date he or
\nshe first is designated as participant, provided<\/u>, that the compensation
\ndeferred pursuant to such election relates solely to services performed after
\nthe date of such election. For this purpose, an election shall be deemed to
\napply to compensation paid for services performed after the election if the
\nelection applies to no more than the amount prescribed by Treasury Regulation
\n \u00a71.409A-2(a)(7)(i).<\/p>\n<\/p>\n
\nshall be irrevocable for the fiscal year to which the election applies.<\/p>\n<\/p>\n
\nparticipants who have made elections pursuant to subsection 5.1(b) or 5.1(c) as
\nfollows.<\/p>\n<\/p>\n
\neach participant who has elected to defer payment of all or a portion of his or
\nher MIP award under subsection 5.1(c). The Deferred Account shall consist of
\nallocations deferred according to subsection 5.1(c) and any adjustments made in
\naccordance with subsection 5.4.<\/p>\n<\/p>\n
\nAccount” and an “After-Tax Account”, in the name of each participant who has
\nelected to have a portion of his or her MIP award deposited in cash to a Grantor
\nTrust according to subsection 5.1(b). The Pre-Tax Account shall consist of the
\naggregate of all allocations contemplated by subsection 5.1(b), whether
\ndeposited to the participant’s Grantor Trust or made in cash to the participant,
\nand any adjustments made in accordance with subsection 5.5. The After-Tax
\nAccount shall consist of allocations deposited to the participant’s Grantor
\nTrust in cash according to subsection 5.1(b) and any adjustments made in
\naccordance with subsection 5.6.<\/p>\n<\/p>\n
\nyear, each participant’s Deferred Account shall be adjusted by the Committee as
\nfollows:<\/p>\n<\/p>\n
\ndistributions made to the participant during that year pursuant to subsections
\n5.14 or 5.15;<\/p>\n<\/p>\n
\nallocation for that year that is deferred pursuant to subsection 5.1(c); and\n<\/p>\n
\n
\nthe interest earned for that year according to subsection 5.7.<\/p>\n<\/p>\n
\nyear, each participant’s Pre-Tax Account shall be adjusted by the Committee as
\nfollows:<\/p>\n<\/p>\n
\nto receive a distribution from his or her Grantor Trust, by an amount equal to
\nthe distribution that would have been made to the participant if the aggregate
\namounts allocated according to subsection 5.1(b) had instead been deferred under
\nsubsection 5.1(c);<\/p>\n<\/p>\n
\nyear that is paid to the participant (including the amount deposited in the
\nparticipant’s Grantor Trust) according to subsection 5.1(b); and<\/p>\n<\/p>\n
\nthat year according to subsection 5.7.<\/p>\n<\/p>\n
\nyear, each participant’s After-Tax Account shall be adjusted by the Committee as
\nfollows:<\/p>\n<\/p>\n
\nreceipt of a benefit distribution from his or her Grantor Trust, by an amount
\ncalculated as provided in subsection 5.19 which represents the distribution for
\nsuch year;<\/p>\n<\/p>\n
\nyear that is deposited in the participant’s Grantor Trust according to
\nsubsection 5.1(b); and<\/p>\n<\/p>\n
\nthat year according to subsection 5.7.<\/p>\n<\/p>\n
\nAccount or Pre-Tax Account, as applicable, shall be credited with interest
\n(“Interest”) at the following rate:<\/p>\n<\/p>\n
\ninterest published by the Wall Street Journal (Mid-West Edition) or comparable
\nsuccessor quotation service on the first business day of January and the last
\nbusiness day of each month of the fiscal year;<\/p>\n
\n
\nshall be credited with the amount of Interest provided above, multiplied by (one
\nminus the aggregate of the applicable federal, state and local individual income
\ntax rates and employment tax rate, determined in accordance with subsection 6.7
\n(the “After-Tax Interest”)).<\/p>\n<\/p>\n
\non the conditions established by the Committee, provided that any award
\nallocation shall be considered to have been made and credited to a participant’s
\nAccount as of the first day of the fiscal year in which the award is made.<\/p>\n<\/p>\n
\nparticipant for any fiscal year in accordance with subsection 5.1(b), Abbott
\nshall also make a payment to a participant’s Grantor Trust (a “Guaranteed Rate
\nPayment”) for each year in which the Grantor Trust is in effect. The Guaranteed
\nRate Payment shall equal the excess, if any, of the participant’s Net Interest
\nAccrual (as defined below) over the net earnings of the participant’s Grantor
\nTrust for the year and shall be paid within the thirty (30) days beginning
\nApril 1 of the following fiscal year. A participant’s Net Interest Accrual for
\nthe year is an amount equal to the After-Tax Interest credited to the
\nparticipant’s After-Tax Account for that year in accordance with subsection 5.7.\n<\/p>\n<\/p>\n
\ninvested solely in the instruments specified by investment guidelines
\nestablished by the Committee. Such investment guidelines, once established, may
\nbe changed by the Committee, provided that any change shall not take effect
\nuntil the year following the year in which the change is made and provided
\nfurther that the instruments specified shall be consistent with the provisions
\nof subsection 3(b) of the form of Grantor Trust attached hereto as Exhibit B.\n<\/p>\n<\/p>\n
\nlimitations set forth below, each participant, and after a participant’s death,
\neach primary beneficiary designated by a participant in accordance with the
\nprovisions of this subsection 5.10, shall have the right from time to time to
\ndesignate a primary beneficiary or beneficiaries and, successive or contingent
\nbeneficiary or beneficiaries to receive unpaid amounts from the participant’s
\nDeferred Account under the Plan and the Predecessor Plans. Beneficiaries may be
\na natural person or persons or a fiduciary, such as a trustee of a trust or the
\nlegal representative of an estate. Any such designation shall take effect upon
\nthe death of the participant or such beneficiary, as the case may be, or in the
\ncase of any fiduciary beneficiary, upon the termination of all of its duties
\n(other than the duty to dispose of the right to receive amounts remaining to be
\npaid under the Plan or a Predecessor Plan). The conditions and limitations
\nrelating to the designation of beneficiaries are as follows:<\/p>\n<\/p>\n
\nfurther beneficiary or beneficiaries only if the original participant or the
\nnext preceding<\/p>\n
\n
\nwriting; and<\/p>\n<\/p>\n
\nbeneficiary or beneficiaries only those persons or other fiduciaries who are
\nentitled to receive the amounts payable from the participant’s account under the
\ntrust or estate of which it is a fiduciary.<\/p>\n<\/p>\n
\nthis subsection may be exercised only by an instrument in writing, executed by
\nthe person making the designation or granting such power and filed with the
\nSecretary of Abbott during such person’s lifetime or prior to the termination of
\na fiduciary’s duties. If a deceased participant or a deceased nonfiduciary
\nbeneficiary who had the right to designate a beneficiary as provided above dies
\nwithout having designated a further beneficiary, or if no beneficiary designated
\nas provided above is living or qualified and acting, the Committee, in its
\ndiscretion, may direct distribution of the amount remaining from time to time to
\neither:<\/p>\n<\/p>\n
\nsurviving spouse) of the participant or the deceased beneficiary, as the case
\nmay be, and in such proportions as the Committee determines; or<\/p>\n<\/p>\n
\nparticipant or deceased beneficiary as the case may be.<\/p>\n<\/p>\n
\nparticipant’s beneficiary or beneficiaries will be considered and treated as an
\ninactive participant for all purposes of this Plan.<\/p>\n<\/p>\n
\nparticipants and their beneficiaries under the Plan are not in any way subject
\nto their debts and other obligations, and may not be voluntarily or
\ninvoluntarily sold, transferred or assigned; provided that the preceding
\nprovisions of this subsection shall not be construed as restricting in any way a
\ndesignation right granted to a beneficiary pursuant to the terms of subsection
\n5.10. When a participant or the beneficiary of a participant is under legal
\ndisability, or in the Committee’s opinion is in any way incapacitated so as to
\nbe unable to manage his or her financial affairs, the Committee may direct that
\npayments shall be made to the participant’s or beneficiary’s legal
\nrepresentative, or to a relative or friend of the participant or beneficiary for
\nthe benefit of the participant or beneficiary, or the Committee may direct the
\npayment or distribution for the benefit of the participant or beneficiary in any
\nmanner that the Committee determines.<\/p>\n<\/p>\n
\nto a participant in the Plan and any interest credited thereto will be<\/p>\n
\n
\nwas employed during the fiscal year for which any amount was allocated, and for
\nthat purpose, if a participant shall have been employed by two or more employers
\nduring any fiscal year the amount allocated under this Plan for that year shall
\nbe an obligation of each of the respective employers in proportion to the
\nrespective amounts of base salary paid by each of them in that fiscal year.<\/p>\n<\/p>\n
\n5.15, a participant shall elect to receive payment of his Deferred Account in
\nsubstantially equal annual installments over a minimum period of ten years, or a
\nlonger period, at the time of his deferral election under subsection 5.1(c).
\nPayment of a participant’s Deferred Account shall commence on the first business
\nday of January of the year following the year in which the participant incurs a
\ntermination of employment.<\/p>\n<\/p>\n
\nNotwithstanding any other provision of the Plan or the provisions of any award
\nmade under the Plan, if a participant incurs a termination of employment with
\nAbbott and its subsidiaries for any reason within two (2) years following the
\ndate of a Change in Control, provided that the event constituting a Change in
\nControl is also a “change in control event”, as such term is defined in Treasury
\nRegulation \u00a7 1.409A-3(i)(5): (a) with respect to a participant whose allocations
\nunder the Plan are deferred in accordance with subsection 5.1(c), the aggregate
\nunpaid balance of the participant’s Deferred Account shall be paid to such
\nparticipant in a lump sum within thirty (30) days following the date of such
\ntermination of employment, and (b) with respect to a participant whose
\nallocations under the Plan are made pursuant to subsection 5.1(b), (i) the
\naggregate of the participant’s unpaid allocation under subsection 5.1(b) (if
\nany) for the fiscal year in which the termination occurs and (ii) a pro rata
\nportion of the unpaid Guaranteed Rate Payment under subsection 5.8 attributable
\nto the portion of the year elapsed prior to the date of termination, shall be
\npaid to such participant’s Grantor Trust in a lump sum within thirty (30) days
\nfollowing the date of such termination of employment.<\/p>\n<\/p>\n
\noccurred on the earliest of the following dates:<\/p>\n<\/p>\n
\ndirectly or indirectly, of securities of Abbott (not including in the securities
\nbeneficially owned by such Person any securities acquired directly from Abbott
\nor its Affiliates) representing 20% or more of the combined voting power of
\nAbbott’s then outstanding securities, excluding any Person who becomes such a
\nBeneficial Owner in connection with a transaction described in clause (i) of
\nparagraph (c) below; or<\/p>\n<\/p>\n
\nconstitute a majority of the number of directors then serving: individuals who,
\non the date hereof, constitute the Board of Directors and any new director
\n(other than a director whose initial assumption of office is in connection with
\nan actual or threatened election<\/p>\n
\n
\nelection of directors of Abbott) whose appointment or election by the Board of
\nDirectors or nomination for election by Abbott’s shareholders was approved or
\nrecommended by a vote of at least two-thirds (2\/3) of the directors then still
\nin office who either were directors on the date hereof or whose appointment,
\nelection or nomination for election was previously so approved or recommended;
\nor<\/p>\n<\/p>\n
\nconsolidation of Abbott or any direct or indirect subsidiary of Abbott with any
\nother corporation or other entity, other than (i) a merger or consolidation
\n(A) immediately following which the individuals who comprise the Board of
\nDirectors immediately prior thereto constitute at least a majority of the Board
\nof Directors of Abbott, the entity surviving such merger or consolidation or, if
\nAbbott or the entity surviving such merger or consolidation is then a
\nsubsidiary, the ultimate parent thereof and (B) which results in the voting
\nsecurities of Abbott outstanding immediately prior to such merger or
\nconsolidation continuing to represent (either by remaining outstanding or by
\nbeing converted into voting securities of the surviving entity or any parent
\nthereof), in combination with the ownership of any trustee or other fiduciary
\nholding securities under an employee benefit plan of Abbott or any subsidiary of
\nAbbott, at least 50% of the combined voting power of the securities of Abbott or
\nsuch surviving entity or any parent thereof outstanding immediately after such
\nmerger or consolidation, or (ii) a merger or consolidation effected to implement
\na recapitalization of Abbott (or similar transaction) in which no Person is or
\nbecomes the Beneficial Owner, directly or indirectly, of securities of Abbott
\n(not including in the securities Beneficially Owned by such Person any
\nsecurities acquired directly from Abbott or its Affiliates) representing 20% or
\nmore of the combined voting power of Abbott’s then outstanding securities; or\n<\/p>\n<\/p>\n
\nliquidation or dissolution of Abbott or there is consummated an agreement for
\nthe sale or disposition by Abbott of all or substantially all of Abbott’s
\nassets, other than a sale or disposition by Abbott of all or substantially all
\nof Abbott’s assets to an entity, at least 50% of the combined voting power of
\nthe voting securities of which are owned by shareholders of Abbott, in
\ncombination with the ownership of any trustee or other fiduciary holding
\nsecurities under an employee benefit plan of Abbott or any subsidiary of Abbott,
\nin substantially the same proportions as their ownership of Abbott immediately
\nprior to such sale.<\/p>\n<\/p>\n
\nhave occurred by virtue of the consummation of any transaction or series of
\nintegrated transactions immediately following which the record holders of the
\ncommon stock of Abbott immediately prior to such transaction or series of
\ntransactions continue to have substantially the same proportionate ownership in
\nan entity which owns all or substantially all of the assets of Abbott
\nimmediately following such transaction or series of transactions.<\/p>\n<\/p>\n
\nRule 12b-2 promulgated under Section 12 of the Exchange Act; “Beneficial Owner”
\nshall have the<\/p>\n
\n
\nmean the Securities Exchange Act of 1934, as amended from time to time; and
\n“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
\nmodified and used in Sections 13(d) and 14(d) thereof, except that such term
\nshall not include (i) Abbott or any of its subsidiaries, (ii) a trustee or other
\nfiduciary holding securities under an employee benefit plan of Abbott or any of
\nits Affiliates, (iii) an underwriter temporarily holding securities pursuant to
\nan offering of such securities, or (iv) a corporation owned, directly or
\nindirectly, by the shareholders of Abbott in substantially the same proportions
\nas their ownership of stock of Abbott.<\/p>\n<\/p>\n
\nshall exist during any period in which the circumstances described in paragraphs
\n(a), (b), (c) or (d), below, exist (provided, however, that a Potential Change
\nin Control shall cease to exist not later than the occurrence of a Change in
\nControl):<\/p>\n<\/p>\n
\nwould result in the occurrence of a Change in Control, provided that a Potential
\nChange in Control described in this paragraph (a) shall cease to exist upon the
\nexpiration or other termination of all such agreements.<\/p>\n<\/p>\n
\nsubsections (i) through (iv) of such definition) publicly announces an intention
\nto take or to consider taking actions the consummation of which would constitute
\na Change in Control; provided that a Potential Change in Control described in
\nthis paragraph (b) shall cease to exist upon the withdrawal of such intention,
\nor upon a determination by the Board of Directors that there is no reasonable
\nchance that such actions would be consummated.<\/p>\n<\/p>\n
\nindirectly, of securities of Abbott representing 10% or more of either the then
\noutstanding shares of common stock of Abbott or the combined voting power of
\nAbbott’s then outstanding securities (not including any securities beneficially
\nowned by such Person which are or were acquired directly from Abbott or its
\nAffiliates).<\/p>\n<\/p>\n
\nfor purposes of this Agreement, a Potential Change in Control exists; provided
\nthat a Potential Change in Control described in this paragraph (d) shall cease
\nto exist upon a determination by the Board of Directors that the reasons that
\ngave rise to the resolution providing for the existence of a Potential Change in
\nControl have expired or no longer exist.<\/p>\n<\/p>\n
\n5.15, 5.16, 5.17 and this subsection 5.18 may not be amended or deleted, nor
\nsuperseded by any other provision of this Plan, (i) during the pendency of a
\nPotential Change in Control and (ii) during the period beginning on the date of
\na Change in Control and ending on the date five (5) years following such Change
\nin Control.<\/p>\n
\n
\nAdministrator shall calculate the amount to be distributed from a participant’s
\nGrantor Trust in any year in which the participant is entitled to a benefit
\ndistribution by multiplying (i) the amount of the reduction determined in
\naccordance with subsection 5.5(a), by (ii) a fraction, the numerator of which is
\nthe balance in the participant’s After-Tax Account as of the end of the prior
\nfiscal year and the denominator of which is the balance of the participant’s
\nPre-Tax Account as of that same date.<\/p>\n<\/p>\n
\nconsider necessary or desirable for the effective and efficient administration
\nof the Plan.<\/p>\n<\/p>\n
\nCommittee qualified to act on any particular question may act by meeting or by
\nwriting signed without meeting, and may execute any instrument or document
\nrequired or delegate to one of its members authority to sign. The Committee from
\ntime to time may delegate the performance of certain ministerial functions in
\nconnection with the Plan, such as the keeping of records, to such person or
\npersons as the Committee may select. Except as otherwise expressly provided in
\nthe Plan, the costs of administration of the Plan will be paid by Abbott. Any
\nnotice required to be given to, or any document required to be filed with the
\nCommittee, will be properly given or filed if mailed or delivered in writing to
\nthe Secretary of Abbott.<\/p>\n<\/p>\n
\nupon any information or advice furnished to it by any Officer of Abbott or by
\nAbbott’s independent auditors, or other consultants, and shall be fully
\nprotected in relying upon such information or advice. No member of the Board of
\nDirectors or the Committee shall be liable for any act or failure to act on
\ntheir part, excepting only any acts done or omitted to be done in bad faith, nor
\nshall they be liable for any act or failure to act of any other member.<\/p>\n<\/p>\n
\npay, or withhold the amount of any federal, state or local tax, attributable to
\nany amounts payable by it under the Plan after giving the person entitled to
\nreceive such amount notice as far in advance as practicable, and may require
\npayment or indemnification from the participant in an amount necessary to
\nsatisfy such taxes prior to remitting such taxes.<\/p>\n<\/p>\n
\nand its subsidiaries shall not be enlarged or affected by reason of
\nestablishment of or inclusion as a participant in the Plan. Nothing contained in
\nthe Plan shall require Abbott or any subsidiary to segregate or earmark any
\nassets, funds or property for the purpose of payment of any amounts which may
\nhave been deferred. The Deferred Account, Pre-Tax Account and After-Tax Account
\nwith respect to any<\/p>\n
\n
\nthe administration of the Plan and no trust relationship with respect to such
\nAccounts is intended or should be implied. Participant’s rights shall be limited
\nto payment to them at the time or times and in such amounts as are contemplated
\nby the Plan. Any decision made by the Board of Directors or the Committee, which
\nis within the sole and uncontrolled discretion of either, shall be conclusive
\nand binding upon the other and upon all other persons whomsoever.<\/p>\n<\/p>\n
\n4.1, each participant who has established a Grantor Trust (or, if the
\nparticipant is deceased, the beneficiary designated under the participant’s
\nGrantor Trust) shall be entitled to a Tax Gross Up payment for each year in
\nwhich the Grantor Trust is in effect. The “Tax Gross Up” shall equal: (a) the
\namount necessary to compensate the participant (or beneficiary) for the net
\nincrease in the participant’s (or beneficiary’s) federal, state and local income
\ntaxes as a result of the inclusion in his or her taxable income of the income of
\nthe participant’s Grantor Trust and any Guaranteed Rate Payment for that year;
\nplus (b) an amount necessary to compensate the participant (or beneficiary) for
\nthe net increase in the taxes described in (a) above as a result of the
\ninclusion in his or her taxable income of any payment made pursuant to this
\nsubsection 6.6. Payment of the Tax Gross Up shall be made by the employers (in
\nsuch proportions as Abbott shall designate) directly from their general
\ncorporate assets, no later than the end of the calendar year in which the
\nparticipant remits the related taxes.<\/p>\n<\/p>\n
\nparticipant’s federal income tax rate shall be deemed to be the highest marginal
\nrate of federal income individual tax in effect in the calendar year in which a
\ncalculation under those Sections is to be made, and state and local tax rates
\nshall be deemed to be the highest marginal rates of individual income tax in
\neffect in the state and locality of the participant’s residence on the date such
\na calculation is made, net of any federal tax benefits without a benefit for any
\nnet capital losses. For purposes of Sections 5 and 6, a participant’s employment
\ntax rate shall be deemed to be the highest marginal rate of Federal Insurance
\nContributions Act tax in effect in the calendar year in which a calculation
\nunder that Section is to be made.<\/p>\n<\/p>\n
\ncomply with the provisions of Code Section 409A. The Plan will be administered
\nand interpreted in a manner consistent with this intent, and any provision that
\nwould cause the Plan to fail to satisfy Code Section 409A will have no force and
\neffect until amended to comply therewith (which amendment may be retroactive to
\nthe extent permitted by Code Section 409A). Notwithstanding anything contained
\nherein to the contrary, for all purposes of the Plan, a participant shall not be
\ndeemed to have had a termination of employment until the participant has
\nincurred a separation from service as defined in Treasury Regulation
\n \u00a71.409A-1(h) and, to the extent required to avoid accelerated taxation and\/or
\ntax penalties under Code Section 409A and applicable guidance issued thereunder,
\npayment of the amounts payable under the Plan that would otherwise be payable
\nduring the six-month period after the date of termination shall instead be paid
\non the first business day after the expiration of such six-month period, plus
\ninterest thereon, at a rate equal to the rate specified in subsection 5.7 (to
\nthe extent that such interest is not already provided to the participant under
\nsubsection 5.6), from the respective dates on which such amounts would otherwise
\nhave been paid until the actual date of payment. In<\/p>\n
\n
\ninstallment payment shall be construed as a separate identified payment for
\npurposes of Code Section 409A.<\/p>\n<\/p>\n
\nCONDITIONS RELATING TO PAYMENTS<\/strong><\/p>\n<\/p>\n
\neffective date until terminated by the Board of Directors. During the fifth year
\nafter the Plan’s effective date and during every fifth year thereafter, the
\nCommittee may recommend to the Board of Directors whether the Plan should be
\namended or terminated. The Board of Directors reserves the right to amend the
\nPlan from time to time and to terminate the Plan at any time, except that no
\nsuch amendment or any termination of the Plan shall reduce any fixed or
\ncontingent obligations which shall have arisen under the Plan prior to the date
\nof such amendment or termination, or change the terms and conditions of payment
\nof any allocation theretofore made without the consent of the participant
\nconcerned.<\/p>\n
\npayment or the time of commencement of payment and any period over which payment
\nshall be made shall be effected except in strict compliance with the subsequent
\nelection requirements of Treasury Regulation \u00a7 1.409A-2(b) to the extent subject
\nthereto.<\/p>\n
\n
\nas Exhibit 10.5 to the Abbott Laboratories Quarterly Report for the quarter
\nended June 30, 2003 on Form 10-Q.]<\/p>\n<\/p>\n
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