Amended effective
December 14, 2001
ABBOTT LABORATORIES 401(K) SUPPLEMENTAL PLAN
SECTION 1
INTRODUCTION
1.1 PURPOSE. This Abbott Laboratories 401(k) Supplemental Plan (the
"Plan") is being established by Abbott Laboratories ("Abbott") to provide
eligible management employees of Abbott an opportunity to accumulate capital for
their retirement or other termination of employment in excess of the
contributions allowed under the Abbott Laboratories Stock Retirement Plan
("Stock Plan").
1.2 EFFECTIVE DATE. The Plan shall be effective as of October 1, 1993.
1.3 ADMINISTRATION. The Plan shall be administered by the Compensation
Committee (the "Committee") appointed by the Board of Directors of Abbott.
SECTION 2
ELIGIBILITY AND PARTICIPATION
2.1 PERSONS ELIGIBLE TO PARTICIPATE. Participation in the Plan shall be
limited to employees who are serving as corporate officers of Abbott as of
October 1, 1993 or who become corporate officers thereafter. The term "corporate
officer" for purposes of the Plan shall mean an individual elected an officer of
Abbott by its Board of Directors (or designated as such for purposes of the Plan
by the Committee), but shall not include assistant officers. In the event an
employee should cease to be a corporate officer of Abbott due to demotion,
termination of employment or otherwise, such employee shall cease to be eligible
to participate in the Plan and any contributions then being made on behalf of
such employee shall immediately cease.
2.2 PARTICIPANT. An eligible employee may elect to participate in the
Plan by electing to have contributions made on the employee's behalf as provided
in Section 5.
SECTION 3
EMPLOYEE CONTRIBUTIONS
3.1 ALLOWABLE CONTRIBUTIONS. An eligible employee may elect to have his
employer make "pre-tax contributions" on his behalf in an amount not greater
than 18% in total of his compensation in any calendar year for services rendered
to his employer. A pre-tax contribution made by an employer on behalf of a
participant shall reduce the participant's compensation at the time of payment
of such compensation. Each election hereunder shall be in writing, and shall be
in multiples of 1% of compensation.
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3.2 COMPENSATION. A participant's "compensation" shall have the same
meaning as that term is used in Subsection 7-2 of the Stock Plan.
3.3 MAXIMUM EMPLOYEE CONTRIBUTIONS. Notwithstanding Subsection 3.1, in
no event shall the sum of:
(a) the participant's total contributions, pre-tax contributions,
supplemental deposits and supplemental pre-tax contributions made
under the Stock Plan; plus
(b) the participant's total pre-tax contributions made under the Plan;
for any calendar year, exceed 18% of the employee's compensation for such year.
In the event the limitation described in this subsection 3.3 would be exceeded
for any participant, the participant's pre-tax contributions made under this
Plan shall be reduced until the limit is not exceeded.
SECTION 4
EMPLOYER CONTRIBUTIONS
For the calendar year ending December 31, 1993, and for each subsequent
calendar year, Abbott shall make a contribution on behalf of each participant in
the Plan who makes pre-tax contributions ("basic contributions") under the Plan
during such year at the rate of two percent (2%) of compensation in excess of,
for calendar year 1993, Two Hundred Thousand Dollars ($200,000), and for
calendar years subsequent to 1993, the limit in effect for such year under
Section 40l(a)(17), Internal Revenue Code of 1986, as amended. Such employer
contribution shall be in an amount equal to the contribution the participant
would have received under subsection 8-3 of the Stock Plan with respect to such
basic contributions had such basic contributions been made under subsection 7-1
of the Stock Plan. A participant who suspends his basic contributions to the
Plan during any calendar year shall receive an employer contribution under this
Section 4 based on the basic contributions made by the participant during such
year.
A contribution made by a participant under subsection 5.4 shall be
considered a basic contribution for purposes of this Section 4 to the extent it
includes contributions at the rate of two percent (2%) of compensation for 1993
in excess of Two Hundred Thousand Dollars ($200,000).
SECTION 5
ELECTIONS
5.1 ANNUAL ELECTIONS REQUIRED. Except as provided in subsections 5.2
and 5.3, a participant shall elect to make pre-tax contributions with respect to
compensation earned in any calendar year, prior to the first day of such
calendar year. Each such election shall be in writing, shall be filed with the
Committee, shall be effective only for the calendar year for which made and,
except as provided in subsection 5.2, shall be irrevocable. Notwithstanding
subsection 5.2, an employee who fails to make an election under this subsection
5.1 for a calendar year may not contribute to the Plan during such year.
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5.2 LIMITED CHANGES. A participant who has elected under subsection 5.1
to make pre-tax contributions for any calendar year, may increase or decrease
such pre-tax contributions during such calendar year by filing a written
election with the Committee. A participant may make no more than two such
elections under this subsection 5.2 during such calendar year. Any election
filed under this subsection 5.2 shall become effective for compensation earned
no earlier then the first payroll period commencing after receipt of the
election by the Committee. Any election filed under this subsection 5.2 shall
remain in effect for compensation earned during the remainder of such calendar
year unless changed by a subsequent election under this subsection 5.2.
5.3 NEWLY ELIGIBLE EMPLOYEES. A newly eligible employee (including
employees who become eligible due to the adoption of the Plan) shall make the
election described in subsection 5.1 within thirty (30) days of the date he is
notified of his eligibility to participate in the Plan. Any such election shall
become effective for compensation earned no earlier then the first payroll
period commencing after receipt of the election by the Committee and shall
remain in effect for the remainder of the then current calendar year unless
changed as provided in subsection 5.2.
5.4 SPECIAL CONTRIBUTION FOR 1993. Employees who are serving as
corporate officers of Abbott and who have established "Grantor Trusts" under the
1986 Abbott Laboratories Management Incentive Plan ("MIP") as of October 1,
1993, may elect to make a lump-sum contribution based on compensation earned
during the period of January 1, 1993 through September 30, 1993 (the "Make-up
Period") by filing an election with the Administrator and tendering payment in
cash to such Grantor Trust of the amount of the contribution, not later than
October 31, 1993. Any such contribution shall not exceed the maximum
contribution allowed under subsection 3.3 based on the employee's Stock Plan
contributions made, and compensation earned, during the Make-Up Period.
5.5 GRANTOR TRUST ELECTION. As part of the annual elections described
in subsection 5.1, each participant may also elect to have his pre-tax and
employer contributions for such year deposited in a "Grantor Trust" established
by the participant under the circumstances and on the terms described in
subsection 6.1. Any such election shall be irrevocable and shall apply to all
pre-tax contributions made during, and employer contributions made for, such
calendar year on behalf of such participant. If the participant fails to make an
election under this subsection 5.5, the participant's pre-tax contributions made
during, and employer contribution made for, such calendar year shall be retained
by Abbott and shall not be deposited in a grantor trust in the future.
SECTION 6
FUNDING EMPLOYER AND EMPLOYEE CONTRIBUTIONS
6.1 CONTRIBUTIONS TO BE DEPOSITED IN GRANTOR TRUSTS. Each participant's
pre-tax contributions and employer contributions which the participant has filed
an election under subsection 5.5 shall be retained by Abbott and credited to a
Grantor Trust Account established under subsection 7.1. As soon as practicable
after the date the value of the participant's Grantor Trust Account exceeds
Fifty Thousand Dollars ($50,000), the entire value of such account, less the
approximate aggregate federal, state and local individual income taxes
(determined under subsection 8.5) attributable to the Grantor Trust Account,
shall be deposited in a "Grantor Trust" established by the participant, provided
such trust is in a form which the Committee determines is substantially similar
to the trust attached to this Plan as Exhibit A. The appropriate aggregate
federal, state and local individual income taxes attributable to the Grantor
Trust Account shall be paid directly to the participant.
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6.2 CONTRIBUTIONS TO BE RETAINED BY ABBOTT. Each participant's pre-tax
contributions and employer contributions for which the participant has not filed
an election under subsection 5.5 shall be retained by Abbott and credited to a
Deferred Account established under subsection 7.1.
6.3 AFTER ESTABLISHMENT OF GRANTOR TRUST. After a Grantor Trust has
been established by a participant under subsection 6.1, all pre-tax
contributions and employer contributions made thereafter for which the
participant has filed an election under Subsection 5.5, shall be deposited in
such Grantor Trust (less the approximate aggregate federal, state and local
individual income taxes (determined under subsection 8.5) attributable to such
contributions). Such deposits shall be made as soon as practicable after the
last complete payroll period of the calendar quarter in which the contributions
are made.
6.4 FUNDING SPECIAL CONTRIBUTION FOR 1993. The full amount of any
contribution made by a participant under subsection 5.4 shall be deposited in
the participant's Grantor Trust established under subsection 5.1 of the MIP.
Such participant's Trust Account established under subsection 5.2 of the MIP
shall be credited with the sum of (a) the amount of such contribution, plus (b)
the amount of the approximate aggregate federal, state and local individual
income taxes (determined under subsection 6.7 of the MIP) attributable to the
sum of paragraph (a) and (b) of this subsection 6.4. Thereafter, such
contribution shall be treated for all purposes of the MIP as if it were an
allocation paid under subsection 5.1 (b) of the MIP.
SECTION 7
ACCOUNTING
7.1 SEPARATE ACCOUNTS. The Committee shall maintain two separate
Accounts, a "Deferred Account" and a "Trust Account" in the name of each
participant. The Deferred Account shall be comprised of any pre-tax
contributions made on behalf of the participant under subsection 3.1 and any
employer contributions made on behalf of the participant under Section 4, for
which the participant has not made an election under subsection 5.5, and any
adjustments made pursuant to subsection 7.2. The "Trust Account" shall be
comprised of any pre-tax contributions made on behalf of the participant under
subsection 3.1 and any employer contributions made on behalf of the participant
under Section 4, for which the participant has made an election under subsection
5.5, and any adjustments made pursuant to subsection 7.3.
7.2 ADJUSTMENT OF DEFERRED ACCOUNTS. As of the end of each calendar
year, the Administrator shall adjust each participant's Deferred Account as
follows:
(a) FIRST, charge an amount equal to any payments made to the
participant during that year pursuant to subsections 7.9 or 7.10;
(b) NEXT, credit an amount equal to any pre-tax contributions and
employer contributions made on behalf of such participant for that
year for which the participant has not made an election under
subsection 5.5; and
(c) FINALLY, credit an amount equal to the Interest Accrual earned for
that year pursuant to subsection 7.4.
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7.3 ADJUSTMENT OF TRUST ACCOUNTS. As of the end of each calendar
year, the Administrator shall adjust each participant's Trust Account as
follows:
(a) FIRST, charge an amount equal to the product of: (i) any payments
made to the participant during that year from the participant's
Grantor Trust (other than distributions of trust earnings in
excess of the Net Interest Accrual authorized by the administrator
of the trust to provide for the Tax Gross Up under subsection
8.4); multiplied by (ii) a fraction, the numerator of which is the
balance in the participant's Trust Account as of the end of the
prior calendar year and the denominator of which is the balance of
the participant's Grantor Trust (as determined by the
administrator of the trust) as of that same date;
(b) NEXT, credit an amount equal to any pre-tax contributions and
employer contributions made on behalf of the participant for that
year for which the participant has made an election under
subsection 5.5;
(c) FINALLY, credit an amount equal to the Interest Accrual earned for
that year pursuant to subsection 7.4.
7.4 INTEREST ACCRUALS ON ACCOUNTS. As of the end of each calendar year,
a participant's Deferred Account and Trust Account shall be credited with
interest equal to: (a) the average of the prime rates of interest charged by the
two largest banks located in the City of Chicago on loans made by them as of
January 1 and the end of each month of the calendar year plus (b) two hundred
twenty-five (225) basis points. Such interest shall be credited on the
conditions established by the Committee.
7.5 GUARANTEED RATE PAYMENTS. In addition to any employer contribution
made on behalf of a participant for any calendar year pursuant to section 4,
Abbott shall also make a payment to a participant's Grantor Trust (a "Guaranteed
Rate Payment") for any year in which the net earnings of such trust do not equal
or exceed the participant's Net Interest Accrual for that year. A participant's
"Net Interest Accrual" for a year is an amount equal to: (a) the Interest
Accrual credited to the participant's Trust Account for that year; less (b) the
product of (i) the amount of such Interest Accrual, multiplied by (ii) the
aggregate of the federal, state and local individual income tax rates
(determined in accordance with subsection 8.5). The Guaranteed Rate Payment
shall equal the difference between the participant's Net Interest Accrual and
the net earnings of the participant's Grantor Trust for the year, and shall be
paid within 90 days of the end of the calendar year.
7.6 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 7.6, 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. Beneficiaries 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). The conditions and limitations relating to the designation of
beneficiaries are as follows:
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(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.
7.7 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 section shall not be construed as restricting in any way a
designation right granted to a beneficiary pursuant to the terms of subsection
7.6. 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.
7.8 PAYER OF AMOUNTS ALLOCATED TO PARTICIPANTS. Any employer
contribution made on behalf of a participant in the Plan and any interest
credited thereto (and to other contributions) will be paid by the employer (or
such employer's successor) by whom the participant was employed during the
calendar 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
calendar 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 compensation paid by each of them in that calendar year.
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7.9 MANNER OF PAYMENT. Subject to subsection 7.10, a participant shall
elect the timing and manner of payment of each portion of his Deferred Account
attributable to contributions made for any calendar year, at the time of his
election for such calendar year under subsection 5.1. Notwithstanding subsection
5.2, any election made under this subsection 7.10 shall be irrevocable as to
that portion of the Deferred Account to which the election relates. The
participant may select a payment method from any of the following alternatives:
(a) Payment in a lump-sum as soon as practicable following the
participant's retirement or other termination of employment; or
(b) Payment under any method allowed by the Committee for deferred
accounts under the MIP.
7.10 PAYMENT UPON TERMINATION FOLLOWING CHANGE IN CONTROL.
Notwithstanding any other provisions of the Plan, if employment of any
participant with Abbott and its subsidiaries should terminate for any reason
within five (5) years after the date of a Change in Control, the aggregate
unpaid balance of the participant's Deferred Account and Trust Account, shall be
paid to the participant in a lump sum within thirty (30) days following the date
of such termination.
7.11 CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred on the earliest of the following dates:
(i) The date any entity or person (including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act")) shall have become the beneficial owner of, or
shall have obtained voting control over thirty percent (30%) or
more of the outstanding common shares of Abbott;
(ii) The date the shareholders of Abbott approve a definitive
agreement (A) to merge or consolidate Abbott with or into another
corporation, in which Abbott is not the continuing or surviving
corporation or pursuant to which any common shares of Abbott
would be converted into cash, securities or other property of
another corporation, other than a merger of Abbott in which
holders of common shares immediately prior to the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger as immediately before,
or (B) to sell or otherwise dispose of substantially all the
assets of Abbott; or
(iii) The date there shall have been a change in a majority of the
Board of Directors of Abbott within a twelve (12) month period
unless the nomination for election by Abbott's shareholders of
each new director was approved by the vote of two-thirds of the
directors then still in office who were in office at the
beginning of the twelve (12) month period.
7.12 PROHIBITION AGAINST AMENDMENT. The provisions of subsections 7.10,
7.11 and this subsection 7.12 may not be amended or deleted, nor superseded by
any other provision of this Plan, 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.
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SECTION 8
MISCELLANEOUS
8.1 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.
8.2 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 after giving the person entitled to
receive such amount notice as far in advance as practicable, and may defer
making payment of any amount with respect to which any such tax question may be
pending unless and until indemnified to its satisfaction.
8.3 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 and Trust Accounts established pursuant to
subsection 7.1 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 Committee which is within his sole and uncontrolled discretion, shall be
conclusive and binding upon all persons whomsoever.
8.4 TAX GROSS UP. In addition to the employer contribution provided
under Section 4, each participant (or, if the participant is deceased, the
beneficiary designated under the participant's Grantor Trust) shall be entitled
to a Tax Gross Up payment for each year there is a balance in his Trust Account.
The "Tax Gross Up" shall approximate: (a) the amount necessary to compensate the
participant (or beneficiary) for the net increase in the participant's (or
beneficiary's) federal, state and local income taxes as a result of the
inclusion in his taxable income of the income of the participant's Grantor Trust
and any Guaranteed Rate Payment for that year; less (b) any distribution to the
participant (or beneficiary) of his Grantor Trust's net earnings for that year;
plus (c) an amount necessary to compensate the participant (or beneficiary) for
the net increase in the taxes described in (a) above as a result of the
inclusion in his taxable income of any payment made pursuant to this subsection
8.4. Payment of the Tax Gross Up shall be made by the employers (in such
proportions as Abbott shall designate) directly from their general corporate
assets.
8.5 INCOME TAX ASSUMPTIONS. For purposes of Sections 7 and 8, a
participant's federal income tax rate shall be deemed to be the highest marginal
rate of federal individual income 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.
8.6 GENDER. For purposes of the Plan, words in the masculine gender
shall include the feminine and neuter genders, the singular shall include the
plural and the plural shall include the singular.
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8.7 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.
8.8 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 omitted to be done in bad faith, nor
shall they be liable for any act or failure to act of any other member.
SECTION 9
AMENDMENT, TERMINATION AND CHANGE OF
CONDITIONS RELATING TO PAYMENTS
The Plan will be effective from its effective date until terminated by
the Board of Directors. The Board of Directors reserves the right to amend the
Plan from time to time and to terminate the Plan at any time. 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.
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EXHIBIT A
IRREVOCABLE GRANTOR TRUST AGREEMENT
THIS AGREEMENT, made this _____ day of ____________, __, 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 Abbott Laboratories 40l(k)
Supplemental 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 "__________ 19__ 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. DEFERRED ACCOUNT. The administrator shall maintain a "deferred
account" under the trust. As of the end of each calendar year, the administrator
shall charge the deferred account with all distributions made from such account
during that year; and credit such account with income and realized gains and
charge such account with expenses and realized losses for the year.
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II-2. 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, either in a
lump-sum payable as soon as practicable following the settlement date, or 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 Abbott Laboratories 401(k) Supplemental
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, may select either the lump-sum or
an installment payment method and, if an installment method is selected, 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 shall be computed by using the method described in
subparagraph (a) next above. Installment distributions under this Paragraph II-2
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-2, and the trustee shall be fully protected
in relying on such information received from the administrator.
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II-3. DISTRIBUTIONS 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 thereof
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-3 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-4. 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-5. 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:
(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.
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(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 making any
payment such release or other document from any lawful taxing
authority and such indemnity from the intended payee as the
trustee considers 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.
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(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.
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.
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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 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).
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.
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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.
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Grantor
The Northern Trust Company as Trustee
By
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Its
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