Exhibit 10.3

 

ABBOTT LABORATORIES SUPPLEMENTAL PENSION PLAN

 

(As amended and restated effective January 1, 2008)

 

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ABBOTT LABORATORIES SUPPLEMENTAL PENSION PLAN

 

Section 1
INTRODUCTION

 

1-1.                             On September 9, 1977, December 14, 1979 and
February 10, 1984 the Board of Directors of Abbott Laboratories (“Abbott”)
adopted certain resolutions providing for payment of (i) pension benefits
calculated under the Abbott Laboratories Annuity Retirement Plan (“Annuity
Plan”) in excess of those which may be paid under that plan under the limits
imposed by Section 415 of the U.S. Internal Revenue Code, as amended, and the
Employee Retirement Income Security Act (“ERISA”) and (ii) the additional
pension benefits that would be payable under the Annuity Plan if deferred awards
under the Abbott Laboratories Management Incentive Plan were included in “final
earnings” as defined in the Annuity Plan.  The ABBOTT LABORATORIES SUPPLEMENTAL
PENSION PLAN (this “Supplemental Plan”) clarified, restated and superseded the
prior resolutions and is hereby amended and restated in accordance with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(“Code Section 409A”).

 

1-2.                             The Supplemental Plan shall apply to employees
of Abbott and its subsidiaries and affiliates existing as of the date of
adoption of the Supplemental Plan or thereafter created or acquired.  (Abbott
and each of such subsidiaries and affiliates are hereinafter referred to as an
“employer” and collectively as the “employers”).

 

1-3.                             All benefits provided under the Supplemental
Plan shall be provided from the general assets of the employers and not from any
trust fund or other designated asset.  All participants in the Supplemental Plan
shall be general creditors of the employers with no priority over other
creditors.

 

1-4.                             The Supplemental Plan shall be administered by
the Abbott Laboratories Employee Benefit Board of Review appointed and acting
under the Annuity Plan (“Board of Review”).  Except as stated below, the Board
of Review shall perform all powers and duties with respect to the Supplemental
Plan, including the power to direct payment of benefits, allocate costs among
employers, adopt amendments and determine questions of interpretation.  The
Board of Directors of Abbott (the “Board of Directors”) shall have the sole
authority to terminate the Supplemental Plan.

 

1-5.                             Notwithstanding anything in the Supplemental
Plan to the contrary, any amounts under the Supplemental Plan that were earned
and vested before January 1, 2005 (as determined in accordance with Code
Section 409A) with respect to participants who retired before January 1, 2005
(“Grandfathered Amounts”) shall be subject to the terms and conditions of the
Supplemental Plan as administered and as in effect on December 31, 2004. 
Amendments made to the Supplemental Plan pursuant to this amendment and
restatement or otherwise shall not affect the Grandfathered Amounts unless
expressly provided for in the amendment.  The terms and conditions applicable to
the Grandfathered Amounts are set forth in Appendix A attached hereto.

 

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Section 2
ERISA ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

2-1.                             The benefits described in this Section 2 shall
apply to all participants in the Annuity Plan who retire, or terminate with a
vested pension under that plan, on or after September 9, 1977.

 

2-2.                             Each Annuity Plan participant whose retirement
or vested pension under that plan would otherwise be limited by Section 415,
Internal Revenue Code, shall receive a supplemental pension under this
Supplemental Plan in an amount, which, when added to his or her Annuity Plan
pension (calculated as if such pension had been payable based on the
distribution rules established hereunder and the pension form selected by the
participant as permitted by subsections 8-3 and 8-4), will equal the amount the
participant would be entitled to under the Annuity Plan as in effect from time
to time, calculated as if such pension had been payable based on the
distribution rules established hereunder and the pension form selected by the
participant as permitted by subsections 8-3 and 8-4, without regard to the
limitations imposed by Section 415, Internal Revenue Code.

 

Section 3
1986 TAX REFORM ACT SUPPLEMENTAL BENEFIT

 

3-1.                             The benefits described in this Section 3 shall
apply to all participants in the Annuity Plan who retire, or terminate with a
vested pension under that plan, after December 31, 1988.

 

3-2.                             Each Annuity Plan participant shall receive a
supplemental pension under this Supplemental Plan in an amount determined as
follows:

 

(a)                                       The supplemental pension shall be the
difference, if any, between:

 

i.                           the hypothetical monthly benefit that would have
been payable under the Annuity Plan based on the distribution rules established
hereunder and the pension form selected by the participant as permitted by
subsections 8-3 and 8-4 plus any supplement provided by Section 2; and

 

ii.                        the hypothetical monthly benefit that would have been
payable under the Annuity Plan, calculated based on the distribution
rules established hereunder and the pension form selected by the participant as
permitted by subsections 8-3 and 8-4, (without regard to the limits imposed by
Section 415, Internal Revenue Code) if the participant’s “final earnings”, as
defined in the Annuity Plan, had included compensation in excess of the limits
imposed by Section 401(a)(17), Internal Revenue Code, and any “pre-tax
contributions” made by the participant under the Abbott Laboratories
Supplemental 401(k) Plan.

 

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Section 4

DEFERRED COMPENSATION PLAN ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

4-1.                             The benefits described in this Section 4 shall
apply to all participants in the Annuity Plan who retire, or terminate with a
vested pension, under that plan, on or after January 1, 2002 and who made a
Deferral Election under the Abbott Laboratories Deferred Compensation Plan (the
“Deferred Compensation Plan”) with respect to any calendar month during the one
hundred twenty consecutive calendar months immediately preceding retirement or
termination of employment.

 

4-2.                             Each Annuity Plan participant shall receive a
supplemental pension under this Supplemental Plan in an amount determined as
follows:

 

(a)                                       The supplemental pension shall be the
difference, if any, between:

 

i.                           the hypothetical monthly benefit that would have
been payable under the Annuity Plan based on the distribution rules established
hereunder and the pension form selected by the participant as permitted by
subsections 8-3 and 8-4 plus any supplement provided by Section 2 and Section 3;
and

 

ii.                        the hypothetical monthly benefit that would have been
payable under the Annuity Plan, calculated based on the distribution
rules established hereunder and the pension form selected by the participant as
permitted by subsections 8-3 and 8-4, (without regard to the limits imposed by
Section 415, Internal Revenue Code) if the participant’s “base earnings”, as
defined in the Annuity Plan, included deferrals made under the Deferred
Compensation Plan and any compensation in excess of the limits imposed by
Section 401(a)(17), Internal Revenue Code.

 

Section 5
DEFERRED MIP ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

5-1.                             The benefits described in this Section 5 shall
apply to all participants in the Annuity Plan who retire, or terminate with a
vested pension, under that plan, on or after December 14, 1979 and who were
awarded Management Incentive Plan awards for any calendar year during the ten
consecutive calendar years ending with the year of retirement or termination of
employment.

 

5-2.                             Each Annuity Plan participant shall receive a
supplemental pension under this Supplemental Plan in an amount determined as
follows:

 

(a)                                       The supplemental pension shall be the
difference, if any, between:

 

i.                           the hypothetical monthly benefit that would have
been payable under the Annuity Plan based on the distribution rules established
hereunder and the pension form selected by the

 

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participant as permitted by subsections 8-3 and 8-4 plus any supplement provided
by Section 2, Section 3, and Section 4; and

 

ii.                        the hypothetical monthly benefit that would have been
payable under the Annuity Plan, calculated based on the distribution
rules established hereunder and the pension form selected by the participant as
permitted by subsections 8-3 and 8-4, (without regard to the limits imposed by
Section 415, Internal Revenue Code) if the participant’s “final earnings”, as
defined in the Annuity Plan, were one-sixtieth of the sum of:

 

A.  the participant’s total “basic earnings” (excluding any payments under the
Management Incentive Plan or any Division Incentive Plan) received in the sixty
consecutive calendar months for which his basic earnings (excluding any payments
under the Management Incentive Plan or any Division Incentive Plan) were highest
within the last one hundred twenty consecutive calendar months immediately
preceding his retirement or termination of employment; and

 

B.  the amount of the participant’s total awards under the Management Incentive
Plan and any Division Incentive Plan (whether paid immediately or deferred) made
for the five consecutive calendar years during the ten consecutive calendar
years ending with the year of retirement or termination for which such amount is
the greatest and (for participants granted Management Incentive Plan awards for
less than five consecutive calendar years during such ten year period) which
include all Management Incentive Plan awards granted for consecutive calendar
years within such ten year period.

 

(b)                                 That portion of any Management Incentive
Plan award which the Compensation Committee of the Board of Directors of Abbott
(“Committee”) has determined shall be excluded from the participant’s “basic
earnings” shall be excluded from the calculation of “final earnings” for
purposes of this subsection 5-2.  “Final earnings” for purposes of this
subsection 5-2 shall include any compensation in excess of the limits imposed by
Section 401(a)(17), Internal Revenue Code.

 

(c)                                  In the event the period described in
subsection 5-2(a)(ii)(B) is the final five calendar years of employment and a
Management Incentive Plan award is made to the participant subsequent to
retirement for the participant’s final calendar year of employment, the
supplemental pension shall be adjusted by adding such new award and subtracting
a portion of the earliest Management Incentive Plan award included in the
calculation, from the amount determined under subsection 5-2(a)(ii)(B).  The
portion subtracted shall be equal to that

 

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portion of the participant’s final calendar year of employment during which the
participant was employed by Abbott.

 

Section 6
CORPORATE OFFICER ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

6-1.                             The benefits described in this Section 6 shall
apply to all participants in the Annuity Plan who are corporate officers of
Abbott as of September 30, 1993 or who become corporate officers thereafter, and
who retire, or terminate with a vested pension under that plan on or after
September 30, 1993.  The term “corporate officer” for purposes of this
Supplemental Plan shall mean an individual elected an officer of Abbott by its
Board of Directors (or designated as such for purposes of this Section 6 by the
Compensation Committee), but shall not include assistant officers.

 

6-2.                             Subject to the limitations and adjustments
described below, each participant described in subsection 6-1 shall receive a
monthly supplemental pension under this Supplemental Plan commencing on the date
determined in accordance with subsection 8-2 and payable as a life annuity,
equal to 6/10 of 1 percent (.006) of the participant’s final earnings (as
determined under subsection 5-2) for each of the first twenty years of the
participant’s benefit service (as defined in the Annuity Plan) occurring after
the participant’s attainment of age 35.

 

6-3.                             In no event shall the sum of (a) the
participant’s aggregate percentage of final earnings calculated under subsection
6-2 and (b) of the participant’s aggregate percentage of final earnings
calculated under subsection 5-1 of the Annuity Plan, excluding 5-1(a)(ii)(B),
exceed the maximum aggregate percentage of final earnings allowed under
subsection 5-1 (also excluding 5-1(a)(ii)(B)) of the Annuity Plan (without
regard to any limits imposed by the Internal Revenue Code), as in effect on the
date of the participant’s retirement or termination.  In the event the
limitation described in this subsection 6-3 would be exceeded for any
participant, the participant’s aggregate percentage calculated under subsection
6-2 shall be reduced until the limit is not exceeded.

 

6-4.                             Benefit service occurring between the date a
participant ceases to be a corporate officer of Abbott and the date the
participant again becomes a corporate officer of Abbott shall be disregarded in
calculating the participant’s aggregate percentage under subsection 6-2.

 

6-5.                             Any supplemental pension otherwise due a
participant under this Section 6 shall be reduced by the amount (if any) by
which:

 

(a)                                  the hypothetical benefits that would be
payable to such participant under the Annuity Plan, based on the distribution
rules established hereunder and the pension form selected by the participant as
permitted by subsections 8-3 and 8-4, and this Supplemental Plan exceeds

 

(b)                                 the hypothetical maximum benefit that would
be payable to the participant under the Annuity Plan, calculated based on the
distribution rules established hereunder and the pension form selected by the
participant as permitted by subsections 8-3 and 8-4, (without regard to the
limits imposed by Section 415, Internal Revenue Code) based on the participant’s
final earnings (as

 

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determined under subsection 5-2), if the participant had accrued the maximum
benefit service recognized by the Annuity Plan.

 

6-6.                             Any supplemental pension due a participant
under this Section 6 shall be actuarially adjusted as provided in the Annuity
Plan to reflect the pension form selected by the participant as permitted by
subsections 8-3 and 8-4 and the participant’s age at commencement of the pension
as provided in Section 7.

 

Section 7
CORPORATE OFFICER ANNUITY PLAN
SUPPLEMENTAL EARLY RETIREMENT BENEFIT

 

7-1.                             The benefits described in this Section 7 shall
apply to all persons described in subsection 6-1.

 

7-2.                             The supplemental pension due under Sections 2,
3, 4, 5 and 6 to each participant described in subsection 7-1 shall be reduced
in accordance with the rules provided in subsections 5-3 and 5-6 of the Annuity
Plan for each month by which its commencement date precedes the last day of the
month in which the participant will attain age 60.  No reduction will be made
for the period between the last day of the months the participant will attain
age 60 and age 62.

 

7-3.                             Each participant described in subsection 7-1
shall receive a monthly supplemental pension under this Supplemental Plan equal
to any hypothetical reduction made in such participant’s Annuity Plan pension in
accordance with the rules provided in subsections 5-3 or 5-6 of the Annuity Plan
for the period between the last day of the months the participant will attain
age 60 and age 62, calculated as if the participant had commenced receipt of the
participant’s Annuity Plan pension on the same date on which the participant
commences receipt of the participant’s supplemental pension based on the
distribution rules established hereunder and the pension form selected by the
participant as permitted by subsections 8-3 and 8-4.

 

Section 8
MISCELLANEOUS

 

8-1.                             For purposes of this Supplemental Plan, the
term “Management Incentive Plan” shall mean the Abbott Laboratories 1971
Management Incentive Plan, the Abbott Laboratories 1981 Management Incentive
Plan and all successor plans to those plans.

 

8-2.                             The monthly vested supplemental pension
described in Sections 2, 3, 4, 5, 6 and 7 shall commence to be paid to the
participant or his or her beneficiary on the last day of the month following the
month in which:

 

(a)                                  For the participant hired before 2004, the
later of the date on which such participant attains age 50 and the date such
participant’s employment is terminated; or

 

(b)                                 For the participant hired after 2003, the
later of the date on which such participant attains age 55 and the date such
participant’s employment is terminated.

 

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Notwithstanding the foregoing provisions of subsection 8-2, any participant
eligible to make an election under Section 9 may make such election with respect
to any accruals for services performed in the year following the year such
election is made.

 

Notwithstanding the foregoing provisions of subsection 8-2, in the event that
the present value of participant’s supplemental pension under Sections 2, 3, 4,
5, 6 and 7 does not exceed in the aggregate $25,000 as of the commencement date
of the pension payable to such participant or his or her beneficiary, and
payment of such supplemental pension has not been previously made under
Section 9, the present value of such supplemental pension shall be paid to such
participant in a lump-sum on such commencement date.

 

8-3.                             Except as otherwise specifically provided,
payment of the monthly vested supplemental pension described in Sections 2, 3,
4, 5, 6, and 7 shall be made to a participant as follows:

 

(a)                                  Life Annuity.  A participant who is not
legally married on the date as of which such payments commence shall receive a
monthly retirement income or monthly deferred vested benefit in accordance with
the plan payable on a life annuity basis, with the last payment to be made for
the month in which his or her death occurs.

 

(b)                                 50% Joint and Survivor Annuity.  A
participant who is legally married on the date as of which such payments
commence shall receive a 50% joint and survivor annuity which is actuarially
equivalent to the amount of monthly retirement income or monthly deferred vested
benefit otherwise payable to him or her in accordance with the plan on a life
annuity basis. Such joint and survivor annuity shall consist of a reduced
monthly retirement income or monthly deferred vested benefit continuing during
the participant’s lifetime, and if the participant’s spouse is living at the
date of the participant’s death, payment of one-half of such reduced monthly
retirement income or monthly deferred vested benefit to such spouse until the
spouse’s death occurs, with the last payment to be made for the month of the
death of the last to die of the participant and his or her spouse. The joint and
survivor annuity payable hereunder to or with respect to a participant who
retires on a late retirement date shall be computed as if such participant had
retired on his or her normal retirement date using for the age of his or her
spouse as of his or her late retirement date, that spouse’s age as of his or her
normal retirement date.

 

8-4.                             In lieu of the form and amount of supplemental
pension benefit specified in subsection 8-3, a participant may elect, prior to
commencement, a supplemental pension benefit, which is actuarially equivalent to
the form of payment specified in subsection 8-3(a), in the annuity forms
permitted by the Board of Review, provided that the scheduled date for the first
annuity payment is not changed as a result of such election.  For purposes of
this provision, the term “actuarially equivalent” shall have the meaning
provided by Treasury Regulation §1.409A-2(b)(2)(ii)(A), applying reasonable
actuarial methods and assumptions, which must be the same for each annuity
payment option and otherwise comply with the rules provided by Treasury
Regulation §1.409A-2(b)(2)(ii)(D).

 

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An election under this subsection 8-4 must be in writing, signed by the
participant, and filed with the Board of Review at such time and in such manner
as the Board of Review shall determine; and will be effective only if the
participant’s spouse, if any, consents to the election in writing, and such
consent acknowledges the effect of the election and is witnessed by a plan
representative or a notary public. In any case where a participant elects an
optional form of benefit, the option shall be designed so that more than 50
percent of the actuarial reserve required to provide the participant’s monthly
vested supplemental pension benefit in the normal form will be applied to
provide the participant’s benefits under the option during the period of the
participant’s life expectancy. Payment of an optional form of benefit will
commence no later than the date on which the participant’s monthly supplemental
pension benefit would otherwise commence. An election under this subs 8-4 may
not be changed after payment of the participant’s supplemental pension benefit
has commenced.

 

8-5.          Notwithstanding any other provision of this Supplemental Plan, if
a participant terminates employment within two (2) years following the
occurrence of a Change in Control, the present value of his or her supplemental
pension under Sections 2, 3, 4 and 5, but excluding any amounts with respect to
which an election under Section 9 has been made, whether or not then payable or
vested) shall be paid to such participant in a lump sum, calculated using
reasonable actuarial assumptions and methods, within thirty (30) days following
the date of such termination of employment; provided that the event constituting
a Change in Control is also a “change in control event”, as such term is defined
in Treasury Regulation § 1.409A-3(i)(5).  The supplemental pension under
Section 2 shall be computed using as the applicable limit under Section 415 of
the Internal Revenue Code, such limit as is in  effect on the termination date
and based on the assumption that the participant will receive his or her
supplemental pension in the form of a straight life annuity with no ancillary
benefits.  The present values of the supplemental pensions under Sections 2, 3,
4 and 5 shall be computed as of the date of payment using an interest rate equal
to the Pension Benefit Guaranty Corporation interest rate applicable to an
immediate annuity, as in effect on the date of payment.

 

8-6.          For purposes of subsection 8-5, a “Change in Control” shall be
deemed to have occurred on the earliest of the following dates:

 

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

 

(b)                                 the date the following individuals cease for
any reason to constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board of Directors and any
new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
Abbott) whose appointment or election by the Board of Directors or nomination
for election by Abbott’s shareholders

 

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was approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously so
approved or recommended; or

 

(c)                                  the date on which there is consummated a
merger or consolidation of Abbott or any direct or indirect subsidiary of Abbott
with any other corporation or other entity, other than (i) a merger or
consolidation (A) immediately following which the individuals who comprise the
Board of Directors immediately prior thereto constitute at least a majority of
the Board of Directors of Abbott, the entity surviving such merger or
consolidation or, if Abbott or the entity surviving such merger or consolidation
is then a subsidiary, the ultimate parent thereof and (B) which results in the
voting securities of Abbott outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of Abbott or any subsidiary of
Abbott, at least 50% of the combined voting power of the securities of Abbott or
such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of Abbott (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of Abbott
(not including in the securities Beneficially Owned by such Person any
securities acquired directly from Abbott or its Affiliates) representing 20% or
more of the combined voting power of Abbott’s then outstanding securities; or

 

(d)                                 the date the shareholders of Abbott approve
a plan of complete liquidation or dissolution of Abbott or there is consummated
an agreement for the sale or disposition by Abbott of all or substantially all
of Abbott’s assets, other than a sale or disposition by Abbott of all or
substantially all of Abbott’s assets to an entity, at least 50% of the combined
voting power of the voting securities of which are owned by shareholders of
Abbott, in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of Abbott or any subsidiary of
Abbott, in substantially the same proportions as their ownership of Abbott
immediately prior to such sale.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of Abbott immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of Abbott
immediately following such transaction or series of transactions.

 

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For purposes of this Supplemental Plan: “Affiliate” shall have the meaning set
forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act;
“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act; “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time; and “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) Abbott or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of Abbott or any of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the shareholders of Abbott
in substantially the same proportions as their ownership of stock of Abbott.

 

8-7.          POTENTIAL CHANGE IN CONTROL.  A “Potential Change in Control”
shall exist during any period in which the circumstances described in paragraphs
(a), (b), (c) or (d), below, exist (provided, however, that a Potential Change
in Control shall cease to exist not later than the occurrence of a Change in
Control):

 

(a)                                  Abbott enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control,
provided that a Potential Change in Control described in this paragraph
(a) shall cease to exist upon the expiration or other termination of all such
agreements.

 

(b)                                 Any Person (without regard to the exclusions
set forth in subsections (i) through (iv) of such definition) publicly announces
an intention to take or to consider taking actions the consummation of which
would constitute a Change in Control; provided that a Potential Change in
Control described in this paragraph (b) shall cease to exist upon the withdrawal
of such intention, or upon a determination by the Board of Directors that there
is no reasonable chance that such actions would be consummated.

 

(c)                                  Any Person becomes the Beneficial Owner,
directly or indirectly, of securities of Abbott representing 10% or more of
either the then outstanding shares of common stock of Abbott or the combined
voting power of Abbott’s then outstanding securities (not including any
securities beneficially owned by such Person which are or were acquired directly
from Abbott or its Affiliates).

 

(d)                                 The Board of Directors adopts a resolution
to the effect that, for purposes of this Agreement, a Potential Change in
Control exists; provided that a Potential Change in Control described in this
paragraph (d) shall cease to exist upon a determination by the Board of
Directors that the reasons that gave rise to the resolution providing for the
existence of a Potential Change in Control have expired or no longer exist.

 

8-8.          The provisions of subsections 8-5, 8-6, 8-7 and this subsection
8-8 may not be amended or deleted, nor superseded by any other provision of this
Supplemental Plan, (i) during

 

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the pendency of a Potential Change in Control and (ii) during the period
beginning on the date of a Change in Control and ending on the date five
(5) years following such Change in Control.

 

8-9.          All benefits due under this Supplemental Plan shall be paid by
Abbott and Abbott shall be reimbursed for such payments by the employee’s
employer.  In the event the employee is employed by more than one employer, each
employer shall reimburse Abbott in proportion to the period of time the employee
was employed by such employer, as determined by the Board of Review in its sole
discretion.

 

8-10.        The benefits under the Supplemental Plan are not in any way subject
to the debts or other obligations of the persons entitled to benefits and may
not be voluntarily or involuntarily sold, transferred or assigned.

 

8-11.        Nothing contained in this Supplemental Plan shall confer on any
employee the right to be retained in the employ of Abbott or any of its
subsidiaries or affiliates.

 

8-12.        Upon adoption of this Supplemental Plan, the prior resolutions
shall be deemed rescinded.

 

8-13.        A participant shall not become vested in the participant’s
supplemental pension under Sections 2, 3, 4, 5, 6 and 7 until the participant
has attained sixty (60) months of vesting service.  For purposes of the
Supplemental Plan, beginning January 1, 1987, a participant shall be entitled to
1/12th of a year of vesting service for each calendar month (or portion thereof)
during which the participant is employed by an employer; provided, however, that
a participant employed by an employer on December 31, 1986 shall receive the
greater of vesting service calculated in accordance with the terms of the
Annuity Plan in effect on December 31, 1986 or vesting service calculated in
accordance with the rule immediately above, for service with an employer after
1986.  The payments required by Section 8 or Section 9 of the Supplemental Plan
shall, in each case, relate only to the vested portion of a participant’s
supplemental pension.

 

8-14.        To the extent applicable, it is intended that the Supplemental Plan
comply with the provisions of Code Section 409A.  The Supplemental Plan will be
administered and interpreted in a manner consistent with this intent, and any
provision that would cause the Supplemental Plan to fail to satisfy Code
Section 409A will have no force and effect until amended to comply therewith
(which amendment may be retroactive to the extent permitted by Code
Section 409A).  Notwithstanding anything contained herein to the contrary, a
participant shall not be considered to have terminated employment with Abbott or
any employer hereunder for purposes of the Supplemental Plan and no payments
shall be due under Supplemental Plan which are payable upon the participant’s
termination of employment unless the participant would be considered to have
incurred a “separation from service” from Abbott within the meaning of
Section 409A.  To the extent required to avoid accelerated taxation and/or tax
penalties under Code Section 409A and applicable guidance issued thereunder,
amounts that would otherwise be payable pursuant to the Supplemental Plan during
the six-month period immediately following the participant’s termination of
employment shall instead be paid on the first business day after the date that
is six months following the participant’s termination of employment (or upon the
participant’s death, if earlier), plus interest thereon, at a rate equal to the
applicable “Federal short-term rate” (as defined in Section 1274(d) of the Code)
for the month in which such termination of employment

 

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occurs (to the extent that such interest is not already provided to the
participant under subsection 9.10), from the respective dates on which such
amounts would otherwise have been paid until the actual date of payment.  With
respect to expenses eligible for reimbursement under the terms of the
Supplemental Plan, (i) the amount of such expenses eligible for reimbursement in
any taxable year shall not affect the expenses eligible for reimbursement in
another taxable year and (ii) any reimbursements of such expenses shall be made
no later than the end of the calendar year following the calendar year in which
the related expenses were incurred, except, in each case, to the extent that the
right to reimbursement does not provide for a “deferral of compensation” within
the meaning of Code Section 409A.

 

Section 9
ALTERNATE PAYMENT OF SUPPLEMENTAL PENSIONS

 

9-1.          A participant who is actively employed by Abbott as a corporate
officer as of December 31 of his or her first year as a corporate officer shall
elect to receive payment of the present value of the vested supplemental pension
described in Sections 2, 3, 4, 5, 6 and 7 which accrues with respect to the
subsequent year by either of the following methods: (a) current payment in cash
directly to the participant, or (b) current payment of a portion of such present
value in cash for the participant directly to a Grantor Trust established by the
participant, determined to be substantially similar to the form of Grantor Trust
attached hereto as Appendix B, and current payment of the balance of such
present value in cash directly to the participant, provided that the payment
made directly to the participant shall be equal to the aggregate federal, state
and local individual income and employment taxes attributable to the amount paid
pursuant to this subsection 9-1(b) (as determined in accordance with subsection
9-12).  Such election shall be made by the participant on or before December 31
of the calendar year prior to the year in which the present value shall be
accrued.  The payment of any amount provided under this subsection 9-1 shall be
made to the Grantor Trust established by the participant within the thirty (30)
days beginning April 1 of the year following the year in which such present
value is accrued.

 

9-2.          If the present value of a participant’s vested and accrued
supplemental pension has been paid to the participant (including amounts paid to
the participant’s Grantor Trust) pursuant to subsection 9-1 (either as in effect
prior to January 1, 2005 that applied to corporate officers with a present value
in excess of $100,000, or as currently in effect for all corporate officers who
are participants as of the applicable December 31) then, with respect to each
subsequent year of active participation, as of that December 31, a participant
shall be entitled to a payment in an amount equal to (i) the present value (as
of that December 31) of the participant’s vested supplemental pension described
in Sections 2, 3, 4, 5, 6 and 7, less (ii) the current value (as of that
December 31) of the payments previously made to the participant under
subsections 9-1 and 9-2 (if any).  Each year on or before December 31, a
participant who is a corporate officer may elect to receive payment of the
amounts described in subparagraphs (i) and (ii) above for the subsequent
calendar year by either of the following methods: (a) current payment in cash
directly to the participant, or (b) current payment of a portion of such amount
in cash for the participant directly to a Grantor Trust established by the
participant and current payment of the balance of such amount in cash directly
to the participant, provided that the payment made directly to the participant
shall equal the aggregate federal, state and local individual income and
employment taxes attributable to the amount paid pursuant to this subsection
9-2(b) (as determined in accordance with subsection 9-12).  The payment of any
amount provided under this subsection

 

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9-2 shall be made to the Grantor Trust established by the participant within the
thirty (30) days beginning April 1 of the year following the year in which such
present value is accrued.  No payments shall be made under this subsection 9-2
as of any December 31 after the calendar year in which the participant retires
or otherwise terminates employment with Abbott.

 

9-3.          Present values for the purposes of subsections 9-1 and 9-2 shall
be determined using reasonable actuarial assumptions specified for this purpose
by Abbott and consistently applied in accordance with the requirements of
Treasury Regulation §1.409A-2(b)(2)(ii)(D).  The “current value” of the payments
previously made to a participant under subsection 9-2 means the aggregate amount
of such payments, with interest thereon (at the rate specified in subsection
9.9).  For purposes of subsections 9-4 and 9-5, “Taxes” with respect to any
payment of supplemental pension benefits under subsections 9-1 or 9-2, shall
mean the taxes which Abbott calculates will be incurred by the participant on
the income earned (i) on the payment (net of taxes) that is made pursuant to
subsections 9-1 or 9-2, (ii) on the corresponding payment(s) for Taxes that are
made pursuant to subsection 9-4 and, if applicable, 9-5 and (iii) on the
accumulated income earned on any of the payments covered by parts (i) and
(ii) hereof, during the life of such participant’s Grantor Trust.  In
calculating such Taxes, Abbott shall use the aggregate of the current federal,
state and local tax rates specified by subsection 9-12.

 

9-4.          As a result of any payment made to a participant eligible for
payments under this Article 9 for any calendar year pursuant to subsection 9-1
or 9-2, Abbott shall also make a corresponding payment to such participant in
the amount of the Taxes.  The payment for Taxes under this subsection 9-4 shall
be made to the participant in the identical manner that the payment under
subsection 9-1 or 9-2 was made.  For example, (a) if the participant elected to
receive the payment under subsection 9-1 directly in cash, then Abbott shall
also pay the Taxes on such payment in cash directly to the participant, and
(b) if the participant elected to receive the payment under subsection 9-1 into
a Grantor Trust established by the participant, then Abbott shall pay the Taxes
on such payment as follows: current payment of a portion of such Taxes in cash
for such participant directly to a Grantor Trust established by such
participant, and current payment of the balance of such Taxes in cash directly
to such participant, provided that the payment made directly to such participant
shall equal the aggregate federal, state and local individual income taxes
attributable to the amount paid pursuant to this subsection 9-4(b) (as
determined in accordance with subsection 9-12).  Such amount shall be paid by
Abbott directly to the participant in cash no later than the end of the calendar
year in which the participant remits the related taxes.

 

9-5.

 

(a)                                  In the event that Abbott has made any
payment for Taxes in a particular year under subsection 9-4 in cash directly to
the participant and there is a subsequent increase in the tax rates for such
participant in such year, Abbott shall make a further cash payment to such
participant in the amount of (a) the Taxes on the payments that were made under
subsections 9-1 and 9-2 in cash directly to such participant calculated using
the actual tax rates for the year less (b) the amount of such Taxes previously
paid.  Such amount shall be paid by Abbott directly to the participant in cash
no later than the end of the calendar year in which the participant remits the
related taxes.

 

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(b)                                 In the event that Abbott has made any
payment for Taxes in a particular year under subsection 9-4 to the participant’s
Grantor Trust, then Abbott shall as of December 31 of the following year, make a
further payment to the participant in the amount of (a) the Taxes on the
payments that were made under subsections 9-1 and 9-2 into the participant’s
Grantor Trust and in cash directly to the participant calculated using the
actual tax rates for the year less (b) the amount of the Taxes previously paid. 
Such payment shall be paid by Abbott as follows: the current payment of a
portion of such amount in cash directly to the participant’s Grantor Trust and
the current payment of the balance of such amount in cash directly to such
participant; provided, that the payments made directly to such participant shall
equal the aggregate federal, state and local individual income taxes
attributable to the amount paid pursuant to this subsection 9-5 (as determined
in accordance with subsection 9-12).  Such amount shall be paid by Abbott
directly to the participant in cash no later than the end of the calendar year
in which the participant remits the related taxes.

 

9-6.          For each participant whose Grantor Trust has received a payment
pursuant to subsections 9-4 or 9-5, Abbott, as the administrator of such Grantor
Trust, shall direct the trustee to distribute to the participant from the income
of such Grantor Trust, a sum of money sufficient to pay the taxes on trust
earnings for such year.  The taxes shall be calculated by multiplying the income
of the Grantor Trust by the aggregate of the federal, state, and local tax rates
(determined in accordance with subsection 9-12).

 

9-7.          Except as provided in subsection 9-11, a participant shall be
deemed to have irrevocably waived and shall be foreclosed from any right to
receive any supplemental pension benefits on that portion of the supplemental
pension that the participant elects to be paid in cash under subsection 9-1 or
9-2.  A participant, who has elected to receive a payment under subsection 9-1
or 9-2 to a Grantor Trust, must establish such trust in a form which Abbott
determines to be substantially similar to the trust attached to this
Supplemental Plan as Appendix B.  If a participant fails to make an election
under subsection 9-1 or 9-2, or if a participant makes an election under
subsection 9-1 or 9-2 to receive payment in a Grantor Trust but fails to
establish a Grantor Trust, then payment shall be made in cash directly to the
participant.

 

9-8.          Abbott will establish and maintain a separate Supplemental Pension
Account in the name of each participant, a separate After-Tax Supplemental
Pension Account in the name of each participant, and a separate Tax Payment
Account in the name of each participant.  The Supplemental Pension Account shall
reflect any amounts:  (i) paid to a participant (including amounts paid to a
participant’s Grantor Trust) pursuant to subsections 9-1 and 9-2; (ii) credited
to such Account pursuant to subsection 9-9; and (iii) disbursed to a participant
for supplemental pension benefits (or which would have been disbursed to a
participant if the participant had not elected to receive a cash disbursement
pursuant to subsections 9-1 and 9-2).  The After-Tax Supplemental Pension
Account shall also reflect such amounts but shall be maintained on an after-tax
basis.  The Tax Payment Account shall reflect any amounts (i) paid to a
participant (net of taxes) pursuant to subsections 9-4 and 9-5 and
(ii) disbursed to a participant for the payment of taxes pursuant to subsection
9-6.  The accounts established pursuant to this subsection 9-8 are

 

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for the convenience of the administration of the Plan and no trust relationship
with respect to such accounts is intended or should be implied.

 

9-9.          As of the end of each calendar year, a participant’s Supplemental
Pension Account shall be credited with interest calculated at the rate of eight
percent (8%) per year.  Any amount so credited shall be referred to as a
participant’s “Interest Accrual”.  The calculation of the Interest Accrual shall
be based on the balance of the payments made pursuant to subsections 9-1 and 9-2
and any Interest Accrual thereon from previous years.  As of the end of each
calendar year a participant’s After-Tax Supplemental Pension Account shall be
credited with interest which shall be referred to as the After-Tax Interest
Accrual.  The “After-Tax Interest Accrual” shall be an amount equal to the
product of (a) the Interest Accrual credited to the participant’s Supplemental
Pension Account for such year multiplied by (b) the aggregate of the federal,
state and local income tax rates (determined in accordance with subsection
9-12).

 

9-10.        In addition to any payment made to a participant for a calendar
year pursuant to subsections 9-1, 9-2, 9-4 and 9-5, a participant shall also be
entitled to a payment to the participant’s Grantor Trust (a “Guaranteed Rate
Payment”) for each year in which the Grantor Trust is in effect.  The Guaranteed
Rate Payment shall equal the excess of the participant’s After-Tax Interest
Accrual over the net income of the participant’s Grantor Trust for the year and
shall be paid by Abbott directly to the participant’s Grantor Trust within the
thirty (30) days beginning April 1 of the year following the year in which the
Guaranteed Rate Payment is earned.  No payments shall be made under this
subsection 9-10 for any year following the year in which the participant dies,
retires or otherwise terminates employment with Abbott.

 

9-11.        In addition and notwithstanding the payments made to a
participant’s Grantor Trust under subsections 9-1 and 9-2 and subject only to
the subsequent election requirements of Treasury Regulation § 1.409A-2(b),
Abbott shall make the monthly vested supplemental pension payments that would
have been payable to the participant had no payments been made to the
participant’s Grantor Trust under subsections 9-1 and 9-2 in the form provided
by subsection 8-3.  The monthly vested supplemental pension payments hereunder
shall commence on the first business day of February following the sixth
anniversary of the participant’s termination of employment and ending with the
month of the participant’s (or surviving spouse’s) death.  By way of example,
(i) if a participant terminated employment on June 1, 2008, the commencement
date would be the first business day in February, 2015 and (ii) if a participant
terminated employment on January 15, 2008, the commencement date would be the
first business day in February, 2014.  For purposes of determining the
commencement date under this subsection 9-11, a participant who retired prior to
January 1, 2009 but after December 31, 2004 shall be deemed to have terminated
employment on March 1, 2008.  Payments under this subsection 9-11 shall be made
by the employers (in such proportions as Abbott shall designate) directly from
their general corporate assets.  Payment of the annuity required by this
subsection 9.11 may be deferred by Abbott in compliance with the subsequent
election requirements of Treasury Regulation § 1.409A-2(b).  Any election to
defer payment hereunder shall not take effect until at least 12 months after the
election is made; shall be made not less than 12 months before the annuity
commencement date; and shall require payment to be deferred for a period of no
less than five years from such annuity commencement date.

 

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9-12.        For purposes of this Supplemental Plan, 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 this Supplemental Plan 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 in the calendar year for
which such a calculation is to be made, net of any federal tax benefits without
a benefit for any net capital losses.

 

9-13.        Each participant’s Grantor Trust assets shall be invested solely in
the instruments specified by investment guidelines established by the
Committee.  Such investment guidelines, once established, may be changed by the
Committee, provided that any change shall not take effect until the year
following the year in which the change is made and provided further that the
instruments specified shall be consistent with the provisions of Section 3(b) of
the form of Grantor Trust attached hereto as Appendix B.

 

9-14.        Notwithstanding anything contained in the Supplemental Plan to the
contrary, effective as of January 1, 2005, (a) with respect to each participant
who is actively employed by Abbott as a corporate officer, the Grantor Trust
funding threshold of $100,000 formerly referenced in subsections 8-2, 9-1 and
9-2 of the Plan shall no longer be applied or have any force or effect and
(b) the Grantor Trusts established by the participants under the Supplemental
Plan shall be funded in accordance with the requirements of Code Section 409A.

 

9-15.        Notwithstanding anything contained in the Supplemental Plan to the
contrary, pursuant to Q&A-20 of Internal Revenue Service Notice 2005-1 (the
“Notice”), Abbott shall cause the present value of accrued benefits under the
Supplemental Plan for the periods ended on or prior to December 31, 2005 for
each participant who has made a Grantor Trust election under Section 9-1, to the
extent not previously paid to a Grantor Trust established by the participant, to
be deposited in such Grantor Trust on or prior to December 31, 2005.  Such
payment is intended to result in a partial termination of participation in the
Supplemental Plan as permitted by the Notice.  Each participant who has
established a Grantor Trust and who receives such payment shall include the full
amount of such payment to the Grantor Trust in the participant’s income in 2005.

 

9-16.        Notwithstanding anything contained in the Supplemental Plan to the
contrary, with respect to each participant who (a) has made a Grantor Trust
election under Section 9-1 and (b) first became a corporate officer in 2006,
2007 or 2008, Abbott shall cause such participant’s  Pre-Officer Benefit (as
defined below) to be deposited in the Grantor Trust established by the
participant in 2009, to the extent not previously subject to an election under
Section 9-1 and paid to such Grantor Trust.  For purposes of the Supplemental
Plan, “Pre-Officer Benefit” means the present value of such participant’s
accrued supplemental pension benefits which (i) accrued prior to 2007 in the
case of a participant who first became a corporate officer in 2006; (ii) accrued
prior to 2008 in the case of a participant who first became a corporate officer
in 2007; or (iii) accrued prior to 2009 in the case of a participant who first
became a corporate officer in 2008.  The foregoing amendment is made in
accordance with and pursuant to Q&A-19(c) of the Notice and the guidance
extending the same for the transition period ending on December 31, 2008  For
the avoidance of doubt, the amounts deposited in the participant’s Grantor
Trusts hereunder shall

 

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no longer be payable pursuant to subsection 8-2, as such amounts will have been
distributed to the respective participants pursuant to the transition relief
described in the preceding sentence.

 

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APPENDIX A

 

ABBOTT LABORATORIES SUPPLEMENTAL PENSION PLAN

 

[Abbott Laboratories Supplemental Pension Plan, as amended, as filed as Exhibit
10.2 to the Abbott Laboratories Current Report on Form 8-K dated December 9,
2005.]

 

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APPENDIX B

 

SUPPLEMENTAL BENEFIT

GRANTOR TRUST

 

THIS AGREEMENT, made this          day of                    , 20    , by and
between                           , (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 Supplemental
Pension 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 “                            Supplemental Benefit
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.

 

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ARTICLE II
Distribution of the Trust Fund

 

II-1.         Supplemental Pension Account.  The administrator shall maintain a
“supplemental pension account” under the trust.  As of the end of each calendar
year, the administrator shall charge the account with all distributions made
from the account during that year; and credit the account with its share of
trust income and realized gains and charge the account with its share of trust
expenses and realized losses for the year.

 

II-2.         Distributions Prior to the Grantor’s Death.  Principal and
accumulated income 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 trust fund for that year, with the balance of such income
to be accumulated in the trust.  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 supplemental pension account to the
grantor, if then living, in the same manner, at the same time and over the same
period as the pension payable to the grantor under Abbott Laboratories Annuity
Retirement Plan.

 

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 upon the grantor’s death.  The grantor may direct that such
amounts be distributed in a lump sum or, if the beneficiary is the grantor’s
spouse (or a trust [a “Trust”] for which the grantor’s spouse is the sole income
beneficiary), in the same manner, at the same time and over the same period as
the pension payable to the grantor’s surviving spouse under the Abbott
Laboratories Annuity Retirement Plan.  If the grantor directs the same method of
distribution as the pension payable to the surviving spouse under the Abbott
Laboratories Annuity Retirement Plan 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 the same method of distribution as the pension payable to the
surviving spouse under the Abbott Laboratories Annuity Retirement Plan 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

 

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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 invest and reinvest 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 and in any mutual funds, common trust
funds or collective investment funds which invest solely in such obligations,
provided that to the extent practicable no more than Ten Thousand Dollars
($10,000) shall be invested in such mutual funds, common trust funds or
collective investment funds at any time; and any such investment made or
retained by the trustee in good faith shall be proper despite any resulting risk
or lack of diversification or marketability.

 

(c)                                  To deposit cash in any depositary
(including the banking department of the bank acting as trustee) without
liability for interest, in amounts not in excess of those reasonably necessary
to make distributions from the trust.

 

(d)                                 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.

 

(e)                                  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.

 

(f)                                    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.

 

(g)                                 To compromise, contest, settle or abandon
claims or demands.

 

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(h)                                 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.

 

(i)                                     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.

 

(j)                                     To divide or distribute the trust fund
in undivided interests or wholly or partly in kind.

 

(k)                                  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.

 

(l)                                     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.

 

(m)                               Upon the prior written consent of the
administrator, 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.

 

(n)                                 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.

 

(o)                                 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.

 

(p)                                 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

 

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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.        Disagreements 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 court.

 

IV-3.        Trustee’s Obligations.  No power, duty or responsibility is imposed
on the trustee except as set forth in this agreement.  The trustee is not
obliged to determine whether funds delivered to or distributions from the trust
are proper under the trust, or whether any tax is due or payable as a result of
any such delivery or distribution.  The trustee shall be protected in making any
distribution from the trust as directed pursuant to Article II without inquiring
as to whether the distributee is entitled thereto; 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;
and the trustee shall not be liable for any action taken because of the specific
direction of the administrator.

 

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.

 

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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 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.

 

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.

 

*     *     *

 

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IN WITNESS WHEREOF, the grantor and the trustee have executed this agreement as
of the day and year first above written.

 

 

 

 

 

Grantor

 

 

 

The Northern Trust Company, as Trustee

 

 

 

By

 

 

 

 

Its

 

 

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