Document:

Exhibit 10.7

 

BOARD OF DIRECTORS  - RETAINER AGREEMENT

 

This agreement made as of January 1, 2006
between HAPS USA, Inc., with its principal place of business at 5912 Bolsa
Avenue, Suite 108, Huntington Beach, CA 92649 (“HAPS USA”) and Mark Buck,
with an address of 5231A Kuaiwi Place, Honolulu, HI 96821, provides for
director services, according to the following:

 

ARTICLE 1

 

Services
Provided

 

HAPS USA agrees to engage Mark Buck to serve as a
member of the Board of Directors (the “Director”) and to provide those services
required of a director under HAPS USA’s Articles of Incorporation and Bylaws (“Articles
and Bylaws”), as both may be amended from time to time and under the
General Corporation Law of Utah, the federal securities laws and other state
and federal laws and regulations, as applicable.

ARTICLE 2

 

Nature of
Relationship

 

2.1                                 The
Director is an independent contractor and will not be deemed an employee of
HAPS USA for purposes of employee benefits, income tax withholding, F.I.C.A.
taxes, unemployment benefits or otherwise. The Director shall not enter into
any agreement or incur any obligations on HAPS USA’s behalf.

 

2.2                                 HAPS
USA will supply, at no cost to the Director:  periodic briefings on the
business, director packages for each board and committee meeting, copies of
minutes of meetings and any other materials that are required under HAPS USA’s
Articles and Bylaws or the charter of any committee of the board on which the
director serves and any other materials which may, by mutual agreement, be necessary
for performing the services requested under this contract.

 

ARTICLE 3

 

Director’s
Warranties

 

3.1                                 The
Director warrants that no other party has exclusive rights to his services in
the specific areas described and that the Director is in no way compromising
any rights or trust between any other party and the Director or creating a
conflict of interest. The Director also warrants that no other agreement will
be entered into that will create a conflict of interest with this agreement. The
Director further warrants that he will comply with all applicable state and
federal laws and regulations, as applicable, including Sections 10 and 16 of
the Securities and Exchange Act of 1934.

 

3.2                                 Throughout
the term of this agreement and for a period of six months thereafter, the
Director agrees he will not, without obtaining HAPS USA’s prior written
consent, directly or indirectly engage or prepare to engage in any activity in
competition with any HAPS USA

 

 

business or product,
including products in the development stage, accept employment or provide
services to (including service as a member of a board of directors), or
establish a business in competition with HAPS USA.

 

ARTICLE 4

 

Compensation

 

4.1                                 Retainer.
HAPS USA shall pay the Director a nonrefundable retainer of Eighteen Thousand
and 0/100 United States Dollars ($18,000.00) per year plus a fee of Five
Hundred and 0/100 United States Dollars ($500.00) per meeting of HAPS USA’s
Board of Directors at which the Director is present during the term of this
agreement, to provide the services described in Section I which shall
compensate him for all time spent preparing for, traveling to (if applicable)
and attending board of director meetings during the year. The retainer shall be
provided for portions of the term less than a full calendar year. This retainer
may be revised by action of HAPS USA’s Board of Directors from time to
time. Such revision shall be effective as of the date specified in the
resolution for payments not yet made and need not be documented by an amendment
to this agreement.

 

4.2                                 Stock
Options. Subject to approval by the Board of Directors, an annual grant of
an option to purchase HAPS USA common stock shall be made to the Director. The
grant shall consist of an option to purchase a specified number of shares under
the term of HAPS USA’s then effective incentive plan. The specified number of
shares for a new appointment to the Board shall be at the discretion of the
Board. Twenty-five percent of the options shall vest on each quarterly
anniversary of the date of grant. The amount and terms of the annual option
grant may be revised by action of HAPS USA’s Board of Directors from time
to time. Such revision shall be effective as of the date specified in the
resolution for any grants not yet made and need not be documented by an
amendment to this agreement.

 

4.3                                 Payment.
Retainer payments shall be made quarterly in cash in advance on the first day
of each accounting quarter. Additional payments shall be made in arrears. No
invoices need be submitted by the Director for payment of the retainer. Invoices
for additional payments under C, above, shall be submitted. Such invoices must
be approved by HAPS USA’s Chief Executive Officer as to form and
completeness.

 

4.4                                 Expenses.
HAPS USA will reimburse the Director for reasonable expenses approved in
advance, and such approval not to be unreasonably withheld. Invoices for
expenses, with receipts attached, shall be submitted. Such invoices must be
approved by HAPS USA’s Chief Executive Officer as to form and completeness.

 

ARTICLE 5

 

General
Provisions

 

5.1                                 Term.
This agreement shall be in effect from January 1, 2006 through the last
date of the Director’s current term as a member of HAPS USA’s Board of
Directors. This agreement shall be automatically renewed on the date of the
Director’s reelection as a member of HAPS

 

2

 

USA’s Board of
Director’s for the period of such new term unless the Board of Directors
determines not to renew this agreement.  Any amendment to this agreement must be
approved by a written action of HAPS USA’s Board of Directors. Amendments to Section IV
Compensation hereof do not require the Director’s consent to be effective.

 

5.2                                 Termination.
This agreement shall automatically terminate upon the death of the Director or
upon his resignation or removal from, or failure to win election or reelection
to, the HAPS USA Board of Directors. In
the event of any termination of this agreement, the Director agrees to return
any materials transferred to the Director under this agreement except as may be
necessary to fulfill any outstanding obligations hereunder. The Director agrees
that HAPS USA has the right of injunctive relief to enforce this provision. HAPS
USA’s obligation in the event of such termination shall be to pay the Director
the retainer and other payments due through the date of termination. Termination
shall not relieve either party of its continuing obligation under this
agreement with respect to confidentiality of proprietary information.

 

5.3                                 Limitation of
Liability. Under no circumstances shall HAPS USA be liable to the Director
for any consequential damages claimed by any other party as a result of
representations made by the Director with respect to HAPS USA which are
different from any to those made in writing by HAPS USA. Furthermore, except for the maintenance of
confidentiality, neither party shall be liable to the other for delay in any
performance, or for failure to render any performance under this agreement when
such delay or failure is caused by Government regulations (whether or not
valid), fire, strike, differences with workmen, illness of employees, flood,
accident, or any other cause or causes beyond reasonable control of such
delinquent party.

 

5.4                                 Confidentiality.
The Director agrees to maintain in confidentiality all of HAPS USA’s
proprietary and confidential information, and to sign the Board of Directors’
Proprietary Inventions and Information Agreement, attached as Exhibit A
hereto.

 

5.5                                 Resolution
of Disputes. Any dispute regarding the agreement (including without
limitation its validity, interpretation, performance, enforcement, termination
and damages) shall be determined in accordance with the laws of the State of
California, the United States of America. Any action under this paragraph shall
not preclude any party hereto from seeking injunctive or other legal relief to
which each party may be entitled.

 

5.6                                 Entire
Agreement. This agreement (including agreements executed in substantially
in the form of the exhibits attached hereto) supersedes all prior or
contemporaneous written or oral understandings or agreements, and may not
be added to, modified, or waived, in whole or in part, except by a writing
signed by the party against whom such addition, modification or waiver is
sought to be asserted.

 

5.7                                 Assignment.
This agreement and all of the provisions hereof shall be binding upon and
insure to the benefit of the parties hereto and their respective successors and
permitted assigns and, except as otherwise expressly provided herein, neither
this agreement, nor any of the rights, interests or obligations hereunder shall
be assigned by either of the parties hereto without the prior written consent
of the other party.

 

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5.8                                 Notices.
Any and all notices, requests and other communications required or permitted
hereunder shall be in writing, registered mail or by facsimile, to each of the
parties at the addresses set forth above or the numbers set forth below:

 

Mark Buck

5231A Kuaiwi Place

Honolulu, HI 96821

Facsimile: (808) 377-9620

 

HAPS USA, Inc.

Attn.: Mr. Henry Miyano

5912 Bolsa Avenue, Suite 108

Huntington Beach, CA 92649

Facsimile: (714) 895-7732

 

Any
such notice shall be deemed given when received and notice given by registered
mail shall be considered to have been given on the tenth (10th) day after
having been sent in the manner provided for above.

 

5.9                                 Survival
of Obligations. Notwithstanding the expiration of termination of this
agreement, neither party hereto shall be released hereunder from any liability
or obligation to the other which has already accrued as of the time of such
expiration or termination (including, without limitation, HAPS USA’s obligation
to make any fees and expense payments required pursuant to Article IV
hereof) or which thereafter might accrue in respect of any act or omission of
such party prior to such expiration or termination.

 

5.10                           Severability.
Any provision of this agreement which is determined to be invalid or
unenforceable shall not affect the remainder of this agreement, which shall
remain in effect as though the invalid or unenforceable provision had not been
included herein, unless the removal of the invalid or unenforceable provision
would substantially defeat the intent, purpose or spirit of this agreement.

 

[Signatures Follow On Next
Page]

 

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IN
WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by their duly authorized officers, as of the date first written above.

 

 

	
  MARK BUCK

  	
   

  	
   

  	
   

  	
  HAPS USA, Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
  A Utah Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   /s/ Mark Buck

  	
   

  	
   

  	
   

  	
  By:

  	
     /s/ Shinichi Kanemoto

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
      Shinichi Kanemoto, Its President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date of last signature: February 16, 2006

  	
   

  	
   

  	
   

  	
   

  
								

 

5

 

EXHIBIT A

 

BOARD OF DIRECTORS
PROPRIETARY INFORMATION

AND INVENTIONS AGREEMENT

 

WHEREAS, the parties desire to assure the
confidential status of the information which may be disclosed by HAPS USA
to the Director; NOW THEREFORE, in reliance upon and in consideration of the
following undertaking, the parties agree as follows:

 

1.      Subject to the
limitations set forth in Paragraph 2, all information disclosed by HAPS USA to
the Director shall be deemed to be “Proprietary Information”. In particular,
Proprietary Information shall be deemed to include any information, process,
technique, algorithm, program, design, drawing, formula or test data relating
to any research project, work in process, future development, engineering,
manufacturing, marketing, servicing, financing or personnel matter relating to
HAPS USA, its present or future products, sales, suppliers, customers,
employees, investors, or business, whether or oral, written, graphic or
electronic form.

 

2.      The term “Proprietary
Information” shall not be deemed to include information which the Director can
demonstrate by competent written proof. (i) is now, or hereafter becomes,
through no act or failure to act on the part of the Director, generally
known or available; (ii) is known by the Director at the time of receiving
such information as evidenced by its records: (iii) is hereafter furnished
to the Director by a third party, as a matter of right and without restriction
on disclosure; or (iv) is the subject of a written permission to disclose
provided by HAPS USA.

 

3.      The Director shall
maintain in trust and confidence and not disclose to any third party or use for
any unauthorized purpose any Proprietary Information received from HAPS USA. The
Director may use such Proprietary Information only to the extent required
to accomplish the purposes of this Agreement. The Director shall not use
Proprietary Information for any purpose or in any manner which would constitute
a violation of any laws or regulations, including without limitation the export
control laws of the United States. No other rights of licenses to trademarks,
inventions, copyrights, or patents are implied or granted under this Agreement.

 

4.      Proprietary Information
supplied shall not be reproduced in any form except as required to
accomplish the intent of this Agreement.

 

5.      The Director represents
and warrants that he shall protect the Proprietary Information received with at
least the same degree of care used to protect its own Proprietary Information
from unauthorized use or disclosure. The Director shall advise its employees or
agents who might have access to such Proprietary Information of the
confidential nature thereof and shall obtain from each of such employers and
agents an agreement to abide by the terms of this Agreement. The Director shall
not disclose any Proprietary Information to any officer, employee or agent who
does not have a need for such information.

 

 

6.      All Proprietary
Information (including all copies thereof) shall remain in the property of HAPS
USA, and shall be returned to HAPS USA after Director’s need for it has
expired, or upon request of HAPS USA, and in any event, upon completion or
termination of this Agreement.

 

7.      Notwithstanding any
other provision of this Agreement, disclosure of Proprietary Information shall
not be precluded if such disclosure:

 

(a)                                  is in response to a valid order of a court or
other governmental body of the United States or any political subdivision
thereof; provided, however, that the responding party shall first have given
notice to the other party hereto and shall have made a reasonable effort to
obtain a protective order requiring that the Proprietary Information so
disclosed be used only for the purpose for which the order was issued;

 

(b)                                 is otherwise required by law; or

 

(c)                                  is otherwise necessary to establish rights or
enforced obligations under this Agreement, but only to the extent that any such
disclosure is necessary.

 

8.      This Agreement shall
continue in full force and effect for so long as the Director continues to
receive Proprietary Information. This Agreement may be terminated at any
time upon thirty (30) days written notice to the other party. The termination
of the Agreement shall not relieve the Director of the obligations imposed by
Paragraphs 3, 4, 5 and 12 of this Agreement with respect to Proprietary
information disclosed prior to the effective date of such termination and the
provisions of these Paragraphs shall survive the termination of this Agreement
for a period of five (5) years from the date of such termination.

 

9.      The Director agrees to
indemnify HAPS USA for any loss or damage suffered as a result of any breach by
the Director of the terms of this Agreement, including any reasonable fees
incurred by HAPS USA in the collection of such indemnity.

 

10.     This Agreement shall be
governed by the laws of the State of California as those laws are applied to
contracts entered into and to be performed entirely in California by California
residents.

 

11.     This Agreement contains the
final, complete and exclusive agreement of the parties relative to the subject
matter hereof and may not be changed, modified, amended or supplemented
except by a written instrument signed by both parties.

 

12.     Each party hereby
acknowledges and agrees that in the event of any breach of this Agreement by
the Director, including, without limitation, an actual or threatened disclosure
of Proprietary Information without the prior express written consent of HAPS
USA, HAPS USA will suffer an irreparable injury, such that no remedy at law
will afford it adequate protection against, or appropriate compensation for,
such injury. Accordingly, each party hereby agrees that HAPS USA shall be
entitled to specific performance of the Director’s obligations under this

 

ii

 

Agreement, as well as such further injunctive
relief as may be granted by a court of competent jurisdiction.

 

 

	
  MARK BUCK

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  HAPS USA, Inc.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  A Utah Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
     /s/ Mark Buck

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   /s/ Shinichi Kanemoto

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
    Shinichi Kanemoto, Its President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
										

 

iiiExhibit
10.1

 

Amended and Restated effective April 28,
2006

 

ABBOTT
LABORATORIES NON-EMPLOYEE DIRECTORS’ FEE PLAN

 

SECTION 1.

PURPOSE

 

ABBOTT LABORATORIES NON-EMPLOYEE DIRECTORS’ FEE PLAN
- referred to below as the “Plan” - has been established by ABBOTT LABORATORIES
- referred to below as the “Company” - to attract and retain as members of its
Board of Directors persons who are not full-time employees of the Company or
any of its subsidiaries but whose business experience and judgment are a
valuable asset to the Company and its subsidiaries.

 

SECTION 2.

DIRECTORS COVERED

 

As used in the Plan, the term “Director”
means any person who is elected to the Board of Directors of the Company in
April, 1962 or at any time thereafter, and is not a full-time employee of the
Company or any of its subsidiaries.

 

SECTION 3.

FEES PAYABLE TO DIRECTORS

 

3.1.         Each Director shall be entitled to a deferred
monthly fee of Six Thousand Six Hundred Sixty-Seven Dollars ($6,667.00) for
each calendar month or portion thereof (excluding the month in which he is
first elected a Director) that he holds such office with the Company.

 

3.2.         A Director who serves as Chairman of the
Executive Committee of the Board of Directors shall be entitled to a deferred
monthly fee of One Thousand Six Hundred Dollars ($1,600.00) for each calendar
month or portion thereof (excluding the month in which he is first elected to
such position) that he holds such position.

 

3.3.         Audit Committee Fees

 

(a)           A Director who serves as Chairman of the
Audit Committee of the Board of Directors shall be entitled to a deferred
monthly fee of One Thousand Five Hundred Dollars ($1,500.00) for each calendar
month or portion thereof (excluding the month in which he is first elected to
such position) that he holds such position.

 

(b)           Each Director who serves on the Audit
Committee of the Board of Directors (other than the Chairman of the Audit
Committee) shall be entitled to a deferred monthly fee of Five Hundred Dollars
($500.00) for

each calendar month or portion thereof (excluding
the month in which he is first elected to such position) that he holds such
position.

 

 

3.4.          A Director who serves as Chairman of the
Compensation Committee of the Board of Directors shall be entitled to a
deferred monthly fee of One Thousand Dollars ($1,000.00) for each calendar
month or portion thereof (excluding the month in which he is first elected to
such position) that he holds such position.

 

3.5.          A Director who serves as Chairman of the
Nominations Committee of the Board of Directors shall be entitled to a deferred
monthly fee of One Thousand Dollars ($1,000.00) for each calendar month or
portion thereof (excluding the month in which he is first elected to such position)
that he holds such position.

 

3.6.          A Director who serves as Chairman of any
other Committee created by this Board of Directors shall be entitled to a
deferred monthly fee of One Thousand Dollars ($1,000.00) for each calendar
month or portion thereof (excluding the month in which he is first elected to
such position) that he holds such position.

 

3.7.          A Director’s Deferred Fee Account shall be
credited with interest annually. During the calendar years 1968 and prior, the
rate of interest credited to deferred fees shall be four (4) percent per
annum. During the calendar years 1969 through 1992, the rate of interest credited
to deferred fees shall be the average of the prime rates being charged by the
two largest commercial banks in the City of Chicago as of the end of the month
coincident with or last preceding the date upon which said interest is so
credited. During the calendar years 1993 and subsequent, the rate of interest
credited to deferred fees shall be equal to: (a) the average of the prime
rates being charged by the two largest commercial banks in the City of Chicago
as of the end of the month coincident with or last preceding the date upon
which said interest is so credited; plus (b) two hundred twenty-five (225)
basis points. For purposes of the provisions of the Plan, the term “deferred
fees” shall include “deferred monthly fees,” and “deferred meeting fees,” and
shall also include any such interest credited thereon.

 

SECTION 4.

PAYMENT OF DIRECTORS’ FEES

 

4.1.         A Director’s deferred fees earned pursuant to
the Plan shall commence to be paid on the first day of the calendar month next
following the earlier of his death or his attainment of age sixty-five (65) if
he is not then serving as a Director, or the termination of his service as a
Director if he serves as a Director after the attainment of age sixty-five
(65); provided that any Director may, by written notice filed with the
Secretary of the Company, elect to receive current payment of all or any
portion of the monthly and meeting fees earned by him in calendar years
subsequent to the calendar year in which he files such notice (or all or any
portion of such fees earned by him in the calendar year he first becomes a
Director, if such notice is filed within 30 days of becoming a Director), in
which case such fees or the portion thereof so designated earned in such calendar
years shall not be deferred but shall be paid quarterly as earned and no
interest shall be credited thereon. Such election may be revoked or modified by
any Director by written notice to the Secretary of the Company as to fees to be
earned by him in calendar years subsequent to the calendar year in which he
files such notice.

 

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4.2.          After a Director’s deferred fees shall have
commenced to be payable pursuant to Paragraph 4.1 they shall be payable in
annual installments in the order in which they shall have been deferred (i.e.
the deferred fees for the earliest year of service as a Director will be paid
on the date provided for in Section 4.1, the deferred fees for the next
earliest year of service as a Director will be paid on the anniversary of the
payment of the first installment, etc.).

 

4.3.          A Director’s deferred fees shall continue to
be paid until all deferred fees which he is entitled to receive under the Plan
shall have been paid to him (or, in case of his death, to his beneficiary).

 

4.4.          Notwithstanding any other provisions of the
Plan, if a Director’s service as a Director should terminate for any reason
within five (5) years after the date of a Change in Control, the aggregate
unpaid balance of such Director’s deferred fees plus all unpaid interest credited
thereon, shall be paid to such Director in a lump sum within thirty (30) days
following the date of such termination.

 

4.5.          A “Change in Control” shall be deemed to have
occurred on the earliest of the following dates:

 

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

 

(ii)           the date the following individuals cease for
any reason to constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board of Directors and any
new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board of Directors or nomination
for election by the Company’s shareholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or recommended; or

 

(iii)          the date on which there is consummated a
merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation
or other entity, other than (a) a merger or consolidation (I) immediately
following which the individuals who comprise the Board of Directors immediately
prior thereto constitute at least a majority of the Board of Directors of the
Company, the entity surviving such merger or consolidation or, if the Company
or the entity surviving such merger or consolidation is then a

 

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subsidiary, the ultimate parent thereof and (II) which results in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (b) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 20% or more of the combined
voting power of the Company’s then outstanding securities; or

 

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

 

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

 

For purposes of this 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) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

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4.6.          A “Potential Change in Control” shall exist during
any period in which the circumstances described in paragraphs (i), (ii), (iii) or
(iv), below, exist (provided, however, that a Potential Change in Control shall
cease to exist not later than the occurrence of a Change in Control):

 

(i)            The Company 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.

 

(ii)           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.

 

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

 

(iv)          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
(iv) 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.

 

4.7.          The provisions of Paragraphs 4.4, 4.5, 4.6
and this Paragraph 4.7 may not be amended or deleted, nor superseded by any
other provision of this Plan, (i) during the pendency of a Potential
Change in Control and (ii) during the period beginning on the date of a
Change in Control and ending on the date five (5) years following such
Change in Control.

 

SECTION 5.

DIRECTORS’ RETIREMENT BENEFIT

 

5.1.         Effective April 30, 1998, each of the
persons serving as a Director on December 12, 1997 shall be credited with
a retirement benefit of $4,167 a month for 120 months of continuous service and
no additional retirement benefits shall accrue under the Plan. Each of the
persons serving as a Director on December 12, 1997 may elect: (a) to
have his or her retirement benefit under the Plan treated as provided in Section 5.2
of the Plan; or (b) to have the present value of that retirement benefit
credited to an unfunded phantom stock account and converted into phantom stock
units based on the closing price of the Company’s common stock on April 30,
1998, with those phantom stock units then being credited with the same cash and
stock

 

5

 

dividends,
stock splits and other distributions and adjustments as are paid on the Company’s
common stock. The phantom stock units shall be payable to the Director in
annual payments commencing on the first day of the calendar month next
following the earlier of the Director’s death or termination of service as a
Director, in an amount determined by the closing price of the Company’s common
stock on the first business day preceding the payment date. Unless the
retirement benefit is terminated, the annual benefit shall continue to be paid
on the anniversary of the day on which the first such retirement benefit
payment was made, until the benefit has been paid for ten years, or until the
death of the Director or surviving spouse, if earlier. If a Director should die
with such benefit still in effect, prior to receipt of all payments due
hereunder, the annual benefit shall continue to be paid to the surviving spouse
of such Director until all payments due hereunder have been made or until the
death of the surviving spouse, if earlier.

 

5.2.         Any person serving as a Director on December 12,
1997 who elects to have his or her retirement benefit paid pursuant to this Section 5.2
shall receive a monthly benefit equal to $4,167. Payment of the monthly benefit
shall commence on the first day of the calendar month next following the
earlier of the Director’s death or termination of service as a Director. Unless
the retirement benefit is terminated, the monthly benefit shall continue to be
paid on the first day of each calendar month thereafter, until the benefit has
been paid for one hundred and twenty (120) months, or until the death of the
Director or surviving spouse, if earlier. If a Director should die with such
benefit still in effect, prior to receipt of all payments due hereunder, the monthly
benefit shall continue to the surviving spouse of such Director until all
payments due hereunder have been made or until the death of the surviving
spouse, if earlier.

 

5.3.         Directors who retired on or before December 12,
1997 will receive the form and amount of retirement benefit payable under the
terms of the Plan in effect at the time of their retirement.

 

5.4.         Each Director who is granted a retirement benefit
hereunder shall make him or herself available for such consultation with the
Board of Directors or any committee or member thereof, as may be reasonably
requested from time to time by the Chairman of the Board of Directors,
following such Director’s termination of service as a Director. The Company shall
reimburse each such Director for all reasonable travel, lodging and subsistence
expenses incurred by the Director at the request of the Company in rendering
such consultation. The Company may terminate the retirement benefit if the
Director should fail to render such consultation, unless prevented by
disability or other reason beyond the Director’s control.

 

5.5.         It is recognized that during a Director’s
period of service as a Director and as a consultant hereunder, a Director will
acquire knowledge of the affairs of the Company and its subsidiaries, the
disclosure of which would be contrary to the best interests of the Company. Accordingly,
the Company may terminate the retirement benefit if, without the express
consent of the Company, the Director accepts election to the Board of Directors
of, acquires a partnership or proprietary interest in, or renders services as
an employee or consultant to, any business entity which is engaged in
substantial competition with the Company or any of its subsidiaries.

 

6

 

5.6.          An individual will be considered a Director’s “surviving spouse” for
purposes of this Section 5 only if the Director and such individual were
married in a religious or civil ceremony recognized under the laws of the state
where the marriage was contracted and the marriage remained legally effective
at the date of the Director’s death.

 

SECTION 6.

CONVERSION TO COMMON STOCK UNITS

 

6.1.          Any Director who is then serving as a
director may, by written notice filed with the Secretary of the Company, elect
to have all or any portion of deferred fees previously earned but not yet paid,
transferred from the Director’s Deferred Fee Account to a Stock Account maintained
on his or her behalf pursuant to paragraph 9.3. Any election as to a portion of
such fees shall be expressed as a percentage and the same percentage shall be
applied to all such fees regardless of the calendar year in which earned or to
all deferred fees earned in designated calendar years, as specified by the
Director. A Director may make no more than one election under this paragraph
6.1 in any calendar year. All such elections may apply only to deferred fees for
which an election has not previously been made and shall be irrevocable.

 

6.2.          Any Director may, by written notice filed
with the Secretary of the Company, elect to have all or any portion of deferred
fees earned subsequent to the date such notice is filed credited to a Stock
Account established under this Section 6. Fees covered by such election shall
be credited to such account at the end of each calendar quarter in, or for
which, such fees are earned. Such election may be revoked or modified by such
Director, by written notice filed with the Secretary of the Company, as to
deferred fees to be earned in calendar years subsequent to the calendar year
such notice is filed, but shall be irrevocable as to deferred fees earned prior
to such year.

 

6.3.          Deferred fees credited to a Stock Account
under paragraph 6.1 shall be converted to Common Stock Units by dividing the
deferred fees so credited by the closing price of common shares of the Company
on the date notice of election under paragraph 6.1 is received by the Company
(or the next business day, if there are no sales on such date) as reported on
the New York Stock Exchange Composite Reporting System. Deferred fees credited
to a Stock Account under paragraph 6.2 shall be converted to Common Stock Units
by dividing the deferred fees so credited by the closing price of common shares
of the Company as of the last business day of the calendar quarter for which
the credit is made, as reported on the New York Stock Exchange Composite
Reporting System.

 

6.4.          Each Common Stock Unit shall be credited with
the same cash and stock dividends, stock splits and other distributions and
adjustments as are received by one common share of the Company. All cash
dividends and other cash distributions credited to Common Stock Units shall be
converted to additional Common Stock Units by dividing each such dividend or
distribution by the closing price of common shares of the Company on the
payment date for such dividend or distribution, as reported by the New York
Stock Exchange Composite Reporting
System.

 

7

 

6.5.          The value of the Common Stock Units credited
each Director shall be paid the Director in cash on the dates specified in
paragraph 4.2 (or, if applicable, paragraph 4.4). The amount of each payment
shall be determined by multiplying the Common Stock Units payable on each date
specified in paragraph 4.2 (or, if applicable, paragraph 4.4) by the closing
price of common shares of the Company on the day prior to that date (or the
next preceding business day if there are no sales on such date), as reported by
the New York Stock Exchange Composite Reporting System.

 

SECTION 7.

MISCELLANEOUS

 

7.1.          Each Director or former Director entitled to
payment of deferred fees hereunder, from time to time may name any person or
persons (who may be named contingently or successively) to whom any deferred
Director’s fees earned by him and payable to him are to be paid in case of his
death before he receives any or all of such deferred Director’s fees. Each designation
will revoke all prior designations by the same Director or former Director,
shall be inform prescribed by the Company, and will be effective only when
filed by the Director or former Director in writing with the Secretary of the
Company during his lifetime. If a deceased Director or former Director shall
have failed to name a beneficiary in the manner provided above, or if the beneficiary
named by a deceased Director or former Director dies before him or before
payment of all the Director’s or former Director’s deferred Directors’ fees,
the Company, in its discretion, may direct payment in a single sum of any
remaining deferred Directors’ fees to either:

 

(a)           any one or more or all of the next of kin
(including the surviving spouse) of the Director or former Director, and in
such proportions as the Company determines; or

 

(b)           the legal representative or representatives
of the estate of the last to die of the Director or former Director and his
last surviving beneficiary.

 

The person or persons to whom any deceased Director’s or former
Director’s deferred Directors’ fees are payable under this paragraph will be
referred to as his “beneficiary.”

 

7.2.          Establishment of the Plan and coverage
thereunder of any person shall not be construed to confer any right on the part
of such person to be nominated for reelection to the Board of Directors of the
Company, or to be reelected to the Board of Directors.

 

7.3.          Payment of deferred Directors’ fees will be
made only to the person entitled thereto in accordance with the terms of the
Plan, and deferred Directors’ fees are not in any way subject to the debts or
other obligations of persons entitled thereto, and may not be voluntarily or involuntarily
sold, transferred or assigned. When a person entitled to a payment under the
Plan is under legal disability or, in the Company’s opinion, is in any way
incapacitated so as to be unable to manage his financial affairs, the Company
may direct that payment be made to such person’s legal representative, or to a
relative or friend of such person for his benefit. Any payment made in
accordance with the preceding sentence shall be in complete discharge of the Company’s
obligation to make such payment under the Plan.

 

8

 

7.4.          Any action required or permitted to be taken by the Company under the
terms of the Plan shall be by affirmative vote of a majority of the members of
the Board of Directors then in office.

 

SECTION 8.

AMENDMENT AND DISCONTINUANCE

 

While the Company expects to continue the
Plan, it must necessarily reserve, and does hereby reserve, the right to amend
or discontinue the Plan at any time; provided, however, that any amendment or
discontinuance of the Plan shall be prospective in operation only, and shall
not affect the payment of any deferred Directors’ fees theretofore earned by
any Director, or the conditions under which any such fees are to be paid or
forfeited under the Plan, unless the Director affected shall expressly consent
thereto.

 

SECTION 9.

ALTERNATE PAYMENT OF DEFERRED FEES

 

9.1.         By written notice filed with the Secretary of
the Company prior to calendar years beginning after December 31, 1988 (or,
for the calendar year he first becomes a Director within 30 days of becoming a
Director), a Director may elect to receive all or any portion of his deferred
fees earned in such calendar years in a lump sum in accordance with the
provisions of this Section 9. An election under this subsection 9.1
may be revoked or modified by the Director by written notice to the Secretary
of the Company as to deferred fees earned under Section 3 in calendar
years beginning after the calendar year in which he files such notice. Any
amounts that were deferred for calendar years beginning before January 1,
1989 shall automatically be paid as provided in this Section 9.

 

9.2.         If payment of a Director’s deferred fees is
made pursuant to paragraph 9.1, a portion of such fees shall be paid in cash
for the Director directly to a “Grantor Trust” established by the Director,
provided such trust is in a form which the Company determines to be substantially
similar to the trust attached to this plan as Exhibit A; and the balance
of the deferred fees shall be paid in cash directly to the Director, provided
that the payment made directly to the Director shall approximate the aggregate
federal, state and local individual income taxes attributable to the deferred
fees paid pursuant to this paragraph 9.2.

 

9.3.         The Company will establish and maintain four
separate accounts in the name of each Director, “a Deferred Fee Account”, a “Deferred
Fee Trust Account”, a “Stock Account” and a “Stock Trust Account”. The Deferred
Fee Account shall reflect the deferred fees and interest to be credited to a
Director pursuant to Section 3. The Deferred Fee Trust Account shall reflect
any deferred fees paid in cash to a Director (including amounts paid to a
Director’s Grantor Trust and allocated to the deferred account maintained
thereunder) pursuant to paragraph 9.2 and any adjustments made pursuant to
paragraph 9.4. The Stock Account shall reflect the deferred fees converted to
Common Stock Units pursuant to Section 6 and any adjustments made pursuant
to that Section. The Stock Trust Account shall reflect deferred fees that have been
converted to Common Stock Units under Section 6 and paid in cash to a
Director (including amounts paid to a Director’s Grantor Trust and allocated to
the stock account maintained

 

9

 

thereunder) pursuant to paragraph 9.2 and any adjustments made pursuant
to paragraph 9.5. The Accounts established pursuant to this paragraph 9.3 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.

 

9.4.          As of the end of each calendar year, the
Company shall adjust each Director’s Deferred Fee Trust Account as follows:

 

(a)           FIRST, charge an amount equal to the product
of: (i) any payments made to the Director during that year from the
deferred account maintained under his or her 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
paragraph 9.9 below); multiplied by (ii) a fraction, the numerator of
which is the balance in the Director’s Deferred Fee Trust Account as of the end
of the prior calendar year and the denominator of which is the balance in the deferred
account maintained under the Director’s Grantor Trust (as determined by the
administrator of the trust) as of that same date;

 

(b)           NEXT, credit an amount equal to the deferred
fees that have not been converted to Common Stock Units that are paid that year
to the Director (including the amount paid to the Director’s Grantor Trust and
allocated to the deferred account maintained thereunder) pursuant to paragraph
9.2; and

 

(c)           FINALLY, credit an amount equal to the
Interest Accrual earned for that year pursuant to paragraph 9.6.

 

9.5.          As of the end of each calendar year, the
Company shall adjust each Director’s Stock Trust Account as follows:

 

(a)           FIRST, charge an amount equal to the product
of: (i) any payments made to the Director during that year from the stock
account maintained under his or her Grantor Trust (other than distributions of
trust earnings authorized by the administrator of the trust to provide for the
Tax Gross Up under paragraph 9.9 below): multiplied by (ii) a fraction,
the numerator of which is the balance in the Director’s Stock Trust Account as
of the end of the prior calendar year and the denominator of which is the
balance in the stock account maintained under the Director’s Grantor Trust (as
determined by the administrator of the trust) as of that same date;

 

(b)           NEXT, credit an amount equal to the deferred
fees that have been converted to Common Stock Units that are paid that year to
the Director (including the amount paid to the Director’s Grantor Trust and
allocated to the stock account maintained thereunder) pursuant to paragraph
9.2; and

 

(c)           FINALLY, credit an amount equal to the Book
Value Adjustments to be made for that year pursuant to paragraph 9.6.

 

10

 

9.6.          As of the end of each calendar year, a
Director’s Deferred Fee Trust Account shall be credited with interest at the
rate described in paragraph 3.7. Any amount so credited shall be referred to as
a Director’s “Interest Accrual”. As of that same date, a Director’s Stock Trust
Account shall be adjusted as provided in paragraph 6.4, and shall also be
adjusted to reflect the increase or decrease in the fair market value of the
Company’s common stock determined in accordance with paragraph 6.5. Such
adjustments shall be referred to as “Book Value Adjustments.”

 

9.7.          In addition to any fees earned by a Director
under Section 3 of this plan or paid under paragraphs 4.1 or 9.1 the
Company shall also make a payment to a Director’s Grantor Trust (a “Guaranteed
Rate Payment”), to be credited to the deferred account maintained thereunder,
for any year in which the net income credited to the deferred account
maintained under such trust does not equal or exceed the Director’s Net Interest
Accrual for that year. A Director’s “Net Interest Accrual” for a year is an
amount equal to: (a) the Interest Accrual credited to the Director’s
Deferred Fee 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 paragraph 9.10). The Guaranteed Rate Payment shall equal the difference
between the Director’s Net Interest Accrual and the net income credited to the
deferred account maintained under the Director’s Grantor Trust for the year,
and shall be paid within 90 days of the end of that year.

 

9.8.          The Company shall also make a payment to a
Director’s Grantor Trust (a “Guaranteed Principal Payment”), to be credited to
the stock account maintained thereunder, to the extent that the balance in the
stock account as of the end of any calendar year is less than 75 percent of the
balance of the Director’s Stock Trust Account (net of federal, state and local income
taxes) as of that same date. For the calendar year in which the last
installment distribution is made from the Director’s Grantor Trust, the payment
made under this paragraph 9.8 shall equal the amount, if any, needed to
increase the fair market value of the stock account maintained under the
Director’s Grantor Trust; such that if a distribution of the stock account were
then made to the Director, the Director would receive the same amount he or she
would have received (net of federal, state and local income taxes) if his or
her Stock Trust Account were to be distributed on that same date with the
deferred fees that had been allocated to that Account taxed at the federal,
state and local income tax rates in effect on the date the fees were credited
to the Account and the balance of the Account taxed at the federal, state and
local income tax rates in effect on the date of the distribution. Payments
required under this paragraph 9.8 shall be made within 90 days of the end of
the calendar year, except the last payment which shall be made not later than
the due date of the last installment distribution from the Director’s Grantor
Trust.

 

9.9.          In addition to the fees provided under Section 3,
each Director (or, if the Director is deceased, the beneficiary designated
under the Director’s Grantor Trust) shall be entitled to a Tax Gross Up payment
for each year there is a balance in his or her Deferred Fee Trust Account or
Stock Trust Account. The “Tax Gross Up” shall approximate: (a) the amount
necessary to compensate the Director (or beneficiary) for the net increase in
his or her federal, state and local income taxes as a result of the inclusion
in the Director’s (or beneficiary’s) taxable income of the income of his or her
Grantor Trust and any Guaranteed Rate and Guaranteed Principal Payments

 

11

 

for
that year; less (b) any distribution to the Director (or beneficiary) of
his or her Grantor Trust’s net earnings for that year; plus (c) an amount
necessary to compensate the Director (or beneficiary) for the net increase in
the taxes described in (a) above as a result of the inclusion in his or
her taxable income of any payment made pursuant to this paragraph 9.9.

 

9.10.        For purposes of this Section, a Director’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 Section 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 Director’s residence on the date such a
calculation is made, net of any federal tax benefits. Notwithstanding the
preceding sentence, if a Director is not a citizen or resident of the United States,
his or her income tax rates shall be deemed to be the highest marginal income
tax rates actually imposed on the Director’s benefits under this Plan or
earnings under his or her Grantor Trust.

 

9.11.        If a Director’s deferred fees have been paid
to a Grantor Trust(s) pursuant to paragraph 9.2, then at any time (and from
time to time) prior to the Director’s retirement the Director may elect to have
those deferred fees paid to him or her from the Grantor Trust(s) either:

 

(i)            in the order in which they were earned (i.e.,
the fees for the earliest year of service as a Director will be the first fees
distributed from the Grantor Trust(s), the fees for the next earliest year of
service as a Director will be paid on the anniversary of the payment of the
first installment, etc.), or

 

(ii)           in reverse chronological order from the order
in which they were earned (i.e., the fees for the Director’s last year of
service as a Director will be the first fees distributed from the Grantor
Trust(s), the fees for the penultimate year of service as a Director will be
paid on the anniversary of the payment of the first installment, etc.).

 

If a Director fails to elect a manner of payment for his or her
deferred fees, then those deferred fees will be paid to the Director in the
order in which they were earned. The date on which payments commence and the
other terms governing distributions from the Grantor Trust(s) shall be
determined in accordance with the terms of the Grantor Trust(s). A Director’s
deferred fees shall continue to be paid until all deferred fees to which the
Director is entitled to receive under the Plan shall have been paid in
accordance with the terms of the Grantor Trust(s).

 

12

 

Exhibit A

 

IRREVOCABLE
GRANTOR TRUST AGREEMENT

 

THIS RESTATED AGREEMENT, made this               
day of                           ,
2002, by  and between                                     of
                    ,
                  (the“grantor”), and The Northern Trust
Company located at Chicago, Illinois, as trustee (the “trustee”),

 

WITNESSETH THAT:

 

WHEREAS, the grantor has established a trust known as the “                           
Grantor  Trust”, dated
                   ,
to hold certain benefits received by the grantor under the Abbott Laboratories Non-Employee Directors’ Fee
Plan, as it may be amended from time to time; and

 

WHEREAS, the grantor, with the consent of the administrator of the
referenced trust, desires to amend the agreement creating the referenced trust
(“trust agreement”) in many respects and believes the trust agreement, as so
amended, would be easier to understand if restated.

 

NOW, THEREFORE, the grantor amends the trust agreement by substituting
for it and all prior amendments the following provisions which set forth all of
the terms and conditions relating to the administration, investment and
distribution of the trust property after this date:

 

ARTICLE I

Introduction

 

I-1.          Name. This agreement and the trust hereby evidenced (the “trust”) may be referred
to as the “
                                                  
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.

 

1

 

ARTICLE II

Distribution of the Trust Fund

 

II-1.         Separate Accounts.  The
administrator shall maintain two separate accounts under the trust, a “deferred
account” and a “stock account.” Funds delivered to the trustee shall be
allocated between the accounts by the trustee as directed by the administrator.
As of the end of each calendar year, the administrator shall charge each
account with all distributions made from such account during that year; and
credit each account with its share of income and realized gains and charge each
account with its share of expenses and realized losses for the year. The
trustee shall be required to make separate investments of the trust fund for
the accounts, and may not administer and invest all funds delivered to it under
the trust as one trust fund.

 

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 termination of service as
a Director 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 trust fund to the grantor, if then living, in a series of annual
installments, commencing on the first day of the month next following the later
of the grantor’s settlement date or the date the grantor attains age 65 years.
The administrator shall inform the trustee of the number of installment
distributions and 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.

 

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.

 

2

 

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 common stock of Abbott
Laboratories, or in obligations of the United States Government and its
agencies or which are backed by the full faith and credit of the United States
Government or in any mutual fund, common trust fund or collective investment fund
which invests solely in such obligations; and any such investment made or
retained by the trustee in good faith shall be proper despite any resulting
risk or lack of diversification or marketability.

 

(c)           To deposit cash in any depositary (including
the banking department of the bank acting as trustee) without liability for
interest, and to invest cash in savings accounts or time certificates of
deposit bearing a reasonable rate of interest in any such depositary.

 

(d)           To invest, subject to the limitations of
subparagraph (b) above, in any common or commingled trust fund or funds
maintained or administered by the trustee solely for the investment of trust
funds.

 

(e)           To borrow from anyone, with the administrator’s
approval, such sum or sums from time to time as the trustee considers desirable
to carry out this trust, and to mortgage or pledge all or part of the trust
fund as security.

 

3

 

(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.

 

(1)           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.

 

(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.

 

4

 

(p)           To employ agents, attorneys, accountants or
other persons, and to delegate to them such powers as the trustee considers
desirable, and the trustee shall be protected in acting or refraining from acting
on the advice of persons so employed without court action.

 

(q)           To perform any and all other acts which in
the trustee’s judgment are appropriate for the proper management, investment
and distribution of the trust fund.

 

III-2.        Principal and Income.  Any
income earned on the trust fund, which is not distributed as provided in Article II
shall be accumulated and from time to time added to the principal of the trust.
The grantor’s interest in the trust shall include all assets or other property
held by the trustee hereunder, including principal and accumulated income.

 

III-3.        Statements.  The trustee shall prepare and
deliver monthly to the administrator and annually to the grantor, if then
living, otherwise to each beneficiary then entitled to distributions under this
agreement, a statement (or series of statements) setting forth (or which taken
together set forth) all investments, receipts, disbursements and other
transactions effected by the trustee during the reporting period; and showing
the trust fund and the value thereof at the end of such period.

 

III-4.        Compensation and Expenses.  All
reasonable costs, charges and expenses incurred in the administration of this
trust, including compensation to the trustee, any compensation to agents,
attorneys, accountants and other persons employed by the trustee, and expenses
incurred in connection with the sale, investment and reinvestment of the trust
fund shall be paid from the trust fund.

 

5

 

ARTICLE IV

General Provisions

 

IV-1.       Interests Not Transferable.  The
interests of the grantor or other persons entitled to distributions hereunder
are not subject to their debts or other obligations and may not be voluntarily
or involuntarily sold, transferred, alienated, assigned or encumbered.

 

IV-2.       Disagreement as to Acts.  If
there is a disagreement between the trustee and anyone as to any act or
transaction reported in any accounting, the trustee shall have the right to a
settlement of its account by any proper court.

 

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

 

IV-4.       Good Faith Actions.  The
trustee’s exercise or non-exercise of its powers and discretions in good faith
shall be conclusive on all persons. No one shall be obliged to see to the
application of any money paid or property delivered to the trustee. The
certificate of the trustee that it is acting according to this agreement will
fully protect all persons dealing with the trustee.

 

IV-5.        Waiver of Notice.  Any
notice required under this agreement may be waived by the person entitled to
such notice.

 

IV-6.       Controlling Law.  The
laws of the State of Illinois shall govern the interpretation and validity of
the provisions of this agreement and all questions relating to the management,
administration, investment and distribution of the trust hereby created.

 

IV-7.        Successors. This agreement shall be binding on all persons entitled to
distributions hereunder and their respective heirs and legal representatives,
and on the trustee and its successors.

 

6

 

ARTICLE V

Changes in Trustee

 

V-l.          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.

 

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.

 

*           *           *

 

7

 

IN WITNESS WHEREOF, the grantor has executed this amending instrument
as of the day and year first above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Grantor

  

 

The undersigned, as trustee, acknowledges receipt of the foregoing
amending instrument as of the day and year first above written.

 

	
   

  	
  The Northern Trust Company as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
						

 

The undersigned, as a duly authorized representative of the
administrator of the trust, hereby consents to the foregoing amending
instrument as of the day and year first above written.

 

	
   

  	
  Abbott Laboratories

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
						

 

8

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