<Page>
EXHIBIT 10.5
1986
ABBOTT LABORATORIES
MANAGEMENT INCENTIVE PLAN
(AS AMENDED AND RESTATED ON JUNE 20, 2003)
SECTION 1
INTRODUCTION
1.1 BACKGROUND AND PURPOSES. This 1986 ABBOTT LABORATORIES
MANAGEMENT INCENTIVE PLAN (the "Plan") is a successor Plan to the 1961, 1971 and
1981 Management Incentive Plans (the "Predecessor Plans"). This Plan is being
established by ABBOTT LABORATORIES ("Abbott") for the following purposes:
(a) To provide greater incentive for participants in the
Plan to attain and maintain the highest standards of
managerial performance by rewarding them for services
rendered with compensation, in addition to their base
salaries, in proportion to the success of Abbott and to
the participants' respective contribution to such
success; and
(b) To attract and retain in the employ of Abbott and its
subsidiaries persons of outstanding competence.
1.2 EFFECTIVE DATE AND FISCAL YEAR. The Plan shall be effective as
of January 1, 1986. The term "fiscal year," as used in this Plan, means the
fiscal period from time to time employed by Abbott for the purpose of reporting
earnings to shareholders.
1.3 ADMINISTRATION. The Plan will be administered by the
Compensation Committee (the "Committee") appointed by the Board of Directors of
Abbott (the "Board of Directors").
SECTION 2
ELIGIBILITY AND PARTICIPATION
2.1 PERSONS ELIGIBLE FOR PARTICIPATION. Participation in the Plan
will be limited to those Officers and managerial employees of Abbott and its
subsidiaries who, from time to time, shall be selected as participants by the
Committee.
2.2 PARTICIPANTS. The term "participant," as used in the Plan,
shall include both active participants and inactive participants.
2.3 ACTIVE PARTICIPANTS. For each fiscal year, there shall be a
group of active participants which, except as provided below, shall not exceed
forty-five
1
<Page>
persons and shall consist of those persons eligible for participation who shall
have been designated as active participants and notified of that fact by the
Committee at any time before or during the fiscal year. If, as a result of the
growth of Abbott and its subsidiaries or changes in Abbott's organization, the
Board of Directors deems it appropriate, the Board of Directors may, in its
discretion, from time to time, increase the number of persons who may be
designated as active participants for any fiscal year beyond the limit of
forty-five persons provided for above. Selection as an active participant for
any fiscal year shall not confer upon any person a right to be an active
participant in any subsequent fiscal year, nor shall it confer upon him the
right to receive any allocation under the Plan, other than amounts allocated to
him by the Committee pursuant to the Plan, and all such allocations shall be
subject to all of the terms and conditions of the Plan.
2.4 INACTIVE PARTICIPANTS. Inactive participants shall consist of
those persons, including beneficiaries of deceased participants, if any, for
whom an allocation shall have been made for a prior fiscal year under this Plan
or a Predecessor Plan, the payment of which was deferred and remains unpaid.
Status as an inactive participant shall not preclude a person from also being an
active participant during any fiscal year.
SECTION 3
MANAGEMENT INCENTIVE PLAN FUND
3.1 BASE FOR MANAGEMENT INCENTIVE PLAN FUND. The "base earnings"
for determining whether any portion of consolidated net income for any fiscal
year may be allocated to the Management Incentive Plan Fund for such year shall
be that amount of consolidated net income (as defined in subsection 3.2) which
is equal to 15 percent of the Abbott Common Shareholder's Equity for such fiscal
year. For this purpose, "Abbott Common Shareholders' Equity" for any fiscal year
shall mean the Shareholders' Investment, as reflected in the consolidated
balance sheet of Abbott as of the close of the next preceding fiscal year, plus
or minus such adjustments thereof as may be determined by the Committee in order
to reflect:
(a) The existence, issuance, sale, exchange, conversion or
retirement of any securities, other than common shares,
of Abbott (whether involving preferred stock, debt,
convertible preferred stock or convertible debt
securities); and
(b) The issuance or retirement of any common shares or any
changes in accounting methods or period adopted by
Abbott since the close of such next preceding fiscal
year.
Any adjustments to be made in accordance with (a) and (b)
above in determining Abbott Common Shareholders' Equity for any fiscal year
shall be determined by the Committee after consultation with Abbott's
independent auditors, and
2
<Page>
any determination made by the Committee after such consultation shall be
conclusive upon all persons.
3.2 CONSOLIDATED NET INCOME. For the purposes of this Plan, for
any fiscal year or period, the "consolidated net income" shall be the
consolidated net income of Abbott and its subsidiaries, prepared in accordance
with generally accepted accounting principles, consistently applied, after
provision for any interest accrued with respect to such period on account of
deferred payments under this Plan or a Predecessor Plan, but before allowances
for any amount to be allocated to the Management Incentive Plan Fund, both net
of applicable income taxes, and after such adjustments for the following, as may
be determined by the Committee after consultation with Abbott's independent
auditors (all net of applicable income taxes):
(a) The exclusion of any charges for amortization or
goodwill arising out of acquisitions made for
securities which, as a result of adjustments made in
determining Abbott Common Shareholders' Equity pursuant
to subsection 3.1, are treated as common share
equivalents; and
(b) The exclusion of any interest on debt securities which
are convertible into common shares of Abbott and which
shall have been considered as common share equivalents
in determining Abbott Common Shareholders' Equity
pursuant to subsection 3.1 hereof; and
(c) The deduction of any dividend requirement for preferred
shares which has not been considered as common share
equivalents in determining Common Shareholders' Equity
pursuant to subsection 3.1 hereof.
In the sole discretion of the Committee there shall also be
excluded in the calculation of "consolidated net income" unusual gains and
losses and the tax effects thereof, changes in generally accepted accounting
principles and the tax effects thereof and extraordinary gains and losses.
3.3 DETERMINATION OF MANAGEMENT INCENTIVE PLAN AMOUNT FOR ANY
YEAR. For each fiscal year that consolidated net income exceeds base earnings,
and as soon as practicable after ascertainment of that fact, the Committee shall
determine a tentative amount as the Management Incentive Plan Amount for that
year, which tentative amount shall not exceed the lesser of:
(a) an amount which, when treated as an expense currently
deductible for income tax purposes in such year, would
cause a 5 percent reduction in such year's excess of
consolidated net income over the base earnings for such
year; and
3
<Page>
(b) an amount which, when treated as an expense currently
deductible for income tax purposes in such year, would
cause a 1-1/2 percent reduction in such year's
consolidated net income; and
(c) an amount which equals 200 percent of the aggregate
base salaries of all active participants for such year.
For purposes of the Plan "base salary" means the amount of
salary paid to each active participant by Abbott and its subsidiaries for such
year plus the includible portion (as described below) of any "Eligible
Restricted Stock Award," as defined in Section 5-2 of the Abbott Laboratories
Supplemental Pension Plan and does not include bonuses, other awards or any
other compensation of any kind. The includible portion of a participant's
Eligible Restricted Stock Award shall be the portion of the participant's
Eligible Restricted Stock Award that is included in the participant's final
earnings under the Abbott Laboratories Supplemental Pension Plan for such year.
Following determination of such tentative Management Incentive Plan Amount, the
Committee shall report in writing the amount of such tentative amount to the
Board of Directors. At the meeting of the Board of Directors coincident with or
next following receipt by it of the Committee's determination, the Board of
Directors shall have the power to approve or reduce, but not to increase, the
tentative amount reported to it by the Committee. The amount approved by the
Board of Directors shall be the Management Incentive Plan Amount for such year.
3.4 THE MANAGEMENT INCENTIVE PLAN FUND. The Management Incentive
Plan Fund at any time shall consist of an amount equal to the aggregate of the
Management Incentive Plan Amounts established pursuant to subsection 3.3 of this
Plan for all fiscal years during which this Plan shall have been operative, plus
the amounts established as Management Incentive Plan Amounts for any prior
fiscal year pursuant to a Predecessor Plan, reduced by an amount equal to the
aggregate of the amounts of awards which shall have been allocated to
participants in accordance with this Plan or a Predecessor Plan, and awards, or
any other compensation of any kind. Following determination of such tentative
Management Incentive Plan Amount, the Committee shall report in writing the
amount of such tentative amount to the Board of Directors. At the meeting of the
Board of Directors coincident with or next following receipt by it of the
Committee's determination, the Board of Directors shall have the power to
approve or reduce, but not to increase, the tentative amount reported to it by
the Committee. The amount approved by the Board of Directors shall be the
Management Incentive Plan Amount for such year.
SECTION 4
ALLOCATION OF MANAGEMENT INCENTIVE FUND
4.1 ANNUAL ALLOCATION OF MANAGEMENT INCENTIVE FUND. As soon as
practicable after the close of each fiscal year, part or all of the amount then
in the Management Incentive Plan Fund (including the Management Incentive Plan
4
<Page>
Amount for such fiscal year) will be allocated by the Committee among active
participants in the Plan for such fiscal year, having due regard for the
purposes for which the Plan was established, in the following manner and order:
(a) First, if the Chairman of the Board of Abbott shall be
an active participant for such year, the members of the
Committee, other than the Chairman of the Board, shall
determine the amount, if any, to be allocated to the
Chairman of the Board from such Fund for such year; and
(b) Next, all or a part of the balance of such Fund may be
allocated among the active participants (other than the
Chairman of the Board) for such year, in such amounts
and proportions as the Committee shall determine
provided, however, that the amount allocated to any
active participant for any year shall not exceed 200
percent of such participant's base salary for that
year.
4.2 COMMITTEE'S DISCRETION IN ALLOCATIONS. In making any
allocations in accordance with subsection 4.1 for any year, the discretion of
the Committee shall be absolute, and no active participants for any year, by
reason of their designation as such, shall be entitled to any particular amounts
or any amount whatsoever.
SECTION 5
PAYMENT OF AMOUNTS ALLOCATED TO PARTICIPANTS
5.1 TIME OF PAYMENT. For fiscal years beginning after December 31,
1988, a participant shall direct the payment or deferral of an allocation made
to him pursuant to subsection 4.1 (subject to such conditions relating to the
right of the participant to receive Payment of such amount as established by the
Committee) by one or more of the following methods:
(a) current payment in cash to the participant;
(b) current payment of a portion of the allocation in cash
for the participant directly to a "Grantor Trust"
established by the participant, provided such trust is
in a form which the Committee determines is
substantially similar to the trust attached to this
Plan as Exhibit A; and current payment of the balance
of the allocation in cash directly to the participant,
provided that the payment made directly to the
participant shall approximate the aggregate federal,
state and local individual income taxes (determined in
accordance with subsection 6.7) attributable to the
allocation paid pursuant to this paragraph (b); or
5
<Page>
(c) deferral of payment until such time and in such manner
as determined in accordance with subsection 5.11.
A participant shall make the preceding direction within 30 days of the
date he is notified of his eligibility to participate in the Plan. A participant
may change such direction with respect to any future allocation, provided that
the change is made prior to the beginning of the fiscal year to which such
allocation relates. Payment of a participant's allocation for the 1988 fiscal
year and of any allocations deferred under the Plan prior to such year shall be
made in accordance with the provisions of either or both of paragraphs (a) and
(b) above. The Committee shall establish and maintain a Trust Account in
accordance with subsection 5.2 and for purposes of subsection 5.4, shall treat
such payment as if it were an allocation made for that fiscal year.
5.2 SEPARATE ACCOUNTS. The Committee will maintain two separate
Accounts, a "Deferred Account" and a "Trust Account," in the name of each
participant. The Deferred Account shall be comprised of any allocations the
payment of which is deferred pursuant to subsection 5.1(c) and any adjustments
made pursuant to subsection 5.3. The Trust Account shall be comprised of any
allocations paid in cash to a participant (including amounts paid to a
participant's Grantor Trust) pursuant to subsection 5.1(b) and any adjustments
made pursuant to subsection 5.4.
5.3 ADJUSTMENT OF DEFERRED ACCOUNTS. As of the end of each fiscal
year, the Committee shall adjust each participant's Deferred Account as follows:
(a) FIRST, charge an amount equal to any payments made to
the participant during that year pursuant to
subsections 5.11 or 5.12;
(b) NEXT, credit an amount equal to the allocation for that
year that is deferred pursuant to subsection 5.1(c);
and
(c) FINALLY, credit an amount equal to the Interest Accrual
earned for that year pursuant to subsection 5.5.
5.4 ADJUSTMENT OF TRUST ACCOUNTS. As of the end of each fiscal
year, the Committee shall adjust each participant's Trust Account as follows:
(a) FIRST, charge an amount equal to the product of (i) any
payments made to the participant during that year from
the participant's Grantor Trust (other than
distributions of trust earnings in excess of the Net
Interest Accrual authorized by the administrator of the
trust to provide for the Tax Gross Up under subsection
6.6); multiplied by (ii) a fraction, the numerator of
which is the balance in the participant's Trust Account
as of the end of the prior fiscal year and the
denominator of which is the balance of the
participant's
6
<Page>
Grantor Trust (as determined by the administrator of
the trust) as of that same date;
(b) NEXT, credit an amount equal to the allocation for that
year that is paid to the Participant (including the
amount paid to the participant's Grantor Trust)
pursuant to subsection 5.l(b); and
(c) FINALLY, credit an amount equal to the Interest Accrual
earned for that Year pursuant to subsection 5.5.
5.5 INTEREST ACCRUALS ON ACCOUNTS. As of the end of each fiscal
year, a participant's Deferred Account and Trust Account shall be credited with
interest equal to: (a) the average of the prime rates of interest charged by the
two largest banks located in the City of Chicago on loans made by them as of
January 1 and the end of each month of the fiscal year; plus (b) two hundred
twenty-five (225) basis points. Such interest shall be credited on the
conditions established by the Committee, provided that any allocation of an
award from the Management Incentive Plan Fund shall be considered to have been
made and credited to a participant's Deferred Account and Trust Account as of
the first day of the fiscal year in which such award is made regardless of the
date upon which the Committee actually makes the determination to award such
allocation.
5.6 GUARANTEED RATE PAYMENTS. In addition to any allocation made
to a participant for any fiscal year pursuant to subsection 4.1 which is paid or
deferred pursuant to subsection 5.1, Abbott shall also make a payment to a
participant's Grantor Trust (a "Guaranteed Rate Payment") for any year in which
the net earnings of such trust do not equal or exceed the participant's Net
Interest Accrual for that year. A participant's "Net Interest Accrual" for a
year is an amount equal to: (a) the Interest Accrual credited to the
participant's Trust Account for that year; less (b) the product of (i) the
amount of such Interest Accrual, multiplied by (ii) the aggregate of the
federal, state and local individual income tax rates (determined in accordance
with subsection 6.7). The Guaranteed Rate Payment shall equal the difference
between the participant's Net Interest Accrual and the net earnings of the
participant's Grantor Trust for the year, and shall be paid within 90 days of
the end of the fiscal year.
5.7 DESIGNATION OF BENEFICIARIES. Subject to the conditions and
limitations set forth below, each participant, and after a participant's death,
each primary beneficiary designated by a participant in accordance with the
provisions of this subsection 5.7, shall have the right from time to time to
designate a primary beneficiary or beneficiaries and, successive or contingent
beneficiary or beneficiaries to receive unpaid amounts from the participant's
Deferred Account under the Plan and the Predecessor Plans. Beneficiaries may be
a natural person or persons or a fiduciary, such as a trustee of a trust or the
legal representative of an estate. Any such designation shall take effect upon
the death of the participant or such beneficiary, as the case may be, or in the
case of any fiduciary beneficiary, upon the termination of all of its duties
(other than the duty to dispose of the right to receive amounts remaining to be
paid under the Plan or
7
<Page>
a Predecessor Plan). The conditions and limitations relating to the designation
of beneficiaries are as follows:
(a) A nonfiduciary beneficiary shall have the right to
designate a further beneficiary or beneficiaries only
if the original participant or the next preceding
primary beneficiary, as the case may be, shall have
expressly so provided in writing; and
(b) A fiduciary beneficiary shall designate as a further
beneficiary or beneficiaries only those persons or
other fiduciaries who are entitled to receive the
amounts payable from the participant's account under
the trust or estate of which it is a fiduciary.
Any beneficiary designation or grant of any power to any
beneficiary under this subsection may be exercised only by an instrument in
writing, executed by the person making the designation or granting such power
and filed with the Secretary of Abbott during such person's lifetime or prior to
the termination of a fiduciary's duties. If a deceased participant or a deceased
nonfiduciary beneficiary who had the right to designate a beneficiary as
provided above dies without having designated a further beneficiary, or if no
beneficiary designated as provided above is living or qualified and acting, the
Committee, in its discretion, may direct distribution of the amount remaining
from time to time to either:
(i) any one or more or all of the next of kin
(including the surviving spouse) of the
participant or the deceased beneficiary, as the
case may be, and in such proportions as the
Committee determines; or
(ii) the legal representative of the estate of the
deceased participant or deceased beneficiary as
the case may be.
5.8 STATUS OF BENEFICIARIES. Following a participant's death, the
participant's beneficiary or beneficiaries will be considered and treated as an
inactive participant for all purposes of this Plan.
5.9 NON-ASSIGNABILITY AND FACILITY OF PAYMENT. Amounts payable to
participants and their beneficiaries under the Plan are not in any way subject
to their debts and other obligations, and may not be voluntarily or
involuntarily sold, transferred or assigned; provided that the preceding
provisions of this section shall not be construed as restricting in any way a
designation right granted to a beneficiary pursuant to the terms of subsection
5.7. When a participant or the beneficiary of a participant is under legal
disability, or in the Committee's opinion is in any way incapacitated so as to
be unable to manage his or her financial affairs, the Committee may
8
<Page>
direct that payments shall be made to the participant's or beneficiary's legal
representative, or to a relative or friend of the participant or beneficiary for
the benefit of the participant or beneficiary, or the Committee may direct the
payment or distribution for the benefit of the participant or beneficiary in any
manner that the Committee determines.
5.10 PAYER OF AMOUNTS ALLOCATED TO PARTICIPANTS. Any amount
allocated to a participant in the Plan and any interest credited thereto will be
paid by the employer (or such employer's successor) by whom the participant was
employed during the fiscal year for which any amount was allocated, and for that
purpose, if a participant shall have been employed by two or more employers
during any fiscal year the amount allocated under this Plan for that year shall
be an obligation of each of the respective employers in proportion to the
respective amounts of base salary paid by each of them in that fiscal year.
5.11 MANNER OF PAYMENT. Subject to subsection 5.12, a participant
shall elect the timing and manner of payment of his Deferred Account at the time
of his deferral election under subsection 5.l. The participant may select a
payment method from among alternative payment methods established by the
Committee.
5.12 PAYMENTS UPON TERMINATION FOLLOWING CHANGE IN CONTROL.
Notwithstanding any other provisions of this Plan or the Predecessor Plans, or
the provisions of any award made under this Plan or the Predecessor Plans: if
the employment of any participant with Abbott and its subsidiaries should
terminate for any reason within five (5) years after the date of a Change in
Control, the aggregate unpaid balance of all awards previously made to such
participant under this Plan and all Predecessor Plans, plus any unpaid interest
credited thereon, shall be paid to the participant in a lump sum within thirty
(30) days following the date of such termination.
5.13 CHANGE IN CONTROL. A "Change in Control" shall be deemed to
have occurred on the earliest of the following dates:
(a) the date any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Abbott (not
including in the securities beneficially owned by such
Person any securities acquired directly from Abbott or
its Affiliates) representing 20% or more of the
combined voting power of Abbott's then outstanding
securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction
described in clause (i) of paragraph (c) below; or
(b) the date the following individuals cease for any reason
to constitute a majority of the number of directors
then serving: individuals who, 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
9
<Page>
with an actual or threatened election contest,
including but not limited to a consent solicitation,
relating to the election of directors of Abbott) whose
appointment or election by the Board of Directors or
nomination for election by Abbott's shareholders was
approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose
appointment, election or nomination for election was
previously so approved or recommended; or
(c) the date on which there is consummated a merger or
consolidation of Abbott or any direct or indirect
subsidiary of Abbott with any other corporation or
other entity, other than (i) a merger or consolidation
(A) immediately following which the individuals who
comprise the Board of Directors immediately prior
thereto constitute at least a majority of the Board of
Directors of Abbott, the entity surviving such merger
or consolidation or, if Abbott or the entity surviving
such merger or consolidation is then a subsidiary, the
ultimate parent thereof and (B) which results in the
voting securities of Abbott outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of Abbott or
any subsidiary of Abbott, at least 50% of the combined
voting power of the securities of Abbott or such
surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii)
a merger or consolidation effected to implement a
recapitalization of Abbott (or similar transaction) in
which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Abbott (not
including in the securities Beneficially Owned by such
Person any securities acquired directly from Abbott or
its Affiliates) representing 20% or more of the
combined voting power of Abbott's then outstanding
securities; or
(d) the date the shareholders of Abbott approve a plan of
complete liquidation or dissolution of Abbott or there
is consummated an agreement for the sale or disposition
by Abbott of all or substantially all of Abbott's
assets, other than a sale or disposition by Abbott of
all or substantially all of Abbott's assets to an
entity, at least 50% of the combined voting power of
the voting securities of which are owned by
shareholders of Abbott, in combination with
10
<Page>
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.
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) Abbott or any of its
subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Abbott or
any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the shareholders of Abbott in
substantially the same proportions as their ownership
of stock of Abbott.
5.14 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
11
<Page>
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 in
the securities beneficially owned by such Person any
securities acquired directly from Abbott or its
Affiliates).
(d) The Board of Directors adopts a resolution to the
effect that, for purposes of this Agreement, a
Potential Change in Control exists; provided that a
Potential Change in Control described in this paragraph
(d) shall cease to exist upon a determination by the
Board of Directors that the reasons that gave rise to
the resolution providing for the existence of a
Potential Change in Control have expired or no longer
exist.
5.15 PROHIBITION AGAINST AMENDMENT. The provisions of subsections
5.12, 5.13, 5.14 and this subsection 5.15 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 6
MISCELLANEOUS
6.1 RULES. The Committee may establish such rules and regulations
as it may consider necessary or desirable for the effective and efficient
administration of the Plan.
6.2 MANNER OF ACTION BY COMMITTEE. A majority of the members of
the Committee qualified to act on any particular question may act by meeting or
by writing signed without meeting, and may execute any instrument or document
required or delegate to one of its members authority to sign. The Committee from
time to time may delegate the performance of certain ministerial functions in
connection with the Plan, such as the keeping of records, to such person or
persons as the Committee may select. Except as otherwise expressly provided in
the Plan, the costs of administration of the Plan will be paid by Abbott. Any
notice required to be given to, or any document
12
<Page>
required to be filed with the Committee, will be properly given or filed if
mailed or delivered in writing to the Secretary of Abbott.
6.3 RELIANCE UPON ADVICE. The Board of Directors and the Committee
may rely upon any information or advice furnished to it by any Officer of Abbott
or by Abbott's independent auditors, or other consultants, and shall be fully
protected in relying upon such information or advice. No member of the Board of
Directors or the Committee shall be liable for any act or failure to act on
their part, excepting only any acts done or omitted to be done in bad faith, nor
shall they be liable for any act or failure to act of any other member.
6.4 TAXES. Any employer shall be entitled, if necessary or
desirable, to pay, or withhold the amount of any federal, state or local tax,
attributable to any amounts payable by it under the Plan after giving the person
entitled to receive such amount notice as far in advance as practicable, and may
defer making payment of any amount with respect to which any such tax question
may be pending unless and until indemnified to its satisfaction.
6.5 RIGHTS OF PARTICIPANTS. Employment rights of participants with
Abbott and its subsidiaries shall not be enlarged or affected by reason of
establishment of or inclusion as a participant in the Plan. Nothing contained in
the Plan shall require Abbott or any subsidiary to segregate or earmark any
assets, funds or property for the purpose of payment of any amounts which may
have been deferred. The Deferred and Trust Accounts established pursuant to
subsection 5.2 are for the convenience of the administration of the Plan and no
trust relationship with respect to such Accounts is intended or should be
implied. Participant's rights shall be limited to payment to them at the time or
times and in such amounts as are contemplated by the Plan. Any decision made by
the Board of Directors or the Committee, which is within the sole and
uncontrolled discretion of either, shall be conclusive and binding upon the
other and upon all other persons whomsoever.
6.6 TAX GROSS UP. In addition to the allocations provided under
subsection 4.1, each participant (or, if the participant is deceased, the
beneficiary designated under the participant's Grantor Trust) shall be entitled
to a Tax Gross Up payment for each year there is a balance in his or her Trust
Account. The "Tax Gross Up" shall approximate: (a) the amount necessary to
compensate the participant (or beneficiary) for the net increase in the
participant's (or beneficiary's) federal, state and local income taxes as a
result of the inclusion in his or her taxable income of the income of the
participant's Grantor Trust and any Guaranteed Rate Payment for that year; less
(b) any distribution to the participant (or beneficiary) of his or her Grantor
Trust's net earnings for that year; plus (c) an amount necessary to compensate
the participant (or beneficiary) for the net increase in the taxes described in
(a) above as a result of the inclusion in his or her taxable income of any
payment made pursuant to this subsection 6.6. Payment of the Tax Gross Up shall
be made by the employers (in such proportions as Abbott shall designate)
directly from their general corporate assets.
13
<Page>
6.7 INCOME TAX ASSUMPTIONS. For purposes of Sections 5 and 6, a
participant's federal income tax rate shall be deemed to be the highest marginal
rate of federal income individual tax in effect in the calendar year in which a
calculation under those Sections is to be made, and state and local tax rates
shall be deemed to be the highest marginal rates of individual income tax in
effect in the state and locality of the participant's residence on the date such
a calculation is made, net of any federal tax benefits.
6.8 PAYMENT OF PRIOR DEFERRALS. Notwithstanding any other
provision of this Plan, the Committee, in its absolute discretion, may direct
that all or a portion of the balance in a participant's Deferred Account be paid
in accordance with the provisions of subsection 5.1(b). In such event, the
Committee shall establish and maintain a Trust Account in accordance with
subsection 5.2 and, for purposes of subsection 5.4, shall treat such payment as
if it were an allocation made for that fiscal year.
SECTION 7
AMENDMENT, TERMINATION AND CHANGE OF
CONDITIONS RELATING TO PAYMENTS
7.1 AMENDMENT AND TERMINATION. The Plan will be effective from its
effective date until terminated by the Board of Directors. During the fifth year
after the Plan's effective date and during every fifth year thereafter, the
Committee may recommend to the Board of Directors whether the Plan should be
amended or terminated. The Board of Directors reserves the right to amend the
Plan from time to time and to terminate the Plan at any time, except that no
such amendment or any termination of the Plan shall reduce any fixed or
contingent obligations which shall have arisen under the Plan prior to the date
of such amendment or termination, or change the terms and conditions of payment
of any allocation theretofore made without the consent of the participant
concerned.
7.2 CHANGE OF CONDITIONS RELATING TO PAYMENTS. Following the
establishment by the Committee of any conditions relating to the payment of any
amount allocated to a participant for any fiscal year and any interest credited
thereon (including the time of payment or the time of commencement of payment
and any period over which payment shall be made), neither the Committee nor the
participant concerned, acting unilaterally, shall have the power to change the
conditions originally established by the Committee. However, in order to
effectuate the purposes of the Plan, any conditions initially established by the
Committee may be changed thereafter by mutual agreement of the Committee and the
participant concerned.
14
<Page>
EXHIBIT A
IRREVOCABLE GRANTOR TRUST AGREEMENT
THIS AGREEMENT, made this _____ day of ____________, 1991, by and
between _______________________ of ___________, Illinois (the "grantor"), and
The Northern Trust Company located at Chicago, Illinois, as trustee (the
"trustee"),
WITNESSETH THAT:
WHEREAS, the grantor desires to establish and maintain a trust to
hold certain benefits received by the grantor under the 1986 Abbott Laboratories
Management Incentive Plan, as it may be amended from time to time;
NOW, THEREFORE, IT IS AGREED as follows:
<Page>
ARTICLE I
INTRODUCTION
I-1 NAME. This agreement and the trust hereby evidenced (the
"trust") may be referred to as the "______________ 1991 Grantor Trust".
I-2 THE TRUST FUND. The "trust fund" as at any date means all
property then held by the trustee under this agreement.
I-3 STATUS OF THE TRUST. The trust shall be irrevocable. The
trust is intended to constitute a grantor trust under Sections 671-678 of the
Internal Revenue Code, as amended, and shall be construed accordingly.
I-4 THE ADMINISTRATOR. Abbott Laboratories ("Abbott") shall
act as the "administrator" of the trust, and as such shall have certain powers,
rights and duties under this agreement as described below. Abbott will certify
to the trustee from time to time the person or persons authorized to act on
behalf of Abbott as the administrator. The trustee may rely on the latest
certificate received without further inquiry or verification.
I-5 ACCEPTANCE. The trustee accepts the duties and obligations
of the "trustee" hereunder, agrees to accept funds delivered to it by the
grantor or the administrator, and agrees to hold such funds (and any proceeds
from the investment of such funds) in trust in accordance with this agreement.
ARTICLE II
DISTRIBUTION OF THE TRUST FUND
II-1 SEPARATE ACCOUNTS. The administrator shall maintain two
separate accounts under the trust, a "rollout account" and a "deferred account."
Funds delivered to the trustee shall be allocated between the accounts by the
trustee as directed by the administrator. As of the end of each calendar year,
the administrator shall charge each account with all distributions made from
such account during that year; and credit each account with its share of income
and realized gains and charge each account with its share of expenses and
realized losses for the year. The trustee shall not be required to make any
separate investment of the trust fund for the accounts, and may administer and
invest all funds delivered to it under the trust as one trust fund.
II-2 DISTRIBUTIONS FROM THE ROLLOUT ACCOUNT PRIOR TO THE
GRANTOR'S DEATH. The trustee shall distribute principal and accumulated income
credited to the rollout account to the grantor, if then living, at such times
and in such amounts as the administrator shall direct.
<Page>
II-3 DISTRIBUTIONS FROM THE DEFERRED ACCOUNT PRIOR TO THE
GRANTOR'S DEATH. Principal and accumulated income credited to the deferred
account shall not be distributed from the trust prior to the grantor's
retirement or other termination of employment with Abbott or a subsidiary of
Abbott (the grantor's "settlement date"); provided that, each year the
administrator may direct the trustee to distribute to the grantor a portion of
the income of the deferred account for that year, with the balance of such
income to be accumulated in that account. The administrator shall inform the
trustee of the grantor's settlement date. Thereafter, the trustee shall
distribute the amounts from time to time credited to the deferred account to the
grantor, if then living, in a series of annual installments, with the amount of
each installment computed by one of the following methods:
(a) The amount of each installment shall be equal to the
sum of: (i) the amount credited to the deferred
account as of the end of the year in which the
grantor's settlement date occurs, divided by the
number of years over which installments are to be
distributed; plus (ii) the net earnings credited to
the deferred account for the preceding year
(excluding the year in which the grantor's settlement
date occurs).
(b) The amount of each installment shall be determined by
dividing the amount credited to the deferred account
as of the end of the preceding year by the difference
between (i) the total number of years over which
installments are to be distributed, and (ii) the
number of annual installment distributions previously
made from the deferred account.
(c) Each installment (after the first installment) shall
be approximately equal, with the amount comprised of
the sum of: (i) the amount of the first installment,
plus interest thereon at the rate determined under
the 1986 Abbott Laboratories Management Incentive
Plan, compounded annually; and (ii) the net earnings
credited to the deferred account for the preceding
year.
(i) the foregoing, the final installment
distribution made to the grantor under this
paragraph II-3 shall equal the total principal
and accumulated income then held in the trust
fund. The grantor, by writing filed with the
trustee and the administrator on or before the
end of the calendar year in which the
grantor's settlement date occurs (or the end
of the calendar year in which this trust is
established, if the grantor's settlement date
has already occurred), may select both the
period (which may not be less than
<Page>
ten years from the end of the calendar year in
which the grantor's settlement date occurred)
over which the installment distributions are
to be made and the method of computing the
amount of each installment. In the absence of
such a written direction by the grantor,
installment distributions shall be made over a
period of ten years, and the amount of each
installment shall be computed by using the
method described in subparagraph (a) next
above. Installment distributions under this
Paragraph II-3 shall be made as of January 1
of each year, beginning with the calendar year
following the year in which the grantor's
settlement date occurs. The administrator
shall inform the trustee of the amount of each
installment distribution under this paragraph
II-3, and the trustee shall be fully protected
in relying on such information received from
the administrator.
II-4. DISTRIBUTIONS FROM THE TRUST FUND AFTER THE GRANTOR'S
DEATH. The grantor, from time to time may name any person or persons (who may be
named contingently or successively and who may be natural persons or
fiduciaries) to whom the principal of the trust fund and all accrued or
undistributed income therefrom shall be distributed in a lump sum or, if the
beneficiary is the grantor's spouse (or a trust for which the grantor's spouse
is the sole income beneficiary), in installments, as directed by the grantor,
upon the grantor's death. If the grantor directs an installment method of
distribution to the spouse as beneficiary, any amounts remaining at the death of
the spouse beneficiary shall be distributed in a lump sum to the executor or
administrator of the spouse beneficiary's estate. If the grantor directs an
installment method of distribution to a trust for which the grantor's spouse is
the sole income beneficiary, any amounts remaining at the death of the spouse
shall be distributed in a lump sum to such trust. Despite the foregoing, if (i)
the beneficiary is a trust for which the grantor's spouse is the sole income
beneficiary, (ii) payments are being made pursuant to this paragraph II-4 other
than in a lump sum and (iii) income earned by the trust fund for the year
exceeds the amount of the annual installment payment, then such trust may elect
to withdraw such excess income by written notice to the trustee. Each
designation shall revoke all prior designations, shall be in writing and shall
be effective only when filed by the grantor with the administrator during the
grantor's lifetime. If the grantor fails to direct a method of distribution, the
distribution shall be made in a lump sum. If the grantor fails to designate a
beneficiary as provided above, then on the grantor's death, the trustee shall
distribute the balance of the trust fund in a lump sum to the executor or
administrator of the grantor's estate.
II-5 FACILITY OF PAYMENT. When a person entitled to a
distribution hereunder is under legal disability, or, in the trustee's opinion,
is in any way incapacitated so as to be unable to manage his or her financial
affairs, the trustee may
<Page>
make such distribution to such person's legal representative, or to a relative
or friend of such person for such person's benefit. Any distribution made in
accordance with the preceding sentence shall be a full and complete discharge of
any liability for such distribution hereunder.
II-6 PERPETUITIES. Notwithstanding any other provisions of this
agreement, on the day next preceding the end of 21 years after the death of the
last to die of the grantor and the grantor's descendants living on the date of
this instrument, the trustee shall immediately distribute any remaining balance
in the trust to the beneficiaries then entitled to distributions hereunder.
ARTICLE III
MANAGEMENT OF THE TRUST FUND
III-1. GENERAL POWERS. The trustee shall, with respect to the
trust fund, have the following powers, rights and duties in addition to those
provided elsewhere in this agreement or by law:
(a) Subject to the limitations of subparagraph (b) next
below, to sell, contract to sell, purchase, grant or
exercise options to purchase, and otherwise deal with
all assets of the trust fund, in such way, for such
considerations, and on such terms and conditions as
the trustee decides.
(b) To retain in cash such amounts as the trustee
considers advisable; and to invest and reinvest the
balance of the trust fund, without distinction
between principal and income, in obligations of the
United States Government and its agencies or which
are backed by the full faith and credit of the United
States Government or in any mutual fund, common trust
fund or collective investment fund which invests
solely in such obligations; and any such investment
made or retained by the trustee in good faith shall
be proper despite any resulting risk or lack of
diversification or marketability.
(c) To deposit cash in any depositary (including the
banking department of the bank acting as trustee)
without liability for interest, and to invest cash in
savings accounts or time certificates of deposit
bearing a reasonable rate of interest in any such
depositary.
(d) To invest, subject to the limitations of subparagraph
(b) above, in any common or commingled trust fund or
funds maintained or administered by the trustee
solely for the investment of trust funds.
<Page>
(e) To borrow from anyone, with the administrator's
approval, such sum or sums from time to time as the
trustee considers desirable to carry out this trust,
and to mortgage or pledge all or part of the trust
fund as security.
(f) To retain any funds or property subject to any
dispute without liability for interest and to decline
to make payment or delivery thereof until final
adjudication by a court of competent jurisdiction or
until an appropriate release is obtained.
(g) To begin, maintain or defend any litigation necessary
in connection with the administration of this trust,
except that the trustee shall not be obliged or
required to do so unless indemnified to the trustee's
satisfaction.
(h) To compromise, contest, settle or abandon claims or
demands.
(i) To give proxies to vote stocks and other voting
securities, to join in or oppose (alone or jointly
with others) voting trusts, mergers, consolidations,
foreclosures, reorganizations, liquidations, or other
changes in the financial structure of any
corporation, and to exercise or sell stock
subscription or conversion rights.
(j) To hold securities or other property in the name of a
nominee, in a depositary or in any other way, with or
without disclosing the trust relationship.
(k) To divide or distribute the trust fund in undivided
interests or wholly or partly in kind.
(l) To pay any tax imposed on or with respect to the
trust; to defer making payment of any such tax if it
is indemnified to its satisfaction in the premises;
and to require before making any payment such release
or other document from any lawful taxing authority
and such indemnity from the intended payee as the
trustee consider necessary for its protection.
(m) To deal without restriction with the legal
representative of the grantor's estate or the trustee
or other legal representative of any trust created by
the grantor or a trust or estate in which a
beneficiary has an interest, even though
<Page>
the trustee, individually, shall be acting in such
other capacity without liability for any loss that
may result.
(n) To appoint or remove by written instrument any bank
or corporation qualified to act as successor trustee,
wherever located, as special trustee as to part or
all of the trust fund, including property as to which
the trustee does not act, and such special trustee,
except as specifically limited or provided by this or
the appointing instrument, shall have all of the
rights, titles, powers, duties, discretions and
immunities of the trustee, without liability for any
action taken or omitted to be taken under this or the
appointing instrument.
(o) To appoint or remove by written instrument any bank,
wherever located, as custodian of part or all of the
trust fund, and each such custodian shall have such
rights, powers, duties and discretions as are
delegated to it by the trustee.
(p) To employ agents, attorneys, accountants or other
persons, and to delegate to them such powers as the
trustee considers desirable, and the trustee shall be
protected in acting or refraining from acting on the
advice of persons so employed without court action.
(q) To perform any and all other acts which in the
trustee's judgment are appropriate for the proper
management, investment and distribution of the trust
fund.
III-2. PRINCIPAL AND INCOME. Any income earned on the trust fund
which is not distributed as provided in Article II shall be accumulated and from
time to time added to the principal of the trust. The grantor's interest in the
trust shall include all assets or other property held by the trustee hereunder,
including principal and accumulated income.
III-3. STATEMENTS. The trustee shall prepare and deliver monthly
to the administrator and annually to the grantor, if then living, otherwise to
each beneficiary then entitled to distributions under this agreement, a
statement (or series of statements) setting forth (or which taken together set
forth) all investments, receipts, disbursements and other transactions effected
by the trustee during the reporting period; and showing the trust fund and the
value thereof at the end of such period.
III-4. COMPENSATION AND EXPENSES. All reasonable costs, charges
and expenses incurred in the administration of this trust, including
compensation to the trustee, any compensation to agents, attorneys, accountants
and other persons
<Page>
employed by the trustee, and expenses incurred in connection with the sale,
investment and reinvestment of the trust fund shall be paid from the trust fund.
ARTICLE IV
GENERAL PROVISIONS
IV-1. INTERESTS NOT TRANSFERABLE. The interests of the grantor
or other persons entitled to distributions hereunder are not subject to their
debts or other obligations and may not be voluntarily or involuntarily sold,
transferred, alienated, assigned or encumbered.
IV-2. DISAGREEMENT AS TO ACTS. If there is a disagreement
between the trustee and anyone as to any act or transaction reported in any
accounting, the trustee shall have the right to a settlement of its account by
any proper court.
IV-3. TRUSTEE'S OBLIGATIONS. No power, duty or responsibility is
imposed on the trustee except as set forth in this agreement. The trustee is not
obliged to determine whether funds delivered to or distributions from the trust
are proper under the trust, or whether any tax is due or payable as a result of
any such delivery or distribution. The trustee shall be protected in making any
distribution from the trust as directed pursuant to Article II without inquiring
as to whether the distributee is entitled thereto; and the trustee shall not be
liable for any distribution made in good faith without written notice or
knowledge that the distribution is not proper under the terms of this agreement.
IV-4. GOOD FAITH ACTIONS. The trustee's exercise or non-exercise
of its powers and discretions in good faith shall be conclusive on all persons.
No one shall be obliged to see to the application of any money paid or property
delivered to the trustee. The certificate of the trustee that it is acting
according to this agreement will fully protect all persons dealing with the
trustee.
IV-5. WAIVER OF NOTICE. Any notice required under this agreement
may be waived by the person entitled to such notice.
IV-6. CONTROLLING LAW. The laws of the State of Illinois shall
govern the interpretation and validity of the provisions of this agreement and
all questions relating to the management, administration, investment and
distribution of the trust hereby created.
IV-7. SUCCESSORS. This agreement shall be binding on all persons
entitled to distributions hereunder and their respective heirs and legal
representatives, and on the trustee and its successors.
ARTICLE V
CHANGES IN TRUSTEE
V-1. RESIGNATION OR REMOVAL OF TRUSTEE. The trustee may resign
at any time by giving thirty days' advance written notice to the administrator
and
<Page>
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.
<Page>
* * *
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
-----------------------------------------