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Registration No. 333- ___________
______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________
ABBOTT LABORATORIES
(Exact name of registrant as specified in its charter)
Illinois 36-0698440
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Abbott Laboratories 60064-3500
100 Abbott Park Road (Zip Code)
Abbott Park, Illinois
(Address of Principal Executive Offices)
ABBOTT LABORATORIES STOCK RETIREMENT PROGRAM
(Full Title of the Plan)
____________
Jose M. de Lasa
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
(Name and address of agent for service)
Telephone number, including area code, of agent for service: (847) 937-5200
____________
CALCULATION OF REGISTRATION FEE
______________________________________________________________________________
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Securities Amount to be Offering Price Offering Registration
to be Registered Registered Per Share (a) Price (a) Fee (a)
______________________________________________________________________________
Common shares 10,000,000 $ 51.3125 $ 513,125,000 $155,492.43
(without par value)
______________________________________________________________________________
(a) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan named herein. The
filing fee has been calculated in accordance with Rule 457(c) based on the
average of the high and low prices of registrant's Common Shares reported
in the consolidated reporting system on January 6, 1997.
Page 1 of 7
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The contents of Abbott Laboratories Stock Retirement Plan Registration Statement
on Form S-8 (File no. 33-50452) are incorporated herein by reference.
Page 2 of 7
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SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in unincorporated Lake County, and State of Illinois, on
January 6, 1997.
ABBOTT LABORATORIES
By:/s/ DUANE L. BURNHAM
-----------------------------
Duane L. Burnham,
Chairman of the Board and
Chief Executive Officer
Page 3 of 7
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Each person whose signature appears below constitutes and appoints Duane
L. Burnham and Jose M. de Lasa, Esq., and each of them, as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this registration statement,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
act and thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ DUANE L. BURNHAM
_________________________ Chairman of the Board, January 6, 1997
Duane L. Burnham Chief Executive Officer,
and Director of
Abbott Laboratories
/s/ K. FRANK AUSTEN, M.D.
_________________________ Director of Abbott January 6, 1997
K. Frank Austen, M.D. Laboratories
/s/ H. LAURANCE FULLER
_________________________ Director of Abbott January 6, 1997
H. Laurance Fuller Laboratories
/s/ THOMAS R. HODGSON
_________________________ President, Chief Operating January 6, 1997
Thomas R. Hodgson Officer, and Director of
Abbott Laboratories
/s/ ALLEN F. JACOBSON
_________________________ Director of Abbott January 6, 1997
Allen F. Jacobson Laboratories
/s/ DAVID A. JONES
_________________________ Director of Abbott January 6, 1997
David A. Jones Laboratories
/s/ DAVID A. L. OWEN
_________________________ Director of Abbott January 6, 1997
David A. L. Owen Laboratories
/s/ BOONE POWELL, JR.
_________________________ Director of Abbott January 6, 1997
Boone Powell, Jr. Laboratories
/s/ A. BARRY RAND
_________________________ Director of Abbott January 6, 1997
A. Barry Rand Laboratories
/s/ W. ANN REYNOLDS
_________________________ Director of Abbott January 6, 1997
W. Ann Reynolds Laboratories
/s/ WILLIAM P. SMITHBERG
_________________________ Director of Abbott January 6, 1997
William D. Smithburg Laboratories
/s/ JOHN R. WALTER
_________________________ Director of Abbott January 6, 1997
John R. Walter Laboratories
/s/ WILLIAM L. WEISS
_________________________ Director of Abbott January 6, 1997
William L. Weiss Laboratories
Page 4 of 7
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/s/ GARY P. COUGHLAN
_________________________ Senior Vice President, Finance January 6, 1997
Gary P. Coughlan and Chief Financial Officer
(Principal Financial Officer)
of Abbott Laboratories
/s/ THEODORE A. OLSON
_________________________ Vice President and January 6, 1997
Theodore A. Olson Controller (Principal
Accounting Officer)
of Abbott Laboratories
Page 5 of 7
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THE PLAN. Pursuant to the requirements of the Securities Act of 1933,
the Abbott Laboratories Stock Retirement Program has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in unincorporated Lake County, and State of
Illinois, on the 6th day of January, 1997.
ABBOTT LABORATORIES STOCK
RETIREMENT PROGRAM
By: /s/ ELLEN M. WALVOORD
-------------------------------------
Ellen M. Walvoord, Plan Administrator
Page 6 of 7
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4 Abbott Laboratories Stock
Retirement Program.
5 Opinion of Jose M. de Lasa,
as to the legality of the
securities being issued and
the compliance of the Program
with the requirements of ERISA.
23.1 Consent of counsel, Jose M. de
Lasa, is included in his
opinion.
23.2 Consent of Arthur Andersen LLP
as to the use of their report
and references to their firm.
24 Power of Attorney is included
on the signature page.
Page 7 of 7
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ABBOTT LABORATORIES STOCK RETIREMENT PROGRAM
PART A
ABBOTT LABORATORIES STOCK
RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1996)
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ARTICLE 1. INTRODUCTION
1.1. PURPOSE. This document amends and restates the provisions of the
Abbott Laboratories Stock Retirement Plan (the "Plan"), effective as of
January 1, 1996. The Plan and its related Trust are intended to qualify as a
profit-sharing plan and trust under Code sections 401(a) and 501(a), the cash
or deferred arrangement forming part of the Plan is intended to qualify under
Code section 401(k), and the provisions of the Plan and Trust shall be
construed and applied accordingly.
1.2. HISTORY OF THE PRIOR PLAN. The Plan was originally established by
Abbott Laboratories (the "Corporation"), effective July 9, 1951, to facilitate
the retirement of eligible participating employees by providing benefits which
reinforce those available to such employees under the Abbott Laboratories
Annuity Retirement Plan and other Abbott Laboratories retirement benefits.
The Plan provides an arrangement by which employees may invest in stock of
the Corporation ("Company Stock") by contributing to the Abbott Laboratories
Stock Retirement Trust (the "Trust") and by which the Corporation and its
affiliates will encourage such investment by also making contributions to the
Trust. Contributions received by the Trust from the Participants and from the
Employers have been applied by the Trustee to acquire, and hold under the Trust,
shares of Company Stock for the benefit of the Participants in the Plan, to the
end that upon retirement or prior termination of employment, the Participants
may receive a distribution of Company Stock and/or an annuity.
On February 24, 1964, the Corporation was substituted as the employer under
the M & R Retirement Investment Trust and effective as of April 1, 1969, the M &
R Retirement Investment Trust was consolidated with the Plan and Abbott
Laboratories Stock Retirement Trust. Special provisions relating to employees
and other persons covered under the M & R Retirement Investment Trust when it
was consolidated with the Plan and the Trust are set forth in Supplement A to
the Prior Plan. Supplement A modified the Prior Plan and the Trust to the
extent it was inconsistent with the Prior Plan and Trust.
The Plan as in effect on January 1, 1996 applies to Eligible Employees of
the Corporation and of all Subsidiaries and Divisions that participated in the
Plan as of December 31, 1995. The Plan will also apply to Eligible Employees of
any Subsidiary or Division that is designated by the Board of Review to
participate in the Plan in accordance with Section 2.6, from and after the
effective date of such designation.
1.3. RIGHTS UNDER PRIOR PLAN. Except as otherwise specifically provided,
the benefits provided under the Plan for any Participant who retired or whose
employment with the Employers otherwise terminated prior to January 1, 1996 will
be governed in all respects by the terms of the Prior Plan as in effect on the
date of his or her retirement or other termination of employment.
ARTICLE 2. PARTICIPATION
2.1. DATE OF PARTICIPATION. Each individual who was a Participant on
December 31, 1995 and is an Eligible Employee on January 1, 1996 shall continue
to be a Participant in the Plan. Each other Employee shall become a Participant
(a) for purposes of making Supplemental Contributions, on any Entry Date
following his or her date of hire after he or she has entered into a
Contribution Agreement under Section 3.4, and (b) for purposes of Basic
Contributions and Employer Contributions on an Entry Date following the day he
or she completes two Years of Credited Service and completes the applicable
forms under Sections 2.2 and 3.4, provided in each case that he or she is an
Eligible Employee on such Entry Date.
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2.2. ENROLLMENT OF PARTICIPANTS. An Eligible Employee shall become a
Participant by signing an application form furnished by the Administrator within
30 days after he or she receives the application, or by such other means as the
Administrator establishes for enrollment. Such application shall authorize the
Participant's Employer to deduct from his or her Compensation (or reduce his or
her Compensation by) the contributions required under Section 3.2 or 3.3,
whichever is applicable.
2.3. REEMPLOYMENT OF PARTICIPANT. If an Employee's employment with the
Corporation, an Affiliated Corporation or a Subsidiary should terminate and such
Employee is subsequently reemployed by the Corporation, an Affiliated
Corporation or a Subsidiary, the following shall apply:
(a) If the reemployment occurs before the Employee has a Break Year,
the Period of Credited Service to which he or she was entitled at the time
of termination shall be reinstated, the period of his or her absence (but
not to exceed 12 months) shall be included in his or her Period of Credited
Service, and he or she will be reinstated as a Participant on his or her
date of reemployment, if the Participant is an Eligible Employee on that
date.
(b) If an Employee is reemployed after a Break Year, and at the time of
termination he or she was not a Participant in the Plan, then:
(i) If the Employee's Years of Credited Service to which he
or she was entitled at the time of termination exceeds his or her
number of consecutive Break Years, the Period of Credited Service to
which he or she was entitled at the time of termination shall be
reinstated and he or she will be reinstated as a Participant on his
or her date of reemployment if he or she is then an Eligible
Employee.
(ii) If the Employee's number of consecutive Break Years equals
or exceeds the Period of Credited Service to which he or she was
entitled at the time of termination, the Employee shall be
considered as a new Employee for all purposes of the Plan and any
Period of Credited Service to which he or she was entitled prior to
the date of termination shall be disregarded.
(c) If an Employee is reemployed after a Break Year, and at the time
of termination he or she was a Participant in the Plan, the Period of
Credited Service to which he or she was entitled at the time of termination
shall be reinstated.
(d) If a Participant is transferred or is given a leave of absence
for a temporary or indefinite period for the purpose of becoming an
Employee of a Subsidiary or an Affiliated Corporation which is not an
Employer hereunder, and such Participant is not treated as an Eligible
Employee under Section 15.23(b), he or she will continue as a Participant
until his or her retirement date or earlier termination of service with the
Corporation, all Affiliated Corporations and all Subsidiaries, except that
during such period the Employee may not make any contributions and will not
be credited with any Employer contributions except for a pro rata share of
his or her Employer's contributions for the year in which the transfer is
made or the leave began, as the case may be, based upon his or her own
contributions and service up to the date of such transfer or the date such
leave began, as the case may be. If a Participant's employment with the
Corporation, all Affiliated Corporations and all Subsidiaries is terminated
by reason of his or her death, retirement or otherwise while he or she is
employed by the Corporation, any Affiliated Corporation or any Subsidiary
which is
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not an Employer hereunder, the Participant will be considered to
have terminated his or her employment with the Employers at the same time
and for the same reason.
(e) In the case of maternity or paternity absence (as defined below)
which commences on or after January 1, 1985, an Employee shall be deemed to
be employed by the Corporation, an Affiliated Corporation, or any
Subsidiary (solely for purposes of determining whether the Employee has
incurred a Break Year) during the calendar year following the calendar year
in which his or her employment terminated. A "maternity or paternity
absence" means an Employee's absence from work because of the pregnancy of
the Employee or birth of a child of the Employee, the placement of a child
with the Employee in connection with the adoption of such child by the
Employee, or for purposes of caring for the child immediately following
such birth or placement. The Administrator may require the Employee to
furnish such information as the Administrator considers necessary to
establish that the employee's absence was for one of the reasons specified
above.
2.4. DURATION OF PARTICIPATION. An individual who has become a Participant
under the Plan will remain a Participant for as long as an Account is maintained
under the Plan for his or her benefit, or until his or her death, if earlier.
Notwithstanding the preceding sentence and unless otherwise expressly provided
for under the Plan, no contributions under the Plan shall be made on behalf of
any Participant, unless the Participant is an Eligible Employee at the time for
which the contribution or allocation is made.
2.5. PARTICIPANT RESTRICTED DUE TO CONFLICT OF INTEREST. If a conflict of
interest as defined in subsection (d) should arise with respect to any
Participant:
(a) Such Participant shall continue as a Participant until his or
her retirement date or earlier termination of service with the Employer,
an Affiliated Corporation or a Subsidiary, except that during the period
of such conflict of interest such Participant shall make no Basic
After-Tax Contributions, such Participant's Employer shall make no Basic
Pre-Tax Contributions on his or her behalf, and such Participant shall be
credited with no Employer Contributions except for a pro rata share of
his or her Employer's Employer Contributions for the year in which such
conflict arises, based on his or her Basic Contributions and service to
the date such conflict arises.
(b) Such Participant must, within 30 days after notice from the
Administrator, elect to have 100% of the value of the shares of Company
Stock credited to his or her Accounts transferred to the SRP Stable Value
Fund or one of the other investment options available under the Plan
(other than Company Stock). If the Participant fails to make such
election, such shares shall be sold and the sale proceeds shall be
transferred to the default Investment Fund selected under Section 5.8.
Any Basic After-Tax Contributions, Basic Pre-Tax Contributions and
pro-rata Employer Contributions, any Supplemental After-Tax Contributions
and Supplemental Pre-Tax Contributions designated by the Participant
under Section 5.1 to be invested in shares of Company Stock, and any
dividends on shares of Company Stock held in the Participant's Accounts,
made for or paid during the calendar year in which such conflict of
interest arises, shall likewise be transferred to the investment option
the Participant selects under the first sentence of this subsection (b)
or to the default Investment Fund referred to in the second sentence.
These transfers shall not be subject to any of the investment
restrictions or transition rules described in Sections 5.4, 5.5 or 5.6.
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(c) Such Participant may elect to make Supplemental After-Tax
Contributions and Supplemental Pre-Tax Contributions during the period of
such conflict of interest, notwithstanding the suspension of Basic
After-Tax Contributions and Basic Pre-Tax Contributions under subsection
(a), provided that no such contributions may be invested in shares of
Company Stock.
(d) A "conflict of interest" means a business, professional, family
or other relationship involving the Participant which, as a result of
statute, ordinance, regulation or generally recognized professional
standard or rule requires divestiture by the Participant of shares of
Company Stock. The existence or non-existence of a conflict of interest
for purposes of this Section 2.5 shall be determined by the
Administrator, which determination shall be final and binding on all
persons. Any determination made under this subsection (d) shall have no
effect on the application of any human resources or corporate policies of
any Employer regarding conflict of interest.
2.6. PARTICIPATION BY ADDITIONAL PARTICIPATING EMPLOYERS. The Board of
Review may extend the Plan to any nonparticipating Division by filing with the
Trustee and the Co-Trustees a certified copy of an appropriate resolution by the
Board of Review to that effect. Any Subsidiary or Affiliated Corporation may
adopt the Plan and become a participating Employer hereunder by:
(a) filing with the Board of Review, the Trustee and Co-Trustees a
written instrument to that effect, and
(b) filing with the Trustee and the Co-Trustees a certified copy of a
resolution of the Board of Review consenting to such action.
At the time the Plan is extended to any Division of the Corporation or is
adopted by any Subsidiary or Affiliated Corporation or any time thereafter, the
Board of Review may modify the Plan or any of its terms as applied to said
Division, Subsidiary, or Affiliated Corporation and its employees. The Board of
Review may include in the Plan any employee of any prior separate business
entity, part or all of which was acquired by or becomes a part of any Employer.
To the extent and on the terms so provided by the Board of Review at the time of
acquisition, or at any subsequent date or in any Supplement to the Plan, the
last continuous period of employment of any employee with such prior separate
business entity, part or all of which is or was acquired by, or becomes a part
of any Employer, will be considered a Period of Credited Service.
2.7. SECURITIES LAW RESTRICTIONS.
(a) The Administrator may, from time to time, impose such
restrictions on participation in the Plan, as the Administrator deems
advisable, to facilitate compliance with federal and state securities laws,
to secure exemption under any rule of the Securities and Exchange
Commission, or to comply with the Corporation's corporate policy with
respect to "blackout periods" related to Company Stock. Such restrictions
shall apply to all Participants or to such individual Participants as the
Administrator shall determine in his or her sole discretion and may include
but shall not be limited to (i) moratoriums on purchases, sales,
withdrawals or distributions of Company Stock; (ii) moratoriums on loans
and transfers into and out of Company Stock; and (iii) suspensions of Basic
Contributions and Supplemental Contributions allocated to Company Stock.
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(b) Any Participant for whom Basic Contributions are suspended under
Section 2.7(a) may elect to make or continue making Supplemental
Contributions, provided that no such contributions may be invested in
shares of Company Stock.
ARTICLE 3. CONTRIBUTIONS
3.1. PARTICIPANT CONTRIBUTIONS. Except as provided in Sections 2.5 and
2.7, each Participant who has satisfied the eligibility requirements of Section
2.1(b) may have Basic Contributions made to the Plan on his or her behalf as
described in Section 3.2. Each Participant who has satisfied the eligibility
requirements of Section 2.1(a) may elect to have Supplemental Contributions made
to the Plan on his or her behalf as described in Section 3.3 at any time after
his or her date of hire; provided, however, that if the Participant is eligible
to make Basic Contributions, he or she may make Supplemental Contributions only
if Basic Contributions are concurrently being made.
3.2. BASIC CONTRIBUTIONS. Except as provided in Section 2.5, each
Participant who is an Eligible Employee may enter into a Contribution Agreement
with the Employer under which the Participant's Compensation for each pay period
shall be reduced by 2%, and the Employer will contribute to the Trust an equal
amount as a Basic Pre-Tax Contribution, or as a Basic After-Tax Contribution, as
the Participant elects. For purposes of this Section 3.2, Compensation shall be
limited to that portion of his or her Compensation as is determined from time to
time by the Board of Directors or the Board of Review. Each Participant who
makes such contributions shall be eligible to share in the Employer
Contributions under Section 3.5.
3.3. SUPPLEMENTAL CONTRIBUTIONS. If a Participant has made the Basic
Contributions required under Section 3.2 (or is not yet eligible to make such
contributions because he or she has not completed two Years of Credited
Service), he or she may make Supplemental Contributions in an amount equal to an
additional 1% to 10% of his or her Compensation as Supplemental Pre-Tax
Contributions and an additional 1% to 10% of his or her Compensation as
Supplemental After-Tax Contributions; provided that the aggregate Supplemental
Contributions shall not exceed 16% of the Participant's Compensation, and all
Supplemental Contributions shall be multiples of 1% of the Participant's
Compensation. The Participant shall elect in the Contribution Agreement
described in Section 3.4 to make such contributions as Supplemental Pre-Tax
Contributions, as Supplemental After-Tax Contributions, or both, as applicable.
No Employer Contributions under Section 3.5 shall be made with respect to such
Supplemental Contributions.
3.4. CONTRIBUTION AGREEMENTS. Each Contribution Agreement shall be on a
form prescribed or approved by the Administrator or in such manner as the
Administrator finds acceptable, and may be entered into, changed or revoked by
the Participant, with such prior notice as the Administrator may prescribe, as
of the first day of any pay period with respect to Compensation payable
thereafter. A Contribution Agreement shall be effective with respect to
Compensation payable to a Participant after the date determined by the
Administrator, but not earlier than the date the Agreement is entered into. The
Administrator may reject, amend or revoke the Contribution Agreement of any
Participant if the Administrator determines that the rejection, amendment or
revocation is necessary to ensure that the limitations referred to in Section
3.8 and Article 11 are not exceeded.
3.5. EMPLOYER CONTRIBUTIONS. For each Plan Year beginning in or after 1996,
the Employers shall make Employer Contributions to the Trust for the benefit of
each Participant who is an Eligible Employee at any time during the Plan Year
and on whose behalf Basic Contributions have been made at any time during the
Plan Year. The amount of Employer Contributions made by
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the Employers for a Plan Year shall be that amount allocated to the Plan
under Section 1.4 of the Preamble to the Abbott Laboratories Stock Retirement
Program for such Plan Year.
The Employers may contribute from time to time to the Unallocated Account a
portion of the estimated Employer Contributions for the Plan Year. The Trustee
shall invest such funds in Company Stock periodically in accordance with stock
trading procedures established by the Co-Trustees and agreed to by the Trustee.
All dividends paid during the year on the Company Stock thus purchased and held
in the Unallocated Account and other income received on Employer Contributions
held in the Unallocated Account pending investment in Company Stock shall be
used to purchase additional Company Stock to the extent such funds are not used
to pay Plan expenses.
After the amount of Employer Contributions for the Plan Year has been
determined, the Employers shall pay the remaining Employer Contributions to the
Trust within 90 days after the end of the Plan Year. The Company Stock
purchased with such additional Employer Contributions and all shares of Company
Stock then held in the Unallocated Account shall be allocated among the accounts
of the eligible Participants as of the last day of the Plan Year, based on the
value of the Participant's earnings points and service points determined as
follows:
(a) One earnings point will be allocated to each eligible Participant
for each $2 of Basic Contributions made on his or her behalf during the
Plan Year;
(b) Five service points will be allocated to each eligible
Participant for each full Year of Credited Service he or she has earned as
of the end of the Plan Year, not to exceed 175 service points;
(c) A Participant who dies, retires under the Abbott Laboratories
Annuity Retirement Plan, or terminates employment with an Employer on
account of total disability for which benefits are payable under the Abbott
Laboratories Extended Disability Plan, at any time during the Plan Year,
will be considered as having continued to be employed until December 31 of
that Year and will thus earn a Year of Credited Service for purposes of
subsection (b);
(d) A Participant who separates from service with the Corporation,
all Affiliated Corporations and all Subsidiaries for any reason other than
death, disability or retirement, at any time during the Plan Year, will be
allocated a pro rata portion of the service points the Participant would
have received had the Participant continued to be employed until December
31 of that Year, prorated based on the months during the Plan Year prior to
the Participant's separation from service, and will thus earn a partial
Year of Credited Service for purposes of subsection (b);
(e) A Participant who is transferred or given a leave of absence in
circumstances described in Section 2.3(d) above, at any time during the
Plan Year, will be allocated a pro rata portion of the service points the
Participant would have received had the Participant continued until
December 31 of that year, prorated based on the Participant's service up to
the date of such transfer or the date such leave began, as the case may be,
and will thus earn a partial Year of Credited Service for purposes of
subsection (b);
(f) If (i) a Participant retires under the Abbott Laboratories
Annuity Retirement Plan and elects to receive the distribution of his or
her Accounts during the same Plan Year, (ii) a Participant dies during the
Plan Year and the Beneficiary elects to take a distribution of the
Participant's Accounts during the same Plan Year; or (iii) a Participant
separates from
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service during the Plan Year for reasons other than retirement or death
and does not elect to defer his distribution to a later Plan Year, the
Employer Contribution due in each case for the Plan Year shall be
calculated using the Point Value determined for the prior Plan Year and
allocated to the applicable Participant's Employer Contribution Account.
If a Participant or Beneficiary who becomes eligible for a distribution
during the Plan Year does not take a distribution during the same Plan
Year as described in the prior sentence, the Employer Contribution which
would be allocable to his or her Accounts shall be determined and
allocated as of the end of the Plan Year under Subsection 3.5(g) below,
as if the Participant were actively employed as of the last day of the
Plan Year, but shall be calculated as described in (a)-(e) above based on
the service recognized therein.
(g) The amount of the Company Stock which will be allocated as of the
end of the Plan Year to the Employer Contribution Account of each eligible
Participant for such Plan Year shall be determined by multiplying the
aggregate cost (after adding earnings and deducting expenses as herein
permitted) of the Company Stock held in the Unallocated Account at the end
of the Plan Year by a fraction, the numerator of which is the sum of the
Participant's earnings points and service points as of the end of the Plan
Year and the denominator of which is the aggregate of all earnings points
and all service points for all eligible Participants as of the end of such
Plan Year (less the points attributable to Participants to whom or on whose
behalf distributions are made during the Plan Year). Once the portion of
the aggregate cost which is attributable to each eligible Participant is
determined, the applicable number of shares represented by such cost shall
be allocated to the Participant's Employer Contribution Account.
3.6. QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTIONS. At the direction of the
Corporation, an Employer may make Qualified Nonelective Employer Contributions
to the Trust for a Plan Year either (a) on behalf of all Participants for whom
Pre-Tax Contributions are made for the Plan Year, or (b) on behalf of only those
Participants for whom Pre-Tax Contributions for the Plan Year are made and who
are not Highly Compensated Employees for the Plan Year, as the Board of Review
shall determine. Such Qualified Nonelective Employer Contributions shall be
made only if, when they are combined with all employer contributions to all
plans which form a part of the Abbott Laboratories Stock Retirement Program, the
aggregate employer contributions of the Employers for the Plan Year to all such
plans do not exceed 7.5 percent of the declared dividends of the Corporation for
the Plan Year. Except as otherwise expressly provided for, any Qualified
Nonelective Employer Contribution shall be treated as a Pre-Tax Contribution for
all purposes under the Plan. Qualified Nonelective Employer Contributions may be
made pursuant to this Section 3.6, (i) with respect only to Participants who are
employed by any Subsidiary which is not an Affiliated Corporation, (ii) with
respect only to Participants who are employed by Employers which are Affiliated
Corporations, or (iii) with respect to Participants described in both (i) and
(ii).
3.7. TIME FOR MAKING AND CREDITING OF CONTRIBUTIONS. Basic and
Supplemental Pre- Tax and After-Tax Contributions will be withheld from the
Participants' Compensation through payroll deductions and will be paid in cash
to the Trust as soon as such contributions can reasonably be segregated from the
general assets of the Employers, but in any event within 90 days after the date
on which the Compensation to which such contributions relate is paid. Such
contributions will be credited to the Participants' respective Pre-Tax
Contribution and After-Tax Contribution Accounts as of the earlier of (a) the
date such contributions are received by the Trust and (b) the last day of the
Plan Year in which the Compensation is paid. In addition and subject to the
limits provided in Section 3.3, a Participant may make Supplemental After-Tax
Contributions by delivering to the Trustee, a certified check in the amount of
such contribution and the contribution shall be credited to the Participant's
Supplemental After-Tax Contribution Account as of the date it is received by the
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Trustee. Any Employer Contributions or Qualified Nonelective Employer
Contributions for a Plan Year will be contributed to the Trust at such time as
the Corporation determines, but no later than the time prescribed by law
(including extensions) for filing the Corporation's federal income tax return
for its taxable year in or with which the Plan Year ends. Such contributions
will be credited to the Employer Contribution Accounts or Pre-Tax Contribution
Accounts, respectively, of Participants on whose behalf they are made at such
time as the Corporation determines, but no later than the last day of such Plan
Year.
3.8. CERTAIN LIMITS APPLY. All contributions to this Plan are subject to
the applicable limits set forth under Code sections 401(k), 401(m), 402(g), 404,
and 415, as further described in Article 11.
3.9. RETURN OF CONTRIBUTIONS. No property of the Trust or contributions
made by the Employers pursuant to the terms of the Plan shall revert to the
Employers or be used for any purpose other than providing benefits to Eligible
Employees or their Beneficiaries and defraying the expenses of the Plan and the
Trust, except as follows:
(a) Upon request of the Corporation, contributions made to the Plan
before the issuance of a favorable determination letter by the Internal
Revenue Service with respect to the initial qualification of the Plan under
Section 401(a) of the Code may be returned to the contributing Employer,
with all attributable earnings, within one year after the Internal Revenue
Service refuses in writing to issue such a letter.
(b) Any amount contributed under the Plan by an Employer by a mistake
of fact as determined by the Employer may be returned to such Employer upon
its request, within one year after its payment to the Trust.
(c) Any amount contributed under the Plan by an Employer on the
condition of its deductibility under Section 404 of the Code may be
returned to such Employer upon its request, within one year after the
Internal Revenue Service disallows the deduction in writing.
(d) Earnings attributable to contributions returnable under paragraph
(b) or (c) shall not be returned to the Employer, and any losses
attributable to those contributions shall reduce the amount returned.
In no event shall the return of a contribution hereunder cause any Participant's
Accounts to be reduced to less than they would have been had the mistaken or
nondeductible amount not been contributed. No return of a contribution
hereunder shall be made more than one year after the mistaken payment of the
contribution, or disallowance of the deduction, as the case may be.
3.10. SPECIAL LIMITS FOR CORPORATE OFFICERS. Notwithstanding any other
provision of the Plan, the Administrator may, from time to time, impose
additional limits on the percentages of Compensation which may be contributed to
the Plan by, or on behalf of, Corporate Officers, provided that such additional
limits are lower than the limits applicable to other Participants. The amount
and terms of such limits shall be determined by the Administrator in its sole
discretion, need not be the same for all Corporate Officers and may be changed
or repealed by the Administrator at any time. For purposes of this Section
3.10, the term "Corporate Officer" shall mean an individual elected an officer
of the Corporation by its Board of Directors but shall not include assistant
officers.
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ARTICLE 4. PARTICIPANT ACCOUNTS
4.1. ACCOUNTS. The Administrator will establish and maintain (or cause the
Trustee to establish and maintain) for each Participant a Basic After-Tax
Contribution Account, a Basic Pre-Tax Contribution Account, a Supplemental
After-Tax Contribution Account, a Supplemental Pre-Tax Contribution Account, an
Employer Contribution Account, a Rollover Contribution Account (if applicable),
a Transfer Contribution Account (if applicable) and such other accounts or
sub-accounts as the Administrator in its discretion deems appropriate. All such
Accounts shall be referred to collectively as the "Accounts".
4.2. ADJUSTMENT OF ACCOUNTS. Except as provided in the following sentence,
as of each Valuation Date, the Administrator or Trustee, as the case may be,
shall adjust the balances of each Account maintained under the Plan on a uniform
and consistent basis to reflect the contributions, distributions, income,
expense, and changes in the fair market value of the assets attributable to such
Account since the prior Valuation Date, in such reasonable manner as the
Administrator or Trustee, as the case may be, shall determine. Employer
Contributions made to the Unallocated Account, Company Stock acquired under
Section 3.5 with such Employer Contributions, and dividends paid on such Company
Stock will not be valued as of each Valuation Date, but will be allocated to the
Participants' Accounts only as of the end of the Plan Year in accordance with
Section 3.5 and thereafter such amounts will be valued in accordance with the
first sentence of this Section 4.2. Notwithstanding any other provision of the
Plan, to the extent that Participants' Accounts are invested in mutual funds or
other assets for which daily pricing is available ("Daily Pricing Media"), all
amounts contributed to the Trust will be invested at the time of their actual
receipt by the Daily Pricing Media, and the balance of each Account shall
reflect the results of such daily pricing from the time of actual receipt until
the time of distribution. Investment elections and changes made pursuant to
Section 5.7 shall be effective upon receipt by the Daily Pricing Media.
References elsewhere in the Plan to the investment of contributions "as of" a
date other than that described in this Section 4.2 shall apply only to the
extent, if any, that assets of the Trust are not invested in Daily Pricing
Media.
ARTICLE 5. INVESTMENT OF ACCOUNTS
5.1. COMPANY STOCK. All Basic Contributions and Employer Contributions
shall be invested in shares of Company Stock. A Participant may also direct
that some or all of his or her Supplemental Contributions, Rollover
Contributions (if applicable) or Transfer Contributions (if applicable) be
invested in shares of Company Stock. Company Stock shall be purchased and
sold by the Trustee on the open market or from the Corporation in accordance
with stock trading procedures established by the Co-Trustees and agreed to by
the Trustee.
5.2. SRP STABLE VALUE FUND. All funds invested in the Fixed Income Option
and the Guaranteed Income Option under the Prior Plan as of December 31, 1995
shall be invested in the SRP Stable Value Fund on and after January 1, 1996,
unless and until such funds are transferred to another Investment Fund described
in Section 5.3. A Participant may direct that some or all of his or her
Supplemental Pre-Tax Contribution Account or Supplemental After-Tax Contribution
Account be transferred to and invested in the SRP Stable Value Fund, subject to
the transition rules described in Section 5.4. In addition, a Participant may
direct that some or all of his or her Supplemental Contributions, Rollover
Contributions, or Transfer Contributions made on or after January 1, 1996 be
invested in the SRP Stable Value Fund.
5.3. OTHER INVESTMENT FUNDS. The Co-Trustees may, from time to time,
direct the Trustee to establish one or more Investment Funds, which may include
registered investment
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companies (including those for which the Trustee or an affiliate is the
investment advisor, principal underwriter or distributor), group trusts for
the collective investment of pension and profit sharing plans which are
qualified under section 401(a) of the Code, and other pooled Investment
Funds. A Participant may invest some or all of his or her Supplemental
Contributions, Rollover Contributions or Transfer Contributions made on or
after January 1, 1996 in one or more of the Investment Funds available under
the Plan in such increments and in such manner as the Co-Trustees and the
Trustee establish in investment procedures. To the extent permitted by
Sections 5.4, 5.5 and 5.6, a Participant may instruct the Trustee that
amounts held in his or her Accounts that are invested in Company Stock or in
the SRP Stable Value Fund be transferred to and invested in one or more of
the Investment Funds established under this Section 5.3. Any amounts held in
a Participant's Accounts that are not otherwise restricted as to investment
under Section 5.1, 5.2, 5.4, 5.5 or 5.6 may be invested or reinvested in
Company Stock or any of the Investment Funds then available under the Plan in
accordance with the procedures established under Section 5.7.
5.4. TRANSFER RESTRICTIONS APPLICABLE TO COMPANY STOCK HELD IN SUPPLEMENTAL
CONTRIBUTION ACCOUNTS AS OF DECEMBER 31, 1995. Effective April 3, 1996 (or on
such subsequent date as the Administrator determines in his or her sole
discretion), a Participant (who is not eligible for the Pre-Retirement Feature
described in Section 5.6) may direct the Trustee to sell a portion of the shares
of Company Stock held in his or her Supplemental Pre-Tax Contribution Account or
Supplemental After-Tax Contribution Account ("Supplemental Contribution
Accounts") as of December 31, 1995 (as adjusted for subsequent stock dividends
and splits) ("Transition Shares") and reinvest the proceeds in the SRP Stable
Value Fund or in one or more of the other Investment Funds described in Section
5.3. The amount of the Transition Shares that shall be available for
reinvestment (the "unrestricted amount") shall be determined in accordance with
the following transition rules:
(a) 1996. Effective April 3, 1996 (or such subsequent date as the
Administrator determines in his or her sole discretion), the unrestricted
amount shall be 20% of the Participant's Transition Shares.
(b) 1997. Effective January 1, 1997 (or such earlier date as the
Administrator determines in his or her sole discretion), the unrestricted
amount shall be 40% of the Participant's Transition Shares (less the number
of such Shares sold pursuant to subsection (a) above).
(c) 1998. Effective January 1, 1998 (or such earlier date as the
Administrator determines in his or her sole discretion), the unrestricted
amount shall be 60% of the Participant's Transition Shares (less the number
of such Shares sold pursuant to subsections (a) or (b) above).
(d) 1999. Effective January 1, 1999 (or such earlier date as the
Administrator determines in his or her sole discretion), the unrestricted
amount shall be 80% of the Participant's Transition Shares (less the number
of such Shares sold pursuant to subsections (a), (b) or (c) above).
(e) 2000. Effective January 1, 2000 (or such earlier date as the
Administrator determines in his or her sole discretion), the unrestricted
amount shall be 100% of the Participant's Transition Shares.
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All dividends received on Transition Shares after January 1, 1996 shall be
treated as unrestricted and may be invested in any of the Investment Funds then
available under the Plan.
The restrictions and transition rules described in this Section 5.4 shall
apply to all active Participants, all Participants who terminated employment
(other than those Participants who retired under the Abbott Laboratories Annuity
Retirement Plan), all Beneficiaries of Participants who died while employed or
after termination of employment (other than Beneficiaries of Participants who
retired under the Abbott Laboratories Annuity Retirement Plan) and all Alternate
Payees.
5.5. TRANSFER RESTRICTIONS APPLICABLE TO SUPPLEMENTAL CONTRIBUTION ACCOUNTS
INVESTED IN THE FIXED INCOME OPTION OR THE GUARANTEED INCOME OPTION AS OF
DECEMBER 31, 1995. A Participant's Supplemental Contribution Accounts that were
invested in the Fixed Income Option or Guaranteed Income Option as of December
31, 1995 ("Transition Amount") and which will be held in the SRP Stable Value
Fund as of January 1, 1996 will be considered restricted as to investment,
subject to the transition rules described in this Section 5.5. A portion of the
Transition Amount shall become unrestricted (the "unrestricted amount") and, at
any time after April 3, 1996 (or such subsequent date as the Administrator
determines in his or her sole discretion), may be reinvested in one or more of
the other Investment Funds described in Section 5.3 as follows:
(a) 1996. Effective April 3, 1996 (or such subsequent date as the
Administrator determines in his or her sole discretion), the unrestricted
amount will be 20% of the Participant's Transition Amount.
(b) 1997. Effective January 1, 1997 (or such earlier date as the
Administrator determines in his or her sole discretion), the unrestricted
amount will be 40% of the Participant's Transition Amount (less any amount
reinvested under subsection (a) above).
(c) 1998. Effective January 1, 1998 (or such earlier date as the
Administrator determines in his or her sole discretion), the unrestricted
amount will be 60% of the Participant's Transition Amount (less any amount
reinvested under subsection (a) or (b) above).
(d) 1999. Effective January 1, 1999 (or such earlier date as the
Administrator determines in his or her sole discretion), the unrestricted
amount will be 80% of the Participant's Transition Amount (less any amount
reinvested under subsection (a), (b) or (c) above).
(e) 2000. Effective January 1, 2000 (or such earlier date as the
Administrator determines in his or her sole discretion) and for all periods
thereafter, the unrestricted amount will be 100% of the Participant's
Transition Amount.
All interest paid in the SRP Stable Value Fund after January 1, 1996 on
Transition Amounts shall be treated as unrestricted as to investment and may be
invested in any of the Investment Funds then available under the Plan.
The restrictions and transition rules described in this Section 5.5 shall
apply to all Participants.
5.6. PRE-RETIREMENT FEATURE FOR REINVESTMENT OF COMPANY STOCK. Effective
April 3, 1996 (or such subsequent date as the Administrator determines in his or
her sole discretion) and notwithstanding the provisions of Section 5.4 above, a
Participant who has attained age 50 prior to
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January 1, 1996 or who will attain age 50 during the 1996 calendar year, may
direct the Trustee to sell all or a portion of the Company Stock held in his
or her Accounts as of January 1, 1996 (the "PRF Shares") and reinvest the
proceeds in the SRP Stable Value Fund or in any of the other Investment Funds
described in Section 5.3. The amount that shall be available for
reinvestment (the "unrestricted amount") shall be determined in accordance
with the following transition rules:
(a) APRIL 3, 1996. Effective April 3, 1996 (or such subsequent date
as the Administrator determines in his or her sole discretion), the
unrestricted amount shall be 25% of the PRF Shares.
(b) JUNE 6, 1996. Effective June 6, 1996 (or such earlier date as
the Administrator determines in his or her sole discretion), the
unrestricted amount shall be 50% of the PRF Shares (less the number of such
Shares sold pursuant to subsection (a) above).
(c) AUGUST 8, 1996. Effective August 8, 1996 (or such earlier date
as the Administrator determines in his or her sole discretion), the
unrestricted amount shall be 75% of the PRF Shares (less the number of such
Shares sold pursuant to subsections (a) and (b) above).
(d) OCTOBER 3, 1996. Effective October 3, 1996 (or such earlier date
as the Administrator determines in his or her sole discretion), the
unrestricted amount shall be 100% of the PRF Shares.
Effective January 1, 1997 and notwithstanding the provisions of Section 5.4
above, a Participant who attains age 50 may direct the Trustee to liquidate all
or a portion of the Company Stock held in his or her Accounts and reinvest the
proceeds in the SRP Stable Value Fund or in any of the other Investment Funds
described in Section 5.3. Once a Participant becomes subject to the provisions
of this Section 5.6, the provisions of Section 5.4 shall no longer apply to such
Participant.
Basic Contributions and Employer Contributions made to the Plan with
respect to a Participant who is eligible for the Pre-Retirement Feature
described in this Section 5.6 shall continue to be invested initially in shares
of Company Stock, but will be available for reinvestment in the SRP Stable Value
Fund or in any of the other Investment Funds described in Section 5.3 in
accordance with the procedures established under Section 5.7.
The restrictions and transition rules described in this Section 5.6 shall
apply to the Accounts of all Participants, including, but not limited to, those
who have retired under the Abbott Laboratories Annuity Retirement Plan.
5.7. INVESTMENT ELECTIONS. Subject to Sections 5.1, 5.2, 5.4, 5.5 and 5.6,
a Participant, Beneficiary or Alternate Payee may make or change investment
instructions with respect to the portion of the Accounts over which he or she
has investment direction at such times and at such frequency as the
Administrator shall permit in accordance with investment procedures established
for the Plan. Such investment instructions shall be in writing or in such other
form as is acceptable to the Trustee.
5.8. DEFAULT INVESTMENT FUND. The Administrator shall from time to time
identify one or more of the Investment Funds as the default Investment Fund into
which all contributions, for which the Participant has the right to direct
investment, shall be invested if the Participant fails to provide complete and
clear investment instructions for such contributions. Such contributions
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shall remain in the default Investment Fund until the Trustee receives
investment instructions from the Participant in a form acceptable to the
Trustee.
5.9. PARTICIPANT DIRECTION OF INVESTMENTS. To the extent that this Article
5 does not prohibit a Participant, Beneficiary or Alternate Payee from directing
the investment of his or her Accounts, the Plan is intended to be a
participant-directed plan and to comply with the requirements of ERISA Section
404(c) and the Department of Labor Regulations 2550.404c-1 as a
participant-directed plan. To the extent this Section 5.9 applies, the
Administrator shall direct the Trustee from time to time with respect to such
investments pursuant to the instructions of the Participant (or, if applicable,
the Alternate Payee, or the deceased Participant's Beneficiary), but the Trustee
may refuse to honor any investment instruction if such instruction would cause
the Plan to engage in a prohibited transaction (as described in Code section
4975(c)) or cause the Trust to be subject to income tax. The Administrator
shall prescribe the form upon which, or such other manner in which such
instructions shall be made, as well as the frequency with which such
instructions may be made or changed and the dates as of which such instructions
shall be effective. The Board of Review reserves the right to amend the Plan to
remove the right of Participants, Beneficiaries or Alternate Payees to give
investment instructions with respect to their Accounts. Nothing contained
herein shall provide for the voting of shares of Company Stock by any
Participant, Beneficiary or Alternate Payee, except as otherwise provided in the
Trust.
5.10. DIVIDENDS ON COMPANY STOCK. Except with respect to shares of
Company Stock acquired during the Plan Year and held in the Unallocated Account,
cash dividends on shares of Company Stock shall be credited to the applicable
Accounts in which the shares are held and cash proceeds from the sale of any
rights or warrants received with respect to such Stock shall be invested in
shares of Company Stock when such dividends or proceeds are received by the
Trust, and thereafter such shares shall be credited to such Accounts based on
the average cost of all shares purchased with such dividends or proceeds. Stock
dividends or "split-ups" and rights or warrants appertaining to such shares
shall be credited to the applicable Accounts when received by the Trust. Cash
dividends received with respect to shares of Company Stock held in the
Unallocated Account and cash proceeds from the sale of rights or warrants
received with respect to such Company Stock shall be reinvested in Company Stock
and allocated under Section 3.5, to the extent not used to pay expenses of the
Plan. Any stock dividends or "split-ups" (and any rights or warrants unless
sooner sold) appertaining to shares of Company Stock held in the Unallocated
Account will be held in the Unallocated Account \until the end of the Plan Year
and allocated under Section 3.5.
5.11. INVESTMENT OPTIONS FOR FORMER M&R EMPLOYEES. Effective April 3,
1996 (or such subsequent date as the Administrator determines in his or her sole
discretion), Participants (and any Beneficiaries of deceased Participants or
Alternate Payees with respect to such Participants or deceased Participants) who
have Accounts formerly held in the M&R Retirement Trust ("M & R Accounts") and
who had special investment options described in Supplement A of the Prior Plan,
shall reinvest their Accounts in one or more of the investment options described
in Section 5.1, 5.2 and 5.3. If at the end of the transition period established
by the Administrator for such reinvestment, any portion of a such M & R Accounts
has not been reinvested pursuant to the prior sentence, then the Administrator
shall direct the Trustee to liquidate the investments in such Accounts and
transfer the proceeds to one or more default investment funds designated by the
Administrator.
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE
6.1. INSERVICE WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS. For purposes of
Code Section 72, all amounts held in a Participant's After-Tax Contribution
Accounts that are attributable to
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Basic or Supplemental After-Tax Contributions made after 1986 (including
earnings) shall be considered a "separate contract". In addition, for
purposes of applying the withdrawal provisions set forth in this Section
6.1(a), (b) and (c), a Participant's Accounts containing Company Stock shall
be separate and distinct from all other Investment Funds in such Accounts,
such that a Participant can elect under Sections 6.1(a), (b) and (c) to
withdraw all of the Participant's Company Stock without withdrawing any of
the other Investment Funds or all of the Participant's Investment Funds (in
other than Company Stock) without withdrawing any Company Stock, or any
combination of Company Stock or other Investment Funds as the Participant may
elect. If the Participant's non-Company Stock funds are in more than one
Investment Fund, then such withdrawal shall be made proportionately from all
such Investment Funds. Subject to the foregoing, a Participant may elect to
take a withdrawal from his or her After-Tax Contribution Accounts in
accordance with the following conditions and order of priority:
(a) PRE-1987 SUPPLEMENTAL AND BASIC AFTER-TAX CONTRIBUTIONS. A
Participant may withdraw from the Trust (i) in cash, any or all of his or
her Supplemental and Basic After-Tax Contributions made prior to 1987
and/or (ii) some or all of the shares of Company Stock purchased with such
After-Tax Contributions. If the Participant elects to receive any
withdrawal in Company Stock or cash from Company Stock, such amounts will
be withdrawn (i) from the Company Stock in the Supplemental After-Tax
Contribution Account until exhausted and (ii) then from the Company Stock
in the Basic After-Tax Contribution Account until exhausted. If the
Participant elects to receive any withdrawal in cash from the Investment
Funds (other than Company Stock), such amounts shall be withdrawn (i) from
the Investment Funds (other than Company Stock) in the Supplemental
After-Tax Contribution Account until exhausted and (ii) then from the
Investment Funds (other than Company Stock) in the Basic After-Tax
Contribution Account until exhausted.
(b) POST-1986 SUPPLEMENTAL AND BASIC AFTER-TAX CONTRIBUTIONS (FIVE
YEARS CREDITED SERVICE REQUIRED). A Participant who has completed five or
more Years of Credited Service and who has withdrawn all of his or her
pre-1987 Supplemental and Basic After-Tax Contributions under subsection
(a) may then withdraw from the Trust any or all of his or her Supplemental
and Basic After-Tax Contributions made after 1986 and earnings thereon.
Withdrawals under this subsection (b) may be in cash or shares of Company
Stock but shall not exceed the value of the Supplemental and Basic
After-Tax Contribution Accounts that is attributable to the Participant's
After-Tax Contributions made after 1986. If the Participant elects to
receive any withdrawal in Company Stock or cash from Company Stock, such
amounts will be withdrawn (i) from the Company Stock in the Supplemental
After-Tax Contribution Account until exhausted and (ii) then from the
Company Stock in the Basic After-Tax Contribution Account until exhausted.
If the Participant elects to receive any withdrawal in cash from the
Investment Funds (other than Company Stock), such amounts shall be
withdrawn (i) from the Investment Funds (other than Company Stock) in the
Supplemental After-Tax Contribution Account until exhausted and (ii) then
from the Investment Funds (other than Company Stock) in the Basic After-Tax
Contribution Account until exhausted.
(c) POST-1986 SUPPLEMENTAL AFTER-TAX CONTRIBUTIONS (LESS THAN FIVE
YEARS CREDITED SERVICE REQUIRED). A Participant who has not completed
five or more Years of Credited Service and who has withdrawn all of his or
her pre-1987 After-Tax Contributions (if any) under subsection (a) may then
withdraw from the Trust any or all of his or her Supplemental After-Tax
Contributions made after 1986 and earnings thereon. Withdrawals under this
subsection (c) may be in cash or shares of Company Stock but shall not
exceed the value of the Supplemental After-Tax Contribution Account that is
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attributable to the Participant's Supplemental After-Tax Contributions made
after 1986. If the Participant elects to receive any withdrawal in Company
Stock (or cash from Company Stock) such amount will be withdrawn from the
Company Stock in the Supplemental After-Tax Contribution Account until
exhausted. If the Participant elects to receive any withdrawal in
Investment Funds (other than Company Stock), such amount will be withdrawn
from the Investment Funds (other than Company Stock) in the Supplemental
After-Tax Contribution Account.
(d) REMAINDER OF AFTER-TAX CONTRIBUTION ACCOUNTS. A Participant, who
has withdrawn all of his or her After-Tax Contributions available under
subsections (a), (b) and (c) in both Company Stock and in Investment Funds
(other than Company Stock), may then withdraw from the Trust any or all of
the amount remaining in his or her After-Tax Contribution Accounts (other
than the Basic After-Tax Contribution Account, in the case of a Participant
who has not completed five or more Years of Service).
(e) SOURCE OF WITHDRAWN AMOUNTS. If the Participant elects to
receive his or her withdrawal in shares of Company Stock held in his or her
After-Tax Contribution Accounts, whole shares shall be distributed and the
value of a fractional share necessary to exhaust the Company Stock
allocated to such Accounts shall be distributed in cash.
(f) PRE-1987 SHARES. (i) For purposes of Section 6.1(a), shares of
Company Stock purchased with a Participant's Supplemental After-Tax
Contribution made prior to 1987 shall be determined as follows:
(A) FIRST, the average cost to the Trust of all unwithdrawn
shares of Company Stock purchased with Participant's Supplemental
After-Tax Contributions made prior to 1987 and related dividends shall
be established.
(B) NEXT, the total of the Participant's unwithdrawn
Supplemental After-Tax Contributions made prior to 1987 and applied to
the purchase of Company Stock (net of any such amounts that have been
reinvested in Investment Funds other than Company Stock) shall be
divided by the average cost established under subparagraph (A) above
and the resulting amount shall be the number of shares of Company
Stock purchased with the Participant's Supplemental After-Tax
Contributions prior to 1987.
(ii) For purposes of Section 6.1(a), shares of Company
Stock purchased with a Participant's Basic After-Tax
Contributions made prior to 1987 shall be determined as follows:
(A) FIRST, the average cost to the Trust of all
unwithdrawn shares of Company Stock purchased with the
Participant's Basic After-Tax Contributions and Employer
contributions made prior to 1987 and related dividends shall
be established.
(B) NEXT, the total of the Participant's unwithdrawn
Basic After- Tax Contributions made prior to 1987 and
applied to the purchase of Company Stock (net of any such
amounts that have been reinvested in Investment Funds other
than Company Stock) shall be divided by the average cost
established under subparagraph (A) above and the resulting
amount shall be the number of shares
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purchased with the Participant's Basic After-Tax
Contributions made prior to 1987.
(iii) For purposes of determining a Participant's
unwithdrawn Basic After-Tax Contributions and Supplemental
After-Tax Contributions made prior to 1987, any shares of Company
Stock purchased with the Participant's Supplemental After-Tax
Contributions made prior to 1987 that were withdrawn by the
Participant as of any date shall be charged at the average cost
established under subparagraph (i)(A) above as of such date, and
any shares of Company Stock purchased with the Participant's
Basic After-Tax Contributions made prior to 1987 that were
withdrawn by the Participant as of any date shall be charged at
the average cost established under subparagraph (ii)(A) above as
of such date.
(g) WITHDRAWAL PROCEDURES. The foregoing provisions of this
Section 6.1 are subject to the following:
(i) Shares of Company Stock and other amounts that are
withdrawn by a Participant under this Section 6.1 shall be
charged to his or her respective After-Tax Contribution Account.
(ii) No more than one withdrawal may be elected in any
ninety-day period; provided, however, that the Administrator, in
his or her sole discretion, may waive this limitation in unusual
cases.
(iii) Distribution of the shares of Company Stock or other
amounts a Participant elects to withdraw under this Section 6.1
shall be made within such time period and in accordance with the
procedures established by the Administrator and agreed to by the
Trustee. If the Participant dies prior to the time distribution
of such shares or amounts is made, distribution shall be made to
the Participant's Beneficiary in the same manner as other
distributions from the Trust.
(iv) Each request for a withdrawal shall be filed with the
Administrator, shall specify either the dollar amount or the
share amount (or both) to be withdrawn, the value of which amount
shall not be less than $500, and may not be revoked, amended or
changed by the Participant after it is filed. The Participant
shall indicate in his or her withdrawal request whether the
withdrawal is to be made in cash or shares of Company Stock.
(v) Any check or certificate fees associated with a
withdrawal will be charged to the Participant's Account.
(vi) Withdrawals under this Section 6.1 shall be subject to
such further conditions and limitations as the Administrator may
establish from time to time and apply on a uniform basis.
(vii) Any shares of Company Stock that are withdrawn shall
be considered as having been withdrawn at the average cost, as of
the date of the withdrawal, of the shares of Company Stock
reflected in the Account from which they were withdrawn.
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(h) WITHDRAWAL PRIORITY. Withdrawals under this Section 6.1 may
be in a different order of priority and subject to such further
conditions and limitations as the Administrator may establish from
time to time and apply on a uniform basis.
6.2. REQUIRED DISTRIBUTIONS AFTER AGE 70. Except as provided in the next
sentence, a Participant who remains an Employee on or after his or her "required
beginning date" (within the meaning of Code section 401(a)(9)) while an Employee
shall receive a distribution of the full value of his or her Accounts as of the
date any distribution under Code section 401(a)(9) would be required. Any
Participant (other than a 5% owner of the Corporation, an Affiliated
Corporation, or a Subsidiary in the year such owner attains age 66 and any
subsequent year) who attained age 70 before January 1, 1988 may defer receipt of
the distributions under this Section 6.2 until the April 1 following the
calendar year in which he or she retires or attains age 70, whichever is later.
Each distribution described in this Section 6.2 shall be made at the latest
possible date permitted under Code section 401(a)(9) and Regulations thereunder
and in accordance with such administrative rules and practices as may be adopted
by the Administrator.
6.3. DISTRIBUTIONS REQUIRED BY A QUALIFIED DOMESTIC RELATIONS ORDER. To
the extent required by a Qualified Domestic Relations Order, the Administrator
shall make distributions from a Participant's Accounts to Alternate Payees named
in such order in a manner consistent with the distribution options otherwise
available under this Plan, regardless of whether the Participant is otherwise
entitled to a distribution at such time under the Plan.
6.4. PARTICIPANT'S CONSENT TO DISTRIBUTION OF BENEFITS AND DIRECT ROLLOVER
NOTICE. If a Participant receives a withdrawal under Section 6.1 or Section
6.2, or an Alternative Payee receives a distribution under Section 6.5, no
distribution may be made unless:
(a) between the 30th and 90th day prior to the date distribution is
to be made or commence, the Administrator notifies the Participant or the
Alternate Payee (whichever is applicable) in writing that he or she may
defer distribution until the April 1 after the Plan Year in which he or she
attains age 70 and provides the Participant or the Alternate Payee
(whichever is applicable) with a written description of the material
features and (if applicable) the relative values of the forms of
distribution available under the Plan including the right to make a direct
rollover under Section 8.3(d); and
(b) the Participant consents to the distribution in writing after the
information described above has been provided to him or her, and files such
consent with the Administrator. Distribution to the Participant will be
made or commence as soon as practicable after such consent is received by
the Administrator. The Participant may waive the 30-day notice period
described in (a) above.
ARTICLE 7. LOANS TO PARTICIPANTS
7.1. IN GENERAL. Upon the request of an Eligible Borrower on a form
approved or procedure prescribed by the Administrator and subject to the
conditions of this Article, the Administrator shall direct the Trustee to make a
loan from the Trust to the Eligible Borrower. For purposes of this Article, an
"Eligible Borrower" is:
(a) a Participant who is an Eligible Employee; or
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(b) a Participant who is a former Employee and is a "party in
interest" within the meaning of ERISA section 3(14); or
(c) a deceased Participant's Beneficiary who has not yet received the
entire vested portion of the Participant's Accounts and who is a "party in
interest" as described in (b) above.
7.2. RULES AND PROCEDURES. The Administrator shall promulgate such rules
and procedures, not inconsistent with the express provisions of this Article, as
he or she deems necessary to carry out the purposes of this Article. All such
rules and procedures shall be deemed a part of the Plan for purposes of the
Department of Labor's Regulations Section 2550.408b-1(d).
7.3. MAXIMUM AMOUNT OF LOAN. The following limitations shall apply in
determining the amount of any loan to an Eligible Borrower hereunder:
(a) The amount of the loan, together with any other outstanding
indebtedness under this Plan or any other qualified retirement Plan of the
Corporation, any Affiliated Corporation or any Subsidiary, shall not exceed
$50,000 reduced by the excess of (i) the highest aggregate outstanding loan
balance of the Eligible Borrower from such Plans during the one-year period
ending on the day prior to the date on which the loans are made, over (ii)
the Eligible Borrower's outstanding loan balance from such Plans
immediately prior to the loan.
(b) The amount of the loan shall not exceed 50 percent of the
Eligible Borrower's Accounts, determined as of the date of the loan.
(c) No loan may exceed the aggregate value of the Participant's Basic
Pre-Tax Contribution Account, Supplemental Pre-Tax Contribution Account,
Employer Contribution Account, Rollover Contribution Account and Transfer
Contribution Account (excluding any amount contributed by the Participant
on an after-tax basis).
7.4. MINIMUM AMOUNT OF LOAN; NUMBER OF LOANS; FREQUENCY OF LOANS; FEES FOR
LOANS. The minimum amount of any single loan under the Plan shall be $1,000. A
Participant may have only two loans outstanding at any time under the Plan or
under any other plan referred to in Section 3.5. The Administrator may charge a
loan fee and such fee may be charged to the Participant's Accounts or taken from
the loan proceeds.
7.5. NOTE; SECURITY; INTEREST. Each loan shall be evidenced by a note
signed by the Eligible Borrower, a Participant Credit Agreement, or other
legally enforceable evidence of indebtedness ("Note"). The Note shall be an
asset of the Trust which shall be allocated to the Accounts of the Eligible
Borrower, and shall for purposes of the Plan be deemed to have a value at any
given time equal to the unpaid principal balance of the Note plus the amount of
any accrued but unpaid interest. The Note shall be secured by that portion of
the Accounts represented by the Note (not to exceed 50% of the Eligible
Borrower's vested interest in his or her Accounts determined as of the date of
the loan). The loan shall bear interest at an annual percentage interest rate
to be determined by the Administrator. In determining the interest rate, the
Administrator shall take into consideration interest rates currently being
charged by persons in the business of lending money with respect to loans made
in similar circumstances.
7.6. REPAYMENT. Each loan made to an Eligible Borrower who is receiving
regular payments of Compensation from the Corporation shall be repayable by
payroll deduction. Loans
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made to other Eligible Borrowers (and, in all events, where payroll deduction
is no longer practicable) shall be repayable in such manner as the
Administrator may from time to time determine. In each case payments shall
be made not less frequently than quarterly, over a specified term (as
determined by the Administrator) not to extend beyond the earlier of five
years from the date of the loan or the Participant's anticipated retirement
date, with substantially level amortization (as that term is used in Code
section 72(p)(2)(C)). Where the loan is being applied toward the purchase of
a principal residence for the Eligible Borrower, the term for repayment shall
not extend beyond the earlier of 15 years from the date of the loan or the
Participant's anticipated retirement date. An Eligible Borrower may prepay
the full balance of an outstanding loan at any time by delivering to the
Trustee a certified check in the amount of such remaining balance and any
accrued but unpaid interest. An Eligible Borrower may also refinance an
outstanding loan, provided the limits under Section 7.3 allow the Borrower to
borrow an amount equal to, or greater than the balance due on the outstanding
loan.
7.7. REPAYMENT UPON DISTRIBUTION. If, at the time benefits are to be
distributed (or to commence being distributed) to an Eligible Borrower with
respect to a separation from service, there remains any unpaid balance of a loan
hereunder, such unpaid balance shall, to the extent consistent with Department
of Labor regulations, become immediately due and payable in full. Such unpaid
balance, together with any accrued but unpaid interest on the loan, shall be
deducted from the Eligible Borrower's Accounts, subject to the default
provisions below, before any distribution of benefits is made. Except as is
provided in Section 7.1 or as may be required in order to comply (in a manner
consistent with continued qualification of the Plan under Code section 401(a))
with Department of Labor regulations, no loan shall be made to an Eligible
Borrower under this Article after the Eligible Borrower incurs a separation from
service whether or not he or she has begun to receive distribution of his or her
Accounts.
7.8. DEFAULT. In the event of a default in making any payment of principal
or interest when due under the Note evidencing any loan under this Article, if
such default continues for more than 90 days after written notice of the default
by the Trustee, the unpaid principal balance of the Note shall immediately
become due and payable in full. Such unpaid principal, together with any
accrued but unpaid interest, shall thereupon be deducted from the Eligible
Borrower's Accounts, subject to the further provisions of this Section. The
amount so deducted shall be treated as distributed to the Eligible Borrower and
applied by the Eligible Borrower as a payment of the unpaid interest and
principal (in that order) under the Note evidencing such loan. In no event
shall the Administrator apply the Eligible Borrower's Accounts to satisfy the
Eligible Borrower's repayment obligation, whether or not he or she is in
default, unless the amount so applied otherwise could be distributed in
accordance with the Plan. Default distributions under this Section 7.8 shall be
subject to such further conditions and limitations as the Administrator may
establish from time to time and apply on a uniform basis.
7.9. NONDISCRIMINATION. Loans shall be made available under this Article
to all Eligible Borrowers on a reasonably equivalent basis.
7.10. SOURCE OF LOAN PROCEEDS. The proceeds for a loan shall be drawn
first from the Eligible Borrower's Supplemental Pre-Tax Contribution Account,
then from his or her Rollover Contribution Account established pursuant to
Section 12.1 (if any), then from his or her Transfer Contribution Account
established pursuant to Section 12.4 (if any), then from his or her Basic
Pre-Tax Contribution Account, and then from his or her Employer Contribution
Account, in each case drawing proportionately from the Investment Funds (other
than Company Stock) in which the applicable Account is invested until such
Investment Funds are exhausted, and then drawing from the applicable Account the
Company Stock held in each such Account.
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7.11. REINVESTMENT OF LOAN REPAYMENTS. Loan repayments shall be made
to the Eligible Borrower's Accounts from which the proceeds were drawn under
Section 7.10 in proportion that the loan was taken from each such Account at the
origination of the loan. Within each such Account, the proceeds will be
invested in accordance with the investment instructions or restrictions
applicable at the time of each loan repayment. If the Eligible Borrower is not
currently making contributions to any such Account at the time of loan
repayment, the proceeds will be invested within such Account in accordance with
any previous instructions on file with the Trustee for the investment of
contributions in such Account, and if there are no such instructions on file,
the proceeds will be invested in the default Investment Fund(s) then in effect
under Section 5.8. The Participant may change his or her investment
instructions in accordance with Section 5.7 for purposes of reinvesting the loan
repayments even if he or she is not then making contributions to the Plan. All
such proceeds (other than proceeds repaid to and invested in a Basic Pre-Tax
Contribution Account or an Employer Contribution Account by a Participant who
has not yet reached the age of 50) shall for purposes of Sections 5.4, 5.5 and
5.6 be considered to be unrestricted as to investment and may be invested in any
of the Investment Funds then available under the Plan.
ARTICLE 8. BENEFITS UPON RETIREMENT, DEATH OR
SEPARATION FROM SERVICE
8.1. RETIREMENT OR SEPARATION FROM SERVICE FOR REASONS OTHER THAN DEATH.
Following a Participant's retirement or separation from the service with the
Corporation, all Affiliated Corporations and all Subsidiaries for any reason
other than death, the Participant will receive the value of his or her Accounts
in a single sum payment unless he or she elects an annuity under Section 8.3 (b)
or a direct rollover under Section 8.3(d). To the extent that the Participant's
Accounts hold Company Stock, he or she may receive the distribution in whole
shares of Company Stock and cash for any fractional share.
8.2. TIME OF DISTRIBUTIONS. Distribution with respect to a Participant's
separation from service (other than on account of death or retirement) normally
will be made or commence as soon as practicable after such separation. The
Employer Contribution made on the Participant's behalf under Section 3.5 for the
Plan Year will be based on the Point Value determined for the prior Plan Year
and distributed to the Participant in cash or Company Stock, at the
Participant's election. Except as provided in the last sentence of this Section
8.2, in the case of a Participant whose Accounts are valued in excess of $3,500
and who has not yet attained age 65, however, distribution may not be made under
this Section unless:
(a) between the 30th and 90th day prior to the date distribution is
to be made or commence, the Administrator notifies the Participant in
writing that he or she may defer distribution until the April 1 after the
Plan Year in which he or she attains age 70_ and provides the Participant
with a written description of the material features and (if applicable) the
relative values of the forms of distribution available under the Plan; and
(b) the Participant consents to the distribution in writing after the
information described above has been provided to him or her, and files such
consent with the Administrator. Distribution to the Participant will be
made or commence as soon as practicable after such consent is received by
the Administrator. The Participant may waive the 30-day notice period
described in (a) above.
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The value of a Participant's Accounts will be considered to be in excess of
$3,500 if the value exceeds such amount at the time of the distribution in
question or exceeded such amount at the time of any prior distribution to the
Participant under the Plan. The Participant may elect to defer the
distribution of his or her Accounts until any subsequent date, but not later
than the April 1 after the Plan Year in which he or she attains age 70.
A Participant who is eligible for retirement under the terms of the Abbott
Laboratories Annuity Retirement Plan will normally receive a distribution as
soon as practicable after the end of the Plan Year in which he or she retires
and following the crediting of the Employer Contribution determined under
Section 3.5 for such Plan Year. Such Participant may elect to receive the
distribution in the calendar year in which he or she retires, in which event the
Employer Contribution made on the Participant's behalf under Section 3.5 will be
based on the Point Value determined for the prior Plan Year and distributed to
the Participant in cash. Alternatively, the Participant may elect to defer the
distribution of his or her Accounts until any date, but no later than the April
1 after the Plan Year in which he or she attains age 70.
8.3. AMOUNT AND MANNER OF DISTRIBUTION. A Participant who is eligible for
a distribution from the Plan under this Article 8, may, subject to subsection
(c), elect to receive his or her benefit in one or more of the following forms:
(a) SINGLE SUM PAYMENT. In the case of a distribution to be made in
a single sum, the amount of such distribution shall be determined as of the
Valuation Date which immediately precedes or coincides with the date
distribution is to be made.
(b) ANNUITY PURCHASED FOR CERTAIN AMOUNTS. With respect to the value
of the Participant's Accounts as of December 31, 1995 only, monthly
payments will be made from a single premium annuity contract purchased for
the Participant with all or any portion of the value of such Accounts. The
provisions of such annuity contract shall be subject to the following:
(i) The payment forms under an annuity contract shall include:
(A) an annuity payable for life; (B) an annuity payable for life with
a refund feature; (C) an annuity payable over the joint lives of the
Participant and another person designated by him or her, provided such
person (if not the Participant's spouse) is not more than 30 years
younger than the Participant; or (D) an annuity payable for life and a
period provided such period certain does not extend beyond the
Participant's 85th birthday.
(ii) Each such annuity contract shall be non-transferable except
by surrender to the issuing insurance company and shall provide for a
monthly payment of not less than twenty-five dollars ($25).
(iii) The Administrator may cause an annuity contract to be
assigned or delivered to the person or persons then entitled to
payments under it, but prior to the assignment or delivery of an
annuity contract, it shall be rendered non- transferable and, at the
Administrator's discretion, may be rendered non-commutable.
(iv) Beginning January 1, 1985, if a Participant is married on
his or her Annuity Starting Date, and the Participant has elected to
have his or her benefits distributed by purchase of an annuity
contract, the value of the Participant's Accounts will be applied to
purchase a joint and survivor annuity (as defined
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herein), unless the Participant has made an election to waive that
form of annuity. A "joint and survivor annuity" is an annuity
payable for the life of the Participant, with a survivor annuity
payable for the life of his or her spouse of one-half of the amount
payable during the joint lives of the Participant and his or her
spouse. A Participant may make a written election to waive the
joint and survivor annuity at any time during the 90-day period
ending on his or her Annuity Starting Date. Such an election will be
effective only if the Participant's spouse consents to the election
in writing, and such consent acknowledges the effect of the waiver
and is witnessed by a Plan representative or a notary public.
Within a reasonable time before a Participant's Annuity Starting
Date, the Administrator shall provide the Participant with a written
explanation of the terms and conditions of the joint and survivor
annuity, the Participant's right to make, and the effect of, a
revocation of such a waiver. An election under this subsection may
be revoked by a Participant at any time prior to his or her Annuity
Starting Date. If a Participant has elected to waive the joint and
survivor annuity, his or her Account balances will be distributed
under one of the annuity forms of payment described in Section
8.3(c)(i) above.
(c) CASHOUT OF SMALL BENEFITS. If the value of a Participant's
Accounts is $3,500 or less, distribution shall be made to the Participant
in a single sum payment as soon as practicable following the Participant's
separation from service. The amount of such distribution shall be
determined as of the Valuation Date immediately preceding or coinciding
with the date the distribution is to be made. The Participant's Accounts
will not be considered to be valued at $3,500 or less, if the value of such
Accounts at the time in question or at the time of any prior distribution
to the Participant under the Plan exceeds such amount.
(d) DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS. If a
Participant or an Alternate Payee of the Participant is entitled to an
eligible rollover distribution within the meaning of Code section 402(c)(4)
under (a) or (b) above, he or she may elect to have all or a portion of
such distribution (but not less than the minimum amount required to be
transferred under Treasury regulations pertaining to the treatment of
eligible rollover distributions) transferred to another qualified plan, an
individual retirement account, or an individual retirement annuity, or any
other eligible retirement plan within the meaning of Code section
402(c)(8)(B). Such distribution may be made in the form of a direct
rollover or by other means prescribed by regulations which satisfy the
requirements for a direct payment to the eligible retirement plan so
specified. The Administrator shall not be obliged to honor any transfer
instruction under this Section that specifies more than one transferee.
8.4. DISTRIBUTIONS AFTER A PARTICIPANT'S DEATH.
(a) DEATH PRIOR TO SEPARATION FROM SERVICE. If a Participant dies
prior to his or her separation from the service with the Corporation, all
Affiliated Corporations and all Subsidiaries, the Participant's Beneficiary
will receive the Participant's Accounts in a single sum payment as soon as
practicable after the end of the Plan Year in which the Participant's death
occurs; provided, however, the Beneficiary may elect to receive the
distribution in the Plan Year in which the Participant's death occurred, in
which event the Employer Contribution made on behalf of the Participant
under Section 3.5 for such Plan Year shall be based on the Point Value
determined for the prior Plan Year and shall be distributed in cash.
Distribution must be made to a Beneficiary who is not the Participant's
spouse no later than December 31 of the calendar year following the year of
the Participant's death. If the Beneficiary is the Participant's spouse,
the Beneficiary may elect to defer receipt of the
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distribution of the Participant's Accounts until any date, but no later than
the December 31 of the Plan Year in which the Participant would have
attained age 70_.
(b) DEATH AFTER SEPARATION FROM SERVICE. If a Participant dies after
separation from service but before the complete distribution of his or her
Accounts has been made, the Participant's Beneficiary will receive the
value of the Participant's Accounts. Distribution will be made in a single
sum payment as soon as practicable after the Participant's death (but no
later than December 31 of the calendar year following the year of the
Participant's death); provided, however, that if distribution to the
Participant had begun following his or her separation from service in a
form elected by the Participant, distribution will continue to be made to
the Beneficiary at least as rapidly in such form unless the Beneficiary
elects to receive distribution in cash in a single sum as soon as
practicable following the Participant's death. Any such election must be
made on a form approved by the Administrator and must be received by the
Administrator within such period following the Participant's death as the
Administrator may prescribe. To the extent the Participant's Accounts held
Company Stock at the time of the proposed distribution, the Beneficiary may
receive the distribution in whole shares of Company Stock and cash for any
fractional share.
(c) CASHOUT OF SMALL BENEFITS. If a Participant dies and the value
of a Participant's Accounts is $3,500 or less, distribution shall be made
to the Beneficiary in a single sum payment as soon as practicable following
the Participant's death (but in no event later than the 60th day following
the close of the Plan Year in which such death occurs) or such later date
on which the amount of the distribution can be determined by the
Administrator. The amount of such distribution shall be determined as of
the Valuation Date immediately preceding or coinciding with the date the
distribution is to be made. The Participant's Accounts will not be
considered to be valued at $3,500 or less, if the value of such Accounts at
the time in question or at the time of any prior distribution to the
Participant under the Plan exceeds such amount.
(d) DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS. If a
Beneficiary who is the spouse of a deceased Participant is entitled to an
eligible rollover distribution within the meaning of Code section 402(c)(4)
under (a) or (b) above, he or she may elect to have all or a portion of
such distribution (but not less than the minimum amount required to be
transferred under Treasury regulations pertaining to the treatment of
eligible rollover distributions) transferred to an individual retirement
account or an individual retirement annuity. Such distribution may be made
in the form of a direct rollover or by other means prescribed by
regulations which satisfy the requirements for a direct payment to the
eligible retirement plan so specified. The Administrator shall not be
obliged to honor any transfer instruction under this Section that specifies
more than one transferee.
Any distribution to a Beneficiary under this Section in the form of a single sum
shall be determined as of the Valuation Date immediately preceding or coinciding
with the date distribution is to be made.
8.5. DESIGNATION OF BENEFICIARY. Subject to the provisions of this
Section, a Participant's Beneficiary shall be the person or persons (or entity
or entities), if any, designated by the Participant from time to time on a form
or in a manner approved by the Administrator. In the absence of an effective
Beneficiary designation, a Participant's Beneficiary shall be his or her
surviving spouse, if any, or if none, the Participant's issue, or if none, the
Participant's estate. A
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non-spouse Beneficiary designation by a Participant who is married at the
time of his or her death shall not be effective unless
(a) prior to the Participant's death, the Participant's surviving
spouse consented to and acknowledged the effect of the Participant's
designation of a specific non-spouse Beneficiary (including any class of
Beneficiaries or any contingent Beneficiaries) in a written form approved
by the Administrator and witnessed by a notary public or Plan
representative; or
(b) it is established by the Participant prior to his or her death
(by furnishing the Administrator with a sworn statement), that the required
consent may not be obtained because there is no spouse, because the spouse
cannot be located, or because of such other circumstances as the Secretary
of the Treasury may prescribe; or
(c) the spouse had earlier executed a general consent form permitting
the Participant (i) to select from among certain specified persons without
any requirement of further consent by the spouse (and the Participant
designates a Beneficiary from the specified list), or (ii) to change his or
her Beneficiary without any requirement of further consent by the spouse.
Any such general consent shall be on a form approved by the Administrator,
and must acknowledge that the spouse has the right to limit consent to a
specific Beneficiary and that the spouse voluntarily elects to relinquish
such right.
Any consent and acknowledgment by a spouse, or the establishment that the
consent and acknowledgment cannot be obtained, shall be effective only with
respect to such spouse, but shall be irrevocable once made.
ARTICLE 9. ADMINISTRATION
9.1. BOARD OF REVIEW. The Board of Review, except where such are
specifically reserved to the Board of Directors, shall have all powers, duties
and obligations (whether imposed, granted or reserved and whether explicit or
implicit) which are lodged in the Corporation under the Trust, or the Plan, or
any supplement to the Plan or by law or regulations. It shall perform all
functions specifically assigned to it under the Plan and under the Trust created
pursuant to the Plan. The Board of Review at its sole discretion may delegate
or redelegate any responsibility which it is able to exercise, and may revoke
such delegations at its sole discretion.
9.2. ADMINISTRATOR. The Administrator will be the "administrator" of the
Plan as defined in Section 3(16)(A) of ERISA and a "named fiduciary" for
purposes of Section 402(a)(1) of ERISA with authority to control and manage the
operation and administration of the Plan, and will be responsible for complying
with all of the reporting and disclosure requirements of Part 1 of Subtitle B of
Title I of ERISA. The Administrator will not, however, have any authority over
the investment of assets of the Trust or the selection of Investment Funds.
9.3. POWERS OF ADMINISTRATOR. The Administrator will have full power to
administer the Plan in all of its details, other than the selection of
Investment Funds, subject, however, to the requirements of ERISA. For this
purpose the Administrator's power will include, but will not be limited to, the
following discretionary authority:
(a) to make and enforce such rules and regulations as he or she deems
necessary or proper for the efficient administration of the Plan or as
required to comply with applicable law;
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(b) to interpret and enforce the Plan in accordance with the terms of
the Plan and the rules and regulations adopted under subsection (a), his or
her interpretation thereof in good faith to be final and conclusive;
(c) to decide all questions concerning the Plan and the eligibility
of any person to participate in the Plan;
(d) to compute the amounts to be distributed under the Plan, and to
determine the person or persons to whom such amounts will be distributed;
(e) to authorize the payment of distributions and to direct the
Trustee to make such payments from the Trust;
(f) to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be required under
the Code and applicable regulations, or under other federal, state or local
law and regulations;
(g) to allocate and delegate his or her ministerial duties and
responsibilities and to appoint such agents, counsel, accountants,
consultants, actuaries and insurance companies as may be required or
desired to assist in administering the Plan;
(h) by written instrument, to allocate and delegate his or her
fiduciary responsibilities in accordance with ERISA section 405; and
(i) to furnish each Employer with such information and data as may be
required by it for tax and other purposes in connection with the Plan.
9.4. NONDISCRIMINATORY EXERCISE OF AUTHORITY. Whenever, in the
administration of the Plan, any discretionary action by the Administrator is
required, the Administrator shall exercise his or her authority in a
nondiscriminatory manner so that all persons similarly situated will receive
substantially the same treatment.
9.5. RELIANCE ON TABLES, ETC. In administering the Plan, the Administrator
will be entitled, to the extent permitted by law, to rely conclusively on all
tables, valuations, certificates, opinions and reports which are furnished by
any accountant, trustee, counsel, actuary, insurance company or other expert who
is employed or engaged by the Administrator or by the Corporation on the
Administrator's behalf.
9.6. CLAIMS AND REVIEW PROCEDURES. The Administrator shall adopt
procedures for the filing and review of claims in accordance with ERISA
section 503.
9.7. INDEMNIFICATION. The Corporation agrees to indemnify and defend to
the fullest extent of the law any of its employees or former employees who
serves or has served as Administrator or as a member of the Board of Review or
who has been appointed to assist the Administrator or the Board of Review in
administering the Plan or to whom the Administrator or the Board of Review has
delegated any duties or responsibilities against any liabilities, damages, costs
and expenses (including attorneys' fees and amounts paid in settlement of any
claims approved by the Corporation) occasioned by any act or omission to act in
connection with the Plan, if such act or omission to act is in good faith.
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9.8. EXPENSES AND COMPENSATION. No compensation shall be paid to the
Administrator or any assistant who is a full-time employee of the Corporation,
an Affiliated Corporation or a Subsidiary, but the Administrator and his or her
assistants shall be reimbursed for all expenses reasonably incurred in the
administration of the Plan. Such expenses shall be charged to the Trust and
paid first out of the dividends paid on Company Stock held in the Unallocated
Account and then from Employer Contributions prior to allocation under Section
3.5, unless the Employers pay such expenses directly. To the extent that any
recordkeeping expense, withdrawal charge, loan fee or check fee is specifically
attributable to a Participant's Accounts, such expenses may be charged to the
Accounts of such Participant.
9.9. NOTICES; PARTICIPANT INFORMATION. Any notice required to be given to
or any document required to be filed with the Administrator, the Trustee or a
Co-Trustee will be given or filed properly if mailed by registered mail, postage
prepaid, or delivered, to the Administrator, the Trustee or Co-Trustees, as the
case may be, in care of the Corporation at Abbott Park, Illinois. Participants
(and their Beneficiaries) must furnish to the Administrator such evidence, data,
or information as they consider necessary or desirable for the purpose of
administering the Plan, and the provisions of the Plan for each person are upon
the condition that he or she will furnish full, true and complete evidence, data
and information requested by the Administrator.
ARTICLE 10. AMENDMENT AND TERMINATION
10.1. AMENDMENT. The Corporation reserves the power (and may and
hereby does specifically delegate a portion of the power to the Board of
Review) at any time or times to amend the provisions of the Plan and Trust to
any extent and in any manner that it may deem advisable. The Corporation
specifically reserves the right to amend Article 5 with respect to the
investment of Participant Accounts. However, the Corporation will not have the
power:
(a) to amend the Plan or Trust in such manner as would cause or
permit any part of the assets of the Trust to be diverted to purposes other
than for the exclusive benefit of each Participant and his or her
Beneficiary (except as permitted by Section 14.3 with respect to Qualified
Domestic Relations Orders, or by Section 3.9 with respect to the return of
contributions upon nondeductibility or mistake of fact), unless such
amendment is required or permitted by law, governmental regulation or
ruling; or
(b) to amend the Plan or Trust retroactively in such a manner as
would reduce the accrued benefit of Code Section 411(d)(6)) of any
Participant, except as otherwise permitted or required by law; or
(c) to change the duties or liabilities of the Trustee, a Co-Trustee
or the Administrator without their consent.
All major amendments and all decisions or amendments which are reasonably
expected to have the effect of suspending or terminating Employer contributions,
of suspending or terminating payment of benefits to Participants or
Beneficiaries, or of terminating the Plan shall be made by the Board of
Directors. All other amendments shall be made by the Board of Review. The
Board of Directors may delegate additional authority to the Board of Review.
For the purposes of the foregoing, a "major amendment" is defined to be any
amendment which will increase the average cost of the Plan to the Employers
(whether through the increase of Employer contributions or otherwise) by an
amount in excess of $500,000 per annum over the three full Plan Years next
succeeding the effective date of the amendment. Determination of
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whether an amendment is a major amendment or a decision or amendment which is
reasonably "to have the effect of suspending or terminating Employer
contributions, of suspending or terminating payment of benefits, or of
terminating the Plan" shall be made by the Board of Review after obtaining
such advice from such legal or tax counsel and the advice of such actuarial
consultants as the Board of Review may deem appropriate. The secretary of
the Board of Review shall maintain detailed minutes reflecting the advice (if
any) so received by the Board of Review and the decisions reached by it
regarding each amendment adopted by it.
10.2. TERMINATION. The Corporation has established the Plan and
authorized the establishment of the Trust with the bona fide intention and
expectation that contributions will be continued indefinitely, but the
Corporation will have no obligation or liability whatsoever to maintain the Plan
for any given length of time and may discontinue contributions under the Plan or
terminate the Plan at any time by written notice delivered to the Trustee and
Co-Trustees without liability whatsoever for any such discontinuance or
termination.
10.3. DISTRIBUTIONS UPON TERMINATION OF THE PLAN. Upon termination of
the Plan by the Corporation, the Trustee will distribute to each Participant (or
other person entitled to distribution) the value of the Participant's Accounts
determined as of the Valuation Date coinciding with or next following the date
of the Plan's termination. However, if a successor Plan is established within
the meaning of Code section 401(k)(2)(B)(i)(II), Accounts shall be distributed
to Participants and their Beneficiaries only in accordance with Article 6
relating to in-service withdrawals and upon the actual separation from service
by the Participant.
10.4. MERGER OR CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS. In
case of any merger or consolidation of the Plan with, or transfer of assets and
liabilities of the Plan to, any other Plan, provision must be made so that each
Participant would, if the Plan then terminated, receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit he or she would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.
ARTICLE 11. LIMITS ON CONTRIBUTIONS
11.1. CODE SECTION 404 LIMITS. The sum of the contributions made by
the Employers under the Plan for any Plan Year shall not exceed the maximum
amount deductible under the applicable provisions of the Code (all such
contributions being hereby conditioned on their deductibility under Code section
404).
11.2. CODE SECTION 415 LIMITS.
(a) The "annual addition" (within the meaning of Code section
415(c)(2) and the Regulations thereunder) to a Participant's Accounts under
the Plan for any limitation year, when added to the annual additions to his
or her accounts for such limitation year (as defined below) under all other
defined contribution plans maintained by the Corporation, all other
Affiliated Corporations and all Subsidiaries, shall not exceed the lesser
of (i) $30,000 (or, if greater, one-fourth of the limitation in effect for
the limitation year under Code section 415(b)(1)(A)), or (ii) 25 percent of
the Participant's Compensation for such limitation year. In the case of a
Participant who also participates in a defined benefit Plan maintained by
the Corporation, any Affiliated Corporation or any Subsidiary, the annual
addition for a limitation year will, if necessary, be further limited so
that the sum of the Participant's "defined contribution fraction" (as
determined under Code section 415(e) and
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the regulations thereunder, including any special transition rules) and
his or her "defined benefit plan fraction" (as determined under Code
section 415(e) and the regulations thereunder) for such limitation year
does not exceed 1.0. For purposes of determining the Code section 415
limits under the Plan, the "limitation year" shall be the calendar year.
For purposes of this Article 11, the term "Subsidiary" shall mean any
corporation, partnership, joint venture or business trust, more than
fifty percent (50%) of which is owned, directly or indirectly, by the
Corporation.
(b) To the extent necessary to satisfy the limitations of Code
section 415 for any Participant, the annual addition which would otherwise
be made on behalf of the Participant under the Plan shall be reduced only
after the Participant's benefit is reduced under any and all qualified
defined benefit plans, and after the Participant's annual addition is
reduced under any other defined contribution plan. The Participant's
annual addition under this Plan shall be reduced, by reducing and refunding
to Participant, first, his or her Supplemental After-Tax Contributions,
then his or her Supplemental Pre-Tax Contributions, then his or her Basic
After-Tax Contributions, and then his or her Basic Pre-Tax Contributions
for the limitation year. Any After-Tax Contribution that is refunded will
be adjusted for income or loss pursuant to Regulation section 1.401(m)-1(e)
(3)(ii) and any Pre-Tax Contribution that is refunded will be adjusted for
income or loss pursuant to Regulation section 1.401(l)-1(f)(4)(ii). Any
Employer Contribution based upon such Basic After-Tax Contributions or
Basic Pre-Tax Contributions shall also be reduced, and the amount by which
the Employer Contribution is reduced will remain part of the assets of the
Trust and allocated to the Participants' Employer Contribution Accounts in
the following year at the same time and in the same manner as Employer
Contributions are allocated under Section 3.5. If further adjustments are
required, any Qualified Nonelective Employer Contribution for the
Participants' benefit shall be reduced and the amount by which it is
reduced will remain part of the Trust and allocated to the Participants'
Employer Contribution Accounts in the following year at the same time and
in the same manner as Employer Contributions are allocated under Section
3.5.
(c) If, as the result of a reasonable error in estimating a
Participant's Compensation for a Plan Year or limitation year or under such
other facts and circumstances as may be permitted under regulation or by
the Internal Revenue Service, the annual addition under the Plan for a
Participant would cause the Code section 415 limitations for a limitation
year to be exceeded, the excess amounts in the Participant's Accounts will
be used to reduce Employer Contributions for the next limitation year (and
succeeding limitation years, as necessary) for that Participant if such
Participant is covered by the Plan as of the end of the limitation year.
However, if the Participant is not covered by the Plan as of the end of the
limitation year, the excess amounts will not be distributed to Participants
or former Participants, but will be held unallocated for that limitation
year in a suspense account. If the suspense account is in existence at any
time during any subsequent limitation year, all amounts in the suspense
account will be allocated to the Accounts of all Participants in proportion
to their relative earnings and service points (as determined under Section
3.5 above) for the subsequent limitation year, before any other
contributions which would be part of an annual addition are made to the
Plan for the subsequent limitation year. No investment gains or losses
will be allocated to any suspense account described in this paragraph.
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11.3. CODE SECTION 402(G) LIMITS.
(a) IN GENERAL. The maximum amount of Pre-Tax Contributions made on
behalf of any Participant for any calendar year, when added to the amount
of elective deferrals (within the meaning of Code section 402(g)(3)) under
all other plans, contracts and arrangements of the Corporation, all
Affiliated Corporations and all Subsidiaries with respect to the
Participant for the calendar year, shall in no event exceed the maximum
applicable limit in effect for the calendar year under Code section
402(g)(1).
(b) DISTRIBUTION OF EXCESS DEFERRALS. In the event that an amount is
included in a Participant's gross income for a taxable year as a result of
an excess deferral under Code section 402(g), and the Participant notifies
the Administrator on or before the March 1 following the taxable year that
all or a specified part of a Pre-Tax Contribution made or to be made for
his or her benefit represents an excess deferral, the Administrator shall
make every reasonable effort to cause such excess deferral, adjusted for
allocable income or loss in accordance with Regulation section
1.402(g)-1(d)(5), to be distributed to the Participant no later than the
April 15 following the calendar year in which such excess deferral was
made. No distribution of an excess deferral shall be made during the
taxable year in which the excess deferral was made unless the correcting
distribution is made after the date on which the Plan received the excess
deferral and both the Participant and the Plan designate the distribution
as a distribution of an excess deferral. The amount of any excess
deferrals that may be distributed to a Participant for a taxable year shall
be reduced by the amount of Pre-Tax Contributions that were excess
contributions and were previously distributed to the Participant for the
Plan Year beginning with or within such taxable year.
11.4. CODE SECTION 401(K)(3) LIMITS.
(a) ACTUAL DEFERRAL RATIOS. For each Plan Year, the Administrator
will determine the "actual deferral ratio" for each Participant who is
eligible for Pre-Tax Contributions. The actual deferral ratio shall be the
ratio, calculated to the nearest one-hundredth of one percent, of the
Pre-Tax Contributions made on behalf of the Participant for the Plan Year
to the Participant's Compensation for the applicable period. For purposes
of determining a Participant's actual deferral ratio,
(i) Pre-Tax Contributions will be taken into account only to the
extent permitted by Regulation section 1.401(k)-1(b)(6) and to the
extent required by Regulation section 1.402(g)-1(d)(1);
(ii) If an eligible Highly Compensated Employee is subject to
the family aggregation rules of Code section 414(q)(6) because such
Employee is either a five percent owner or one of the ten most highly
paid employees, the family group shall be treated as a single Highly
Compensated Employee with an actual deferral ratio determined by
combining the Pre-Tax Contributions (and any amounts treated as
Pre-Tax Contributions) and Compensation of all the eligible family
members.
(iii) The applicable period for each Participant for a given
Plan Year shall be that portion of the 12-month period ending on the
last day of such Plan Year during which the individual was a
Participant.
(iv) Employer Contributions may be treated as Pre-Tax
Contributions to the extent permitted by Regulation section
1.401(k)-1(b)(3).
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(b) ACTUAL DEFERRAL PERCENTAGES. The actual deferral ratios for all
Highly Compensated Employees who are eligible for Pre-Tax Contributions for
a Plan Year shall be averaged to determine the actual deferral percentage
for the highly compensated group for the Plan Year, and the actual deferral
ratios for all Employees who are not Highly Compensated Employees but who
are eligible for Pre-Tax Contributions for the Plan Year shall be averaged
to determine the actual deferral percentage for the nonhighly compensated
group for the Plan Year. The actual deferral percentages for any Plan Year
must satisfy at least one of the following tests, which shall be
interpreted and applied by the Administrator in a manner consistent with
Regulation section 1.401(k)-1:
(i) The actual deferral percentage for the highly compensated
group does not exceed 125 percent of the actual deferral percentage
for the nonhighly compensated group; or
(ii) The excess of the actual deferral percentage for the highly
compensated group over the actual deferral percentage for the
nonhighly compensated group does not exceed two percentage points, and
the actual deferral percentage for the highly compensated group does
not exceed twice the actual deferral percentage of the nonhighly
compensated group.
If the actual deferral percentages for any Plan Year fail to satisfy the
tests in (i) or (ii) above, the Administrator may, to the extent permitted
by Regulations and for the sole purpose of satisfying those tests, treat
the Plan as two Plans, each covering one or more classifications of
employees (consistent with Code section 410(b) and any regulations
thereunder). The Administrator will then apply the foregoing tests
separately to each such Plan.
(c) ADJUSTMENTS BY ADMINISTRATOR. If, prior to the time all Pre-Tax
Contributions for a Plan Year have been contributed to the Trust, the
Administrator determines that Pre-Tax Contributions are being made at a
rate which will cause the Code section 401(k)(3) limits to be exceeded for
the Plan Year, the Administrator may, in its sole discretion, limit the
amount of Pre-Tax Contributions to be made with respect to one or more
Highly Compensated Employees for the balance of the Plan Year by suspending
or reducing Pre-Tax Contribution elections to the extent the Administrator
deems appropriate. Any Pre-Tax Contributions which would otherwise be made
to the Trust shall instead be paid in cash to the affected Participant.
(d) EXCESS CONTRIBUTIONS. If the Code section 401(k)(3) limits have
been exceeded for a Plan Year after all contributions for the Plan Year
have been made, the Administrator shall determine the amount of excess
contributions with respect to Participants who are Highly Compensated
Employees. To do so, the Administrator shall reduce the actual deferral
ratio of the Highly Compensated Employee with the highest actual deferral
ratio to the extent necessary to (i) enable the Plan to satisfy the
401(k)(3) limits or (ii) cause such Employee's actual deferral ratio to
equal the actual deferral ratio of the Highly Compensated Employee with the
next highest actual deferral ratio, and shall repeat this process until the
Plan no longer exceeds the Code section 401(k)(3) limits. The amount of
excess contributions for each Highly Compensated Employee for the Plan Year
shall equal the amount of Pre-Tax Contributions (plus Employer
Contributions which are treated as Pre-Tax Contributions for purposes of
the Code section 401(k)(3) limits) actually made to the Trust for the Plan
Year, less the product of the (i) the Highly Compensated Employee's
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<PAGE>
reduced actual deferral ratio as determined under the preceding sentence,
and (ii) his or her Compensation. Any excess contributions will be
recharacterized as After-Tax Contributions or distributed as provided
below. In no event will excess contributions remain unallocated or be
allocated to a suspense account for allocation in a future Plan Year.
(e) RECHARACTERIZATION OF EXCESS CONTRIBUTIONS. At the option of the
Administrator, a Participant's excess contributions may be recharacterized
as After-Tax Contributions, provided the Administrator complies with the
reporting requirements of Treas. Reg. section 1.40l(k)-l(f)(3) for such
contributions and such recharacterization occurs no later than the March 15
following the Plan Year for which the contributions were made.
(f) DISTRIBUTION OF EXCESS CONTRIBUTIONS. At the option of the
Administrator, a Participant's excess contributions, adjusted for income or
loss pursuant to Regulation section 1.401(k)-1(f)(4)(ii), will be
designated by the Corporation as a distribution of excess contributions and
distributed to the Participant. Distribution of excess contributions will
be made after the close of the Plan Year to which the contributions relate,
but within 12 months after the close of such Plan Year.
(g) SPECIAL RULES. For purposes of distributing excess
contributions,
(i) the amount of excess contributions that may be distributed
with respect to a Highly Compensated Employee for a Plan Year shall be
reduced by the amount of excess deferrals previously distributed to
the Highly Compensated Employee for his or her taxable year ending
with or within such Plan Year.
(ii) Any distribution of less than the entire amount of excess
contributions with respect to a Highly Compensated Employee shall be
treated as a pro rata distribution of excess contributions and
allocable income or loss.
(iii) The determination and correction of excess contributions
with respect to a Highly Compensated Employee whose actual deferral
ratio is determined pursuant to the family aggregation rules will be
accomplished pursuant to Regulation section 1.401(k)-1(f)(5)(iii).
(h) RECORDKEEPING REQUIREMENT. The Administrator, on behalf of the
Corporation, shall maintain such records as are necessary to demonstrate
compliance with the Code section 401(k)(3) limits including the extent to
which qualified matching contributions and Qualified Nonelective Employer
Contributions are taken into account in determining the actual deferral
ratios.
(i) SEPARATE APPLICATION OF LIMITS. The limits described in this
Section 11.4 shall be applied separately with respect to Participants
employed by any Employer which is not an Affiliated Corporation as if such
Participants were participants in a separate plan for purposes of Code
section 401(k).
11.5. CODE SECTION 401(M) LIMITS.
(a) ACTUAL CONTRIBUTION RATIOS. For each Plan Year, the
Administrator will determine the "actual contribution ratio" for each
Participant who is eligible for Employer Contributions. The actual
contribution ratio shall be the ratio, calculated to the nearest
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one-hundredth of one percent, of the Employer Contributions and After-Tax
Contributions (if any) made on behalf of the Participant for the Plan Year,
to the Participant's Compensation for the Plan Year. For purposes of
determining a Participant's actual contribution ratio,
(i) Employer Contributions will be taken into account only to
the extent permitted by Regulation section 1.401(m)-1(b)(5);
(ii) If an eligible Highly Compensated Employee is subject to
the family aggregation rules of Code section 414(q)(6) because such
Employee is either a five percent owner or one of the ten most highly
paid employees, the family group shall be treated as a single Highly
Compensated Employee with an actual contribution ratio determined by
combining the Employer Contributions, After-Tax Contributions,
Compensation, and any amounts treated as Employer Contributions of all
the eligible family members.
(iii) The applicable period for each Participant for a given
Plan Year shall be that portion of the 12-month period ending on the
last day of such Plan Year during which the individual was a
Participant.
(iv) Pre-Tax Contributions may be treated as matching
contributions to the extent permitted by Regulation section
1.401(m)-1(b)(2). Any forfeitures which are applied against Employer
Contributions shall be treated as Employer Contributions.
(b) ACTUAL CONTRIBUTION PERCENTAGES. The actual contribution ratios
for all Highly Compensated Employees who are eligible for Employer
Contributions and After-Tax Contributions for a Plan Year shall be averaged
to determine the actual contribution percentage for the highly compensated
group for the Plan Year, and the actual contribution ratios for all
Employees who are not Highly Compensated Employees but who are eligible for
Employer Contributions and After-Tax Contributions for the Plan Year shall
be averaged to determine the actual contribution percentage for the
nonhighly compensated group for the Plan Year. The actual contribution
percentages for any Plan Year must satisfy at least one of the following
tests, which shall be interpreted and applied by the Administrator in a
manner consistent with Regulation sections 1.401(m)-1 and 1.401(m)-2:
(i) The actual contribution percentage for the highly
compensated group does not exceed 125 percent of the actual
contribution percentage for the nonhighly compensated group; or
(ii) The excess of the actual contribution percentage for the
highly compensated group over the actual contribution percentage for
the nonhighly compensated group does not exceed two percentage points,
and the actual contribution percentage for the highly compensated
group does not exceed twice the actual contribution percentage of the
nonhighly compensated group.
If the actual contribution percentages for any Plan Year fail to satisfy
the tests in (i) or (ii) above, the Administrator may, to the extent
permitted by Regulations and for the sole purpose of satisfying those
tests, treat the Plan as two Plans, each covering one or more
classifications of employees (consistent with Code section 410(b) and any
regulations
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thereunder). The Administrator will then apply the foregoing
tests separately to each such Plan.
(c) MULTIPLE USE TEST. In the event that the sum of the actual
deferral percentage and the actual contribution percentage of the highly
compensated group exceeds the "aggregate limit" within the meaning of
Regulation section 1.401(m)-2(b)(3), the Administrator shall reduce such
percentages to the extent required by such section and in a manner
consistent with the provisions of this Plan.
(d) EXCESS AGGREGATE CONTRIBUTIONS. If the limits of Code section
401(m) have been exceeded for a Plan Year after all contributions for the
Plan Year have been made, the Administrator shall determine the amount of
excess aggregate contributions with respect to Participants who are Highly
Compensated Employees. To do so, the Administrator shall reduce the actual
contribution ratio of the Highly Compensated Employee with the highest
actual contribution ratio to the extent necessary to (i) enable the Plan to
satisfy the 401(m) limits or (ii) cause such employee's actual contribution
ratio to equal the actual contribution ratio of the Highly Compensated
Employee with the next highest actual contribution ratio, and shall repeat
this process until the Plan no longer exceeds the Code section 401(m)
limits. The amount of excess aggregate contributions for each Highly
Compensated Employee for the Plan Year shall equal the amount of Employer
Contributions and After-Tax Contributions (plus Pre-Tax Contributions which
are treated as Employer Contributions for purposes of the Code section
401(m) limits) actually made to the Trust for the Plan Year, less the
product of the (i) the Highly Compensated Employee's reduced actual
contribution ratio as determined under the preceding sentence, and (ii) his
or her Compensation. Any excess aggregate contributions will be
distributed as provided below. In no event will excess aggregate
contributions remain unallocated or be allocated to a suspense account for
allocation in a future Plan Year.
(e) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. A Participant's
excess aggregate contributions, adjusted for income or loss pursuant to
Regulation section 1.401(m)-1(e)(3)(ii), will be designated by the
Corporation as a distribution of excess aggregate contributions, and
distributed to the Participant. Distribution of excess aggregate
contributions will be made after the close of the Plan Year to which the
contributions relate, but within 12 months after the close of such Plan
Year. The determination and distribution of excess aggregate contributions
with respect to a Highly Compensated Employee whose actual contribution
ratio is determined pursuant to the family aggregation rules will be
accomplished pursuant to Regulation section 1.401(m)-1(e)(4)(iii).
(f) RECORDKEEPING REQUIREMENT. The Administrator, on behalf of the
Corporation, shall maintain such records as are necessary to demonstrate
compliance with the Code section 401(m) limits, including the extent to
which qualified elective contributions and qualified nonelective
contributions are taken into account in determining the actual contribution
ratios.
(g) SEPARATE APPLICATION OF LIMITS. The limits of this Section 11.5
shall be applied separately with respect to Participants employed by any
Employer which is not an Affiliated Corporation as if such Participants
were participants in a separate plan for purposes of Code section 401(m).
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ARTICLE 12. ROLLOVER AND TRANSFER CONTRIBUTIONS
12.1. CONTRIBUTION OF AMOUNT DISTRIBUTED FROM ANOTHER QUALIFIED PLAN.
An Eligible Employee who was formerly a participant in a plan described in
section 401(a) of the Code and exempt from tax under section 501(a) of the Code
(the "Distributing Plan") and who has received a qualified total distribution
(within the meaning of section 402(a)(5)(E)(i) of the Code) from the
Distributing Plan (the "distribution") may, within 60 days of receipt of the
distribution from the Distributing Plan, contribute to the Trust, as a "Rollover
Contribution", an amount which
(a) does not exceed the fair market value of the distribution,
reduced by the amount contributed to the Distributing Plan on an after-tax
basis by the Eligible Employee, as determined in accordance with section
72(f) of the Code and the regulations thereunder, such amount to be reduced
by any amounts theretofore distributed to the Eligible Employee which were
not includible in his or her gross income for federal income tax purposes,
and
(b) includes no property other than (i) money received in the
distribution, and (ii) money attributable to other property received in the
distribution which is sold and the proceeds of which are transferred
pursuant to section 402(a)(6)(D) of the Code.
The Eligible Employee may also transfer an eligible rollover distribution to the
Plan by way of a direct rollover which satisfies the requirements of section
401(a)(31) of the Code, and such amount shall also be considered a "Rollover
Contribution."
12.2. TRANSFER OF AMOUNT DISTRIBUTED FROM A ROLLOVER IRA. An Eligible
Employee who has received a distribution from an individual retirement account
or individual retirement annuity which qualifies as a distribution described in
Code section 408(a)(3)(A)(ii) may, in accordance with such Code section and
within 60 days of receipt of the distribution from the individual retirement
account or annuity, contribute a portion of the distribution to the Trust as a
Rollover Contribution. To qualify for transfer under this section, the value of
the individual retirement account or individual retirement annuity as the case
may be, must be attributable to a previous rollover contribution from a plan
qualified under Code section 401(a) of the Code or earnings thereon.
12.3. MONITORING OF ROLLOVERS.
(a) The Administrator shall establish such procedures and require
such information from employees seeking to make Rollover Contributions as
it deems necessary to insure that such Rollover Contributions satisfy the
requirements for tax-free rollovers established by conditions of this
Article and the Code and the Regulations.
(b) No amount may be contributed or transferred under this Article
until approved by the Administrator.
12.4. TRANSFER CONTRIBUTION. Subject to such restrictions and
procedures as the Administrator may prescribe (which, without limitation, may
include restrictions as to the type of plan from which transfers will be
permitted), amounts held for the benefit of an Eligible Employee under a
Distributing Plan may be transferred (the "Transfer Contribution") directly by
the Distributing Plan to this Plan in accordance with the requirements of
section 414(l) of the Code and the Regulations thereunder. A Transfer
Contribution Account shall be established for each Eligible Employee for whom
a Transfer Contribution is made. To the extent determined by the
Administrator to be required under section 411(d)(6) of the Code, an Eligible
Employee for whom
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a Transfer Contribution Account is maintained shall be entitled to
distributions and withdrawals from such Account under provisions not less
restrictive than applied under the Distributing Plan. To the extent the
Distributing Plan was subject to the requirements of Code sections 401(a)(11)
and 417, such requirements shall continue to apply to the transferred amount.
Transfers described in the last sentence of Section 12.1 shall not be
allocated to a Transfer Contribution Account but shall be treated as Rollover
Contributions for all purposes.
12.5. TREATMENT OF TRANSFERRED AMOUNT UNDER THE PLAN. An individual
who makes a Rollover Contribution to the Trust or has a Transfer Contribution
made to the Trust on his or her behalf shall not be eligible to make or receive
any other contributions under the Plan until he or she has actually become a
Participant and satisfied the eligibility requirements otherwise applicable to
such contributions. However, for all other purposes under the Plan (including
without limitation, investment directions and distributions), an individual who
makes a Rollover Contribution or for whom a Transfer Contribution has been made
shall be treated as a Participant.
ARTICLE 13. SPECIAL TOP-HEAVY PROVISIONS
13.1. PROVISIONS TO APPLY. The provisions of this Article shall apply
for any top- heavy Plan notwithstanding anything to the contrary in this Plan.
13.2. MINIMUM CONTRIBUTION. For any Plan Year which is a top-heavy
plan year, the Employer shall contribute to the Trust a minimum contribution on
behalf of each Participant who is not a key employee for such year and who has
not separated from service from the Corporation, all Affiliated Corporations and
all Subsidiaries by the end of the Plan Year. The minimum contribution shall,
in general, equal 3 percent of each such Participant's Compensation received
during the Plan Year, but shall be subject to the following special rules:
(a) If the largest contribution on behalf of a key employee for such
year, taking into account only Pre-Tax Contributions and Employer
Contributions, is less than 3 percent of the key employee's Compensation
received during the Plan Year, such lesser percentage shall be the minimum
contribution percentage for Participants who are not key employees. This
special rule shall not apply, however, if this Plan is required to be
included in an aggregation group and enables a defined benefit plan to meet
the requirements of Code section 410(a)(4) or 410.
(b) No minimum contribution will be required with respect to a
Participant for any period during which the Participant is also covered by
another top-heavy defined contribution plan of the Corporation, an
Affiliated Corporation or a Subsidiary which meets the vesting requirements
of Code section 416(b) and under which the Participant receives the
top-heavy minimum contribution.
(c) No minimum contribution will be required with respect to any
Participant who is also covered by a top-heavy defined benefit plan of the
Corporation, an Affiliated Corporation or a Subsidiary and the Participant
receives the top-heavy defined benefit minimum (within the meaning of Code
section 416(c)(1) and the Regulations thereunder) under such defined
benefit plan.
(d) The minimum contribution with respect to any Participant who is
not a key employee for the particular year will be offset by any Employer
Contributions (but not any other type of contribution) otherwise made for
the Participant's benefit for such year.
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(e) Any additional minimum contribution made for the benefit of a
Participant under this Section shall be credited to his or her Employer
Contribution Account as soon as practicable after the close of the Plan
Year for which such contribution is made.
13.3. SPECIAL VESTING SCHEDULE. Each Employee who is a Participant at
any time during a top-heavy plan year shall have a fully vested and
nonforfeitable interest in not less than the percentage of each of his or her
Accounts as set forth in the following vesting schedule, based on the
Participant's Years of Credited Service:
Applicable
Years of Credited Service Nonforfeitable Percentage
------------------------- --------------------------
less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
13.4. ADJUSTMENT TO LIMITATION ON BENEFITS. For purposes of the Code
section 415 limits, the definitions of "defined contribution plan fraction" and
"defined benefit plan fraction" contained therein shall be modified, for any
Plan Year which is a top-heavy plan year, by applying the special rule set forth
in Code section 416(h) of the Code unless (a) the Plan and each plan with which
the Plan is required to be aggregated for top-heavy purposes satisfies the
requirements of Code section 416(h)(2)(A), and (b) such Plan Year would not be a
top-heavy plan year if "90 percent" were substituted for "60 percent" in the
definition of a top-heavy plan year.
13.5. DEFINITIONS. For purposes of these top-heavy provisions, the
following terms have the following meanings:
(a) "key employee" means a key employee described in Code section
416(i)(l), determined on the basis of Compensation; and
(b) "top-heavy plan year" means a Plan Year if the sum of the account
balances of all key employees under the Plan and each other defined
contribution plan (as of the applicable determination date of each such
Plan) which is aggregated with the Plan, plus the sum of the present values
of the total accrued benefits of all key employees under each defined
benefit plan (as of the applicable determination date of each such plan)
which is aggregated with the Plan exceeds 60 percent of the sum of such
amounts for all Employees (including, for purposes of this paragraph (b),
any person employed by the Corporation, an Affiliated Corporation or a
Subsidiary) and former Employees (other than former key employees, but
including Beneficiaries of former Employees) under the Plan and all such
plans. For purposes of these determinations:
(i) The foregoing determination will be made in accordance with
the provisions of Code section 416 and the regulations promulgated
thereunder, which are specifically incorporated herein by reference.
(ii) The term "determination date" means, with respect to the
initial plan year of a plan, the last day of such plan year and, with
respect to any other plan year of a plan, the last day of the
preceding plan year of such plan. The term
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<PAGE>
"applicable determination date" means, with respect to the Plan, the
determination date for the Plan Year of reference and, with respect
to any other plan, the determination date for any plan year of such
plan which falls within the same calendar year as the applicable
determination date of the Plan.
(iii) Accrued benefits or account balances under a plan will be
determined as of the most recent valuation date of the plan in that
12-month period ending on the applicable determination date of the
plan; provided, however, that in the case of a defined benefit plan
such valuation date must be the same date as is employed for minimum
funding purposes, and in the case of a defined contribution plan the
value so determined will be adjusted for contributions made after the
valuation date to the extent required by applicable Regulations.
(iv) If any individual has not received any compensation from
the Corporation, an Affiliated Corporation or a Subsidiary maintaining
a plan (other than benefits under the Plan) at any time during the
5-year period ending on the applicable determination date with respect
to such plan, any accrued benefit for such individual (and the account
of such individual) under such plan shall not be taken into account.
(v) Each plan of the Corporation, an Affiliated Corporation or a
Subsidiary (whether or not terminated) in which a key employee
participates, and any other plan of the Corporation, an Affiliated
Corporation or a Subsidiary which enables a plan referred to in the
preceding clause to satisfy the requirements of Code sections
401(a)(4) and 410, shall be aggregated with the plan. Any plan of the
Corporation, an Affiliated Corporation or a Subsidiary not required to
be aggregated with the Plan may nevertheless, at the discretion of the
Administrator, be aggregated with the Plan if the benefits and
coverage of all aggregate plans would continue to satisfy the
requirements of sections 401(a)(4) and 410 of the Code.
(vi) The determination of the present value of accrued benefits
under a defined benefit plan shall be made on the basis of the funding
assumptions employed by such plan.
13.6. SEPARATE TOP HEAVY DETERMINATIONS FOR SUBSIDIARIES. To the
extent required by section 416 of the Code, the portion of the Plan attributable
to Participants who are employed by any Subsidiary which is not an Affiliated
Corporation shall be treated as a separate plan for purposes of the top heavy
determination and contribution requirements of this Article.
ARTICLE 14. MISCELLANEOUS
14.1. EXCLUSIVE BENEFIT RULE. No part of the corpus or income of the
Trust forming part of the Plan will be used for or diverted to purposes other
than for the exclusive benefit of each Participant and Beneficiary, except as
otherwise provided under the provisions of the Plan relating to Qualified
Domestic Relations Orders, and the return of contributions upon
nondeductibility, mistake of fact, or the failure of the Plan to qualify
initially.
14.2. LIMITATION OF RIGHTS. Neither the establishment of the Plan or
the Trust, nor any amendment thereof, nor the creation of any fund or account,
nor the payment of any benefits, will be construed as giving to any Participant
or other person any legal or equitable right against the Corporation, any
Affiliated Corporation, any Subsidiary, the Administrator, the Trustee, or the
37
<PAGE>
Co-Trustees except as provided herein, and in no event will the terms of
employment or service of any Participant be modified or in any way be affected
hereby. It is a condition of the Plan, and each Participant expressly agrees by
his or her participation herein, that each Participant will look solely to the
assets held in the Trust for the payment of any benefit to which he or she is
entitled under the Plan.
14.3. NONALIENABILITY OF BENEFITS. The benefits provided hereunder
will not be subject to alienation, assignment, garnishment, attachment,
execution or levy of any kind, and any attempt to cause such benefits to be so
subjected will not be recognized, except to the extent as may be required by
law; provided, however, that if the Administrator receives any Qualified
Domestic Relations Order that requires the payment of benefits hereunder or the
segregation of any Account, such benefits shall be paid, and such Account
segregated, in accordance with the applicable requirements of such Qualified
Domestic Relations Order.
14.4. CHANGES IN VESTING SCHEDULE. A Plan amendment which changes a
vesting schedule under the Plan shall apply with respect to any Participant who
has completed three Years of Service prior to the expiration of the period
described below only to the extent that the Participant's vested percentage in
his or her Accounts determined under the amendment is greater than the
nonforfeitable percentage of his or her Accounts determined without regard to
the amendment. The period referred to in the preceding sentence will begin on
the date the amendment of the vesting schedule is adopted and will end 60 days
after the latest of the following dates:
(a) the date on which such amendment is adopted;
(b) the date on which such amendment becomes effective; and
(c) the date on which the Participant is issued written notice of
such amendment by the Administrator.
14.5. GOVERNING LAW. The Plan and Trust will be construed,
administered and enforced according to the laws of the State of Illinois to the
extent such laws are not preempted by ERISA.
ARTICLE 15. DEFINITIONS
Wherever used in the Plan, the singular includes the plural, and the
following terms have the following meanings, unless a different meaning is
clearly required by the context:
15.1. "Accounts" means, for any Participant, his or her Basic Pre-Tax
Contribution Account, Basic After-Tax Contribution Account, Supplemental Pre-Tax
Contribution Account, Supplemental After-Tax Contribution Account, Employer
Contribution Account, Rollover Contribution Account (if applicable), Transfer
Contribution Account (if applicable) and any other accounts or subaccounts
established on his or her behalf under the Plan by the Administrator or the
Trustee.
15.2. "Administrator" means the Senior Vice President, Human Resources,
of Abbott Laboratories, unless the Board of Review appoints another entity or
person(s) to administer the Plan.
15.3. "Affiliated Corporation" means (a) any corporation that is a
member of a controlled group of corporations (as defined in Code section 414(b))
of which the Corporation is also a member, (b) any trade or business, whether or
not incorporated, that is under common control (as
38
<PAGE>
defined in Code section 414(c)) with the Corporation, (c) any trade or
business that is a member of an affiliated service group (as defined in Code
section 414(m)) of which the Corporation is also a member, or (d) to the
extent required by Regulations issued under Code section 414(o), any other
organization; provided that the term "Affiliated Corporation" shall not
include any Corporation or unincorporated trade or business prior to the date
on which such Corporation, trade or business satisfies the affiliation or
control tests of (b), (c) or (d) above. In identifying any "Affiliated
Corporations" for purposes of the Code section 415 limits, the definitions in
Code sections 414(b) and (c) shall be modified as provided in Code section
415(h)
15.4. "Annuity Starting Date" for any Participant means (a) the first
day of the first period for which a benefit is payable to the Participant under
the Plan as an annuity, or (b) in the case of a benefit not payable in the form
of an annuity, the first day on which all events have occurred which entitle the
Participant to such benefit.
15.5. "After-Tax Contribution Account" means a Participant's Basic
After-Tax Contribution Account or his or her Supplemental After-Tax Contribution
Account.
15.6. "Alternate Payee" means an alternate payee (as defined in section
414(p)(8) of the Code) who has rights to one or more Accounts under the Plan.
15.7. "Basic After-Tax Contribution" means a Basic Contribution made to
the Plan by a Participant on an after-tax basis.
15.8. "Basic After-Tax Contribution Account" means, for any
Participant, the account established by the Administrator or Trustee to which
Basic After-Tax Contributions made for the Participant's benefit are credited.
15.9. "Basic Contribution" means any contribution made pursuant to
Section 3.2 entitling the Participant to a share in the Employer Contributions.
15.10. "Basic Pre-Tax Contribution" means a Basic Contribution made to
the Plan for the benefit of a Participant on a pre-tax basis.
15.11. "Basic Pre-Tax Contribution Account" means, for any Participant,
the account established by the Administrator or Trustee to which Basic Pre-Tax
Contributions made for the Participant's benefit are credited.
15.12. "Beneficiary" means any person entitled to receive benefits under
the Plan upon the death of a Participant.
15.13. "Board of Directors" means the Board of Directors of the
Corporation.
15.14. "Board of Review" means the Employee Benefit Board of Review
appointed and acting under the Abbott Laboratories Annuity Retirement Plan and
having the duties and powers described in Article 9.
15.15. "Break Year" means, with respect to any Employee, a 12
consecutive month period of severance.
15.16. "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section or subsection of the Code includes
reference to any comparable or
39
<PAGE>
succeeding provisions of any legislation which amends, supplements or
replaces such section or subsection.
15.17. "Company Stock" means the common stock of the Corporation.
15.18. "Compensation" means,
(a) for purposes of determining the amount of Pre-Tax, After-Tax, and
Employer Contributions to be made on behalf of a Participant, (i) the
Participant's total compensation (prior to reduction for contributions
under Code sections 401(k) or 125 and for contributions under the Abbott
Laboratories 401(k) Supplemental Plan) for personal services actually
rendered in the course of employment with the participating Employers, but
excluding (ii) any reimbursements, expense allowances, fringe benefits
(cash or noncash), moving expenses, or welfare benefits (whether or not
those amounts are includable in gross income), prizes, or any Christmas,
anniversary, or discretionary bonuses, or payments made under the Abbott
Laboratories Cash Profit Sharing Plan, Division Incentive Plan, Management
Incentive Plan, Supplemental Pension Plan, 401(k) Supplemental Plan, or
plans maintained by any participating Employer which are determined by the
Administrator to be similar to such plans, or any suggestion or other
special awards. For purposes of (i) above, cash bonuses calculated on a
uniform basis and paid no more frequently than annually to all hourly
compensated employees on a plant-wide basis shall be included in
Compensation;
(b) for purposes of applying the Code section 401(k)(3) and 401(m)
limits and determining the Code section 415 limits, a top-heavy minimum
contribution, and the status of any individual as a "key employee," the
Participant's wages, salaries, fees for professional services and other
amounts received during the Plan Year (without regard to whether or not an
amount is paid in cash) for personal services actually rendered in the
course of employment with the participating Employers to the extent that
the amounts are includable in gross income, including but not limited to
commissions paid to salespeople, compensation for services on the basis of
a percentage of profits, tips, bonuses, fringe benefits, reimbursements,
and expense allowances, but not including those items excludable from the
definition of compensation under Regulation section 1.415-2(d)(2)
(including amounts that are excludable from gross income under Code
sections 125 or 401(k)); and
(c) for purposes of determining whether an individual is a Highly
Compensated Employee, the same as described in (b) above, increased by any
amounts that would have been received by the individual from the
participating Employers but for an election under Code section 401(k) or
125.
For all purposes under the Plan, Compensation for any Participant shall not
exceed the amount specified in Code section 401(a)(17) for any Plan Year as
adjusted thereunder for each such year ("Section 401(a)(17) Limitation"). This
limitation shall be applied on a Plan Year basis, shall not be prorated for any
part of such Plan Year, and shall be applied only with respect to compensation
earned after an Eligible Employee becomes a Participant. For purposes of
determining the maximum amount of Pre-Tax and After-Tax Contributions that may
be made to the Plan on behalf of or by a Participant for any Plan Year, the
Section 401(a)(17) Limitation shall be multiplied by 18%. In determining the
Compensation of a Participant for purposes of this limitation, the rules of Code
section 414(q)(6) shall apply, except in applying such rules, the term "family"
shall include only the spouse of the Participant and any lineal descendants of
the Participant who have
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<PAGE>
not attained age 19 before the close of the Plan Year. If, as a result of the
application of such rules the Section 401(a)(17) Limitation is exceeded, then
the Limitation shall be prorated among the affected individuals in proportion
to each such individual's Compensation as determined under this Section prior
to the application of this Limitation. The Section 401(a)(17) Limitation for
1996 is $150,000.
15.19. "Contribution Agreement" means, for any Participant, the
agreement by which the Participant elects to defer a certain portion of his or
her regular pay and the Corporation agrees to contribute the deferred amount to
the Participant's Pre-Tax or After-Tax Contribution Account, whichever is
applicable.
15.20. "Corporation" means Abbott Laboratories, an Illinois corporation,
and any successor to all or a major portion of its assets or business which
assumes the obligations of the Corporation.
15.21. "Co-Trustees" means the persons appointed by the Board of Review
to serve as Co-Trustees under the Trust.
15.22. "Division" means any functionally or geographically separate
operating unit of the Corporation which is designated by the Board of Review as
a "division" for the purposes of the Plan.
15.23. "Eligible Employee" means
(a) any Employee who is employed by an Employer, provided no Employer
contributes to a retirement program on his or her behalf, other than a
federal or state-mandated retirement program, the Abbott Laboratories
Annuity Retirement Plan, any pension plan of an Employer incorporated under
the laws of or having its principal manufacturing facilities in Puerto
Rico, or the Plan;
(b) any Employee of any foreign entity, in which the Corporation has
not less than a 10% interest, directly or through one or more entities, but
which is not a participating Employer, if (i) such Employee is a citizen or
resident alien of the United States of America, (ii) an Employer has
entered into an agreement under Code section 3121(l) which applies to such
foreign entity, (ii) no contributions are provided by any entity to a
funded plan of deferred compensation (other than the Abbott Laboratories
Annuity Retirement Plan or any pension plan of any subsidiary of the
Corporation having its principal place of business in Puerto Rico) for such
Employee with respect to remuneration paid to such Employee by the foreign
entity, and (iv) such Employee is designated a "U.S. Expatriate" on the
records of an Employer;
(c) each Employee of an Employer who is employed at a site, office or
other facility of an Employer located outside the United States of America
if (i) such Employee is a citizen or resident alien of the United States of
America, and (ii) such Employee is designated a "U.S. Expatriate" on the
records of an Employer; and
(d) for purposes of making Supplemental Contributions, a seasonal
employee (namely an Employee who is hired to work for less than one year)
once he or she has completed One Year of Credited Service.
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<PAGE>
"Eligible Employee" does not include (i) a "leased employee" within the meaning
of Code section 414(n) until he or she becomes actually employed by an Employer,
(ii) an Employee covered by a collective bargaining agreement, unless such
agreement specifically provides for such Employee's participation in the Plan,
or (iii) any Employee who is employed by an Employer located in Puerto Rico,
other than any person designated as a "U.S. Expatriate" on the records of an
Employer.
15.24. "Employee" means any individual employed by the Corporation, an
Affiliated Corporation or a Subsidiary, including any leased employee and any
other individual required to be treated as an employee pursuant to Code sections
414(n), 414(o) and the Regulations thereunder.
15.25. "Employer" means the Corporation, any Affiliated Corporation or
any Subsidiary that had adopted the Plan or was otherwise designated as a
participating employer thereunder prior to 1996 or which becomes a participating
employer thereafter under Section 2.6.
15.26. "Employer Contributions" means the contributions made by the
Employers under Section 3.5 for the benefit of the Participants under the Plan
on account of Basic Contributions.
15.27. "Employer Contribution Account" means, for any Participant, the
account established by the Administrator or Trustee to which Employer
Contributions made under Section 3.5 for the Participant's benefit are credited.
15.28. "Entry Date" means the first day of each payroll period.
15.29. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute or statutes of
similar import.
15.30. "Highly Compensated Employee" means an employee of the
Corporation, an Affiliated Corporation or a Subsidiary who, during the Plan Year
in question or the preceding Plan Year,
(a) was at any time a 5-percent owner (as defined in Code section
416(i)(1)) of the Corporation, of an Affiliated Corporation or of a
Subsidiary,
(b) received Compensation in excess of $75,000,
(c) received Compensation in excess of $50,000 and was in the
top-paid group of employees (as defined in Code section 414(q) and the
Regulations thereunder), based upon the exclusion of all employees
excludable under Code section 414(q)(8)) for the Year, or
(d) was at any time an officer of the Corporation, an Affiliated
Corporation or a Subsidiary and received Compensation greater than 50% of
the amount described in Code section 415(b)(1)(A).
The $75,000 and $50,000 amounts in (b) and (c) above shall automatically be
adjusted if and to the extent the corresponding amounts in Code section 414(q)
are adjusted by the Secretary of the Treasury. No more than 50 Employees of the
Corporation, the Affiliated Corporations and the Subsidiaries (or, if less, the
greater of 3 Employees or 10 percent of all employees of the Corporation, the
Affiliated Corporations or the Subsidiaries) shall be treated as officers for
purposes of clause (d) above. An individual who was not described in (b), (c),
or (d) above during the preceding Plan Year shall be a Highly Compensated
Employee during the current Plan
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<PAGE>
Year only if he or she is described in (a) above or is among the 100
employees of the Affiliated Corporation with the greatest Compensation for
the current Plan Year.
15.31. "Hour of Service" means, with respect to any Employee, each hour
for which the Employee is paid or entitled to payment for the performance of
duties for an Employer each such hour to be credited to the Employee for the
computation period in which the duties were performed.
15.32. "Investment Fund" means any investment fund described in Article
5 or as subsequently selected by the Co-Trustees as an investment option under
the Plan.
15.33. "Participant" means each Eligible Employee who participates in
the Plan pursuant to its provisions or other individual for whom an Account is
maintained.
15.34. "Period of Credited Service" means with respect to any Employee
the aggregate of all time periods beginning on the date the Employee first
completes an Hour of Service or is reemployed and ending on the date a Break
Year begins, subject to the following adjustments:
(a) An Employee will be credited with one Year of Credited Service
for each year of credited service under the Plan as in effect prior to
October 1, 1988.
(b) On or after October 1, 1988, an Employee shall be credited with
1/12th of a Year of Credited Service for each calendar month of employment
(or portion thereof) during which he or she is employed by the Corporation,
an Affiliated Corporation or a Subsidiary, including employment prior to
October 1, 1988; provided, however that the Employee will not be credited
with less service than was credited to him as of September 30, 1988.
(c) An Employee will also receive credit for any period of severance
of less than 12 consecutive months. Fractional periods of a year will be
expressed in terms of days. In the case of an individual who is absent
from work for maternity or paternity reasons, the 12-consecutive month
period beginning on the first anniversary of the first day of such absence
shall not constitute a Break Year. For purposes of this Section,
(i) an absence from work for maternity or paternity reasons
means an absence (A) by reason of the pregnancy of the individual, (B)
by reason of the birth of a child of the individual, (C) by reason of
the placement of a child with the individual in connection with the
adoption of such child by such individual, or (D) for purposes of
caring for such child for a period beginning immediately following
such birth or placement;
(ii) a period of severance is a continuous period of time during
which the Employee is not employed by the Corporation, an Affiliated
Corporation or a Subsidiary. Such period begins on the date the
Employee retires, quits or is discharged, or if earlier, the 12-month
anniversary of the date on which the Employee was otherwise first
absent from service; and
(iii) in the case of a leave of absence for service in the armed
forces of the United States, no period shall be excluded under this
paragraph during which the Employee has reemployment rights with
respect to the Corporation, any Affiliated Corporation or any
Subsidiary under federal law.
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<PAGE>
(d) If, to the extent, and on the terms so provided by the Board of
Review at the time of acquisition, or at any subsequent date or in any
Supplement to the Plan, the last continuous period of employment of any
employee with any prior separate business entity, part or all of which is
or was acquired by, or becomes part of an Employer will be considered a
Period of Credited Service.
15.35. "Plan" means the Abbott Laboratories Stock Retirement Plan, as
amended from time to time.
15.36. "Plan Year" means the calendar year.
15.37. "Point Value" means the dollar value of an earnings or service
point determined for a Plan Year by dividing the aggregate Employer
Contributions made under Section 3.5 for such Plan Year (less that portion of
such Employer Contributions determined under Section 3.5(f) that are distributed
during such Plan Year to Participants by the aggregate earnings and service
points credited under Section 3.5 for such Plan Year to all Participants
entitled to share in Employer Contributions to the Plan for such Plan Year (less
the points attributable to participants to or for whom distributions are made
during the Plan Year.).
15.38. "Pre-Tax Contribution Account" means the Participant's Basic
Pre-Tax Contribution Account or his or her Supplemental Pre-Tax Contribution
Account.
15.39. "Pre-Tax Contributions" means, for any Participant, the aggregate
of the Participant's Basic Pre-Tax Contributions and Supplemental Pre-Tax
Contributions contributed to the applicable Pre-Tax Contribution Account.
15.40. "Prior Plan" means the Plan as in effect on December 31, 1995.
15.41. "Qualified Domestic Relations Order" means any judgment, decree
or order (including approval of a property settlement agreement) which
constitutes a "qualified domestic relations order" within the meaning of Code
section 414(p). A judgment, decree or order shall not be considered not to be a
Qualified Domestic Relations Order merely because it requires a distribution to
an alternate payee (or the segregation of accounts pending distribution to an
alternate payee) before the Participant is otherwise entitled to a distribution
under the Plan.
15.42. "Qualified Nonelective Employer Contribution" means a
contribution (other than an Employer Contribution) made for the benefit of a
Participant by the Employer in its discretion.
15.43. "Regulation" means a regulation issued by the Department of
Treasury, or the Department of Labor, as the case may be, including any final
regulation, proposed regulation, temporary regulation, as well as any
modification of any such regulation contained in any notice, revenue procedure,
advisory or similar pronouncement issued by the Internal Revenue Service or the
Department of Labor, whichever is applicable.
15.44. "Retirement Program" means the program of retirement benefits,
provided by the Corporation, of which the Plan and the Abbott Laboratories
Annuity Retirement Plan form a part.
15.45. "Rollover Contribution Account" means, for any Participant, the
account described in Section 12.1 or 12.2, as established by the Administrator
or the Trustee, to which the Participant's Rollover Contribution, if any, is
allocated.
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15.46. "Rollover Contribution" means a contribution made by a
Participant which satisfies the requirements for rollover contributions as set
forth in Article 12.
15.47. "Section" means a section of the Plan.
15.48. "SRP Stable Value Fund" means the Investment Fund described in
5.2.
15.49. "Subsidiary" means any corporation, partnership, joint venture or
business trust fifty percent (50%) or more of the control of which is owned,
directly or indirectly, by the Corporation, except as provided in Article 11.
15.50. "Supplemental After-Tax Contribution" means a Supplemental
Contribution made to the Plan by the Participant on an after-tax basis.
15.51. "Supplemental After-Tax Contribution Account" means, for any
Participant, the account established by the Administrator or Trustee to which
Supplemental After-Tax Contributions made for the Participant's benefit are
credited.
15.52. "Supplemental Contribution" means any contribution made pursuant
to Section 3.3 and for which no Employer Contribution is made.
15.53. "Supplemental Pre-Tax Contribution" means a Supplemental
Contribution made to the Plan for the benefit of a Participant on a pre-tax
basis.
15.54. "Supplemental Pre-Tax Contribution Account" means, for any
Participant, the account established by the Administrator or Trustee to which
Supplemental Pre-Tax Contributions made for the Participant's benefit are
credited.
15.55. "Transfer Contribution" means a contribution made on behalf of a
Participant by way of a trustee-to-trustee transfer as described in Section
12.4.
15.56. "Transfer Contribution Account" means, for any Participant, the
account described in Section 12.4 established by the Administrator or the
Trustee to which the Participant's Transfer Contribution, if any, is allocated.
15.57. "Trust" means the trust established between the Corporation, the
Trustee and Co-Trustees in connection with the Plan, together with any and all
amendments thereto.
15.58. "Trustee" means the person(s) or entity appointed by the Board of
Review to serve as Trustee under the Trust.
15.59. "Unallocated Account" means the portion of the Trust to which
Employer Contributions are made during the Plan Year, in which shares of Company
Stock will be held prior to allocation to Participant Accounts, to which
dividends paid on such shares of Company Stock will be paid, and from which
expenses of the Plan will be paid.
15.60. "Valuation Date" means each business day of each Plan Year.
15.61. "Year of Credited Service" means, with respect to any Employee, a
twelve-month Period of Credited Service.
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ABBOTT LABORATORIES
STOCK RETIREMENT PLAN
(PUERTO RICO)
(Effective January 1, 1996)
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. INTRODUCTION 1
1.1 Purpose 1
1.2 Objective 1
ARTICLE 2. PARTICIPATION 1
2.1 Date of Participation 1
2.2 Enrollment of Participants 2
2.3 Reemployment of Participant 2
2.4 Duration of Participation 4
2.5 Participant Restricted Due to Conflict of Interest 4
ARTICLE 3. CONTRIBUTIONS 6
3.1 Participant Contributions 6
3.2 Basic Contributions 7
3.3 Supplemental Contributions 7
3.4 Contribution Agreements 8
3.5 Employer Contributions 8
3.6 Qualified Nonelective Employer Contributions 11
3.7 Time for Making and Crediting of Contributions 11
3.8 Certain Limits Apply 12
3.9 Return of Contributions 12
ARTICLE 4. PARTICIPANT ACCOUNTS 13
4.1 Accounts 13
4.2 Adjustment of Accounts 14
ARTICLE 5. INVESTMENT OF ACCOUNTS 14
5.1 Abbott Stock 14
5.2 Putnam Stable Value Fund 15
5.3 Other Investment Funds 15
5.4 Pre-Retirement Feature for Reinvestment of Abbott Stock 15
5.5 Investment Elections 16
5.6 Default Investment Fund 16
5.7 Participant Direction of Investments 16
5.8 Dividends on Abbott Stock 17
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE 18
6.1 In-service Withdrawals of After-Tax Contributions 18
6.2 Distributions Required by a Qualified Domestic Relations Order 21
6.3 Participant's Consent to Distribution of Benefits. 21
<PAGE>
ARTICLE 7. LOANS TO PARTICIPANTS 22
7.1 In General 22
7.2 Rules and Procedures 22
7.3 Maximum Amount of Loan 22
7.4 Minimum Amount of Loan; Number of Loans; Frequency of Loans;
Fees for Loans. 23
7.5 Note; Security; Interest 23
7.6 Repayment 24
7.7 Repayment upon Distribution 24
7.8 Default 25
7.9 Nondiscrimination 25
7.10 Source of Loan Proceeds 25
7.11 Reinvestment of Loan Repayments 25
ARTICLE 8. BENEFITS UPON RETIREMENT, DEATH OR
SEPARATION FROM SERVICE 26
8.1 Retirement or Separation from Service for Reasons Other Than Death 26
8.2 Time of Distributions 26
8.3 Amount and Manner of Distribution 28
8.4 Distributions After a Participant's Death 28
8.5 Designation of Beneficiary. 30
ARTICLE 9. ADMINISTRATION 31
9.1 Administrator 31
9.2 Powers of Administrator 31
9.3 Nondiscriminatory Exercise of Authority 32
9.4 Reliance on Tables, etc 32
9.5 Claims and Review Procedures 33
9.6 Indemnification of Administrator and Assistants 33
9.7 Expenses and Compensation 33
9.8 Notices 33
ARTICLE 10. AMENDMENT AND TERMINATION 34
10.1 Amendment 34
10.2 Termination 34
10.3 Distributions upon Termination of the Plan 35
10.4 Merger or Consolidation of Plan; Transfer of Plan Assets 35
ARTICLE 11. LIMITS ON CONTRIBUTION 35
11.1 PR-Code section 1023(n) Limits. 35
11.2 PR-Code section 1165(e)(7)(A) Limits. 35
11.3 PR-Code section 1165(e)(3) Limits. 36
ARTICLE 12. ROLLOVER AND TRANSFER CONTRIBUTIONS 40
12.1 Contribution of Amount Distributed from Another Qualified Plan 40
12.2 Monitoring of Rollovers 40
12.3 Transfer Contribution 41
12.4 Treatment of Transferred Amount under the Plan 41
ARTICLE 13. MISCELLANEOUS 42
13.1 Exclusive Benefit Rule 42
13.2 Limitation of Rights 42
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13.3 Nonalienability of Benefits 42
13.4 Changes in Vesting Schedule 42
13.5 Governing Law 43
ARTICLE 14. DEFINITIONS 43
14.1 Abbott 43
14.2 Abbott Stock 43
14.3 Accounts 43
14.4 Administrator 44
14.5 Affiliated Corporation 44
14.6 Alternate Payee 44
14.7 Basic Contribution 44
14.8 Basic After-Tax Contributions 44
14.9 Basic Pre-Tax Contribution 44
14.10 Basic Pre-Tax Contribution Account 44
14.11 Beneficiary 44
14.12 Board of Directors 45
14.13 Break Year 45
14.14 Compensation 45
14.15 Contribution Agreement 45
14.16 Corporation 45
14.17 Committee 45
14.18 Eligible Employee 46
14.19 Employee 46
14.20 Employer 46
14.21 Employer Contributions 46
14.22 Employer Contribution Account 46
14.23 Entry Date 46
14.24 ERISA 47
14.25 Highly Compensated Employee 47
14.26 Hour of Service 47
14.27 Investment Fund 47
14.28 Participant 47
14.29 Period of Credited Service 47
14.30 Plan 49
14.31 Plan Year 49
14.32 Point Value 49
14.33 PR-Code 49
14.34 Pre-Tax Contribution Account 49
14.35 Pre-Tax Contributions 50
14.36 Qualified Domestic Relations Order 50
14.37 Qualified Nonelective Employer Contribution 50
14.38 Regulations 50
14.39 Retirement Program 50
14.40 Rollover Contribution Account 50
14.41 Rollover Contribution 51
14.42 Section 51
14.43 Putnam Stable Value Fund 51
14.44 Subsidiary 51
14.45 Supplemental Contribution 51
14.46 Supplemental After-Tax Contribution 51
<PAGE>
14.47 Supplemental After-Tax Contribution Account 51
14.48 Supplemental Pre-Tax Contribution 51
14.49 Supplemental Pre-Tax Contribution Account 51
14.50 Transfer Contribution 51
14.51 Transfer Contribution Account 52
14.52 Trust 52
14.53 Trustee 52
14.54 Unallocated Account 52
14.55 Date 52
14.56 Year of Credited Service 52
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ARTICLE 1. INTRODUCTION
1.1 PURPOSE. Because of the desire to assist its employees and those
of its affiliated companies in Puerto Rico in obtaining financial security
for their retirement, Abbott Chemicals, Inc. (the "Corporation") is
establishing effective January 1, 1996 the Abbott Laboratories Stock
Retirement Plan (Puerto Rico) (the "Plan").
The Plan is a profit sharing plan containing a cash or deferred
arrangement intended to qualify under sections 1165(a) and (e) of the Puerto
Rico Internal Revenue Code of 1994 (the "PR-Code") and the trust forming a
part thereof is intended to be exempt from taxation under PR-Code section
1165(a) and, pursuant to section 1022(i)(1) of the Employee Retirement Income
Security Act of 1974, under section 501(a) of the United States Internal
Revenue Code of 1986, as amended.
1.2 OBJECTIVE. The Plan provides an arrangement by which employees may
invest in stock of Abbott Laboratories ("Abbott Stock") by contributing to
the Abbott Laboratories Stock Retirement Trust (Puerto Rico) (the "Trust")
and by which the Corporation and its affiliates in Puerto Rico will encourage
such investment by also making contributions to the Trust. Basic and
Employer Contributions received by the Trust will be applied by the Trustee
to acquire, and hold under the trust, shares of Abbott Stock for the benefit
of the Participants in the Plan, to the end that upon retirement or prior
termination of employment, the Participants may receive a distribution in
cash or in Abbott Stock pursuant to the provisions of the Plan.
ARTICLE 2. PARTICIPATION
2.1 DATE OF PARTICIPATION. Each individual who was a Participant in
the Abbott Laboratories Stock Retirement Plan on December 31, 1995 and is an
Eligible Employee on January 1, 1996 shall be automatically eligible to
become a Participant in the Plan. Each other Employee shall become a
Participant (a) for purposes of making Supplemental Contributions, on any
Entry Date following his or her date of hire after he or she has entered into
a Contribution Agreement under Section 3.4, and (b) for purposes of Basic
Contributions and Employer Contributions on an Entry Date following the day
he or
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2
she completes two Years of Credited Service and completes the applicable
forms under Sections 2.2 and 3.4, provided in each case that he or she is an
Eligible Employee on such Entry Date.
2.2 ENROLLMENT OF PARTICIPANTS. An Eligible Employee shall become a
Participant by signing an application form furnished by the Administrator
within 30 days after he or she receives the application, or by such other
means as the Administrator establishes for enrollment. Such application
shall authorize the Participant's Employer to deduct from his or her
Compensation (or reduce his or her Compensation by) the contributions
required under Section 3.2 or 3.3, whichever is applicable.
2.3 REEMPLOYMENT OF PARTICIPANT. If an Employee's employment with the
Corporation, an Affiliated Corporation or a Subsidiary should terminate and
such Employee is subsequently reemployed by the Corporation, an Affiliated
Corporation or a Subsidiary, the following shall apply:
(A) If The Reemployment Occurs Before The Employee Has A Break
Year, The Period Of Credited Service To Which He Or She Was Entitled At The
Time Of Termination Shall Be Reinstated, The Period Of His Or Her Absence
(But Not To Exceed 12 Months) Shall Be Included In His Or Her Period Of
Credited Service, And He Or She Will Be Reinstated As A Participant On His Or
Her Date Of Reemployment, If The Participant Is An Eligible Employee On That
Date.
(B) If An Employee Is Reemployed After A Break Year, And At The
Time Of Termination He Or She Was Not A Participant In The Plan, Then:
(I) If The Employee's Years Of Credited Service To Which He
Or She Was Entitled At The Time Of Termination Exceeds His Or Her Number Of
Consecutive Break Years, The Period Of Credited Service To Which He Or She
Was Entitled At The Time Of Termination Shall Be Reinstated And He Or She
Will Be Reinstated As A Participant On His Or Her Date Of Reemployment If He
Or She Is Then An Eligible Employee.
(ii) If the Employee's number of consecutive Break Years
equals or exceeds the Period of Credited Service to which he or she was
entitled at the time of termination, the Employee shall be considered as a
new Employee for all purposes of the Plan and any Period of Credited Service
to which he or she was entitled prior to the date of termination shall be
disregarded.
(c) If an Employee is reemployed after a Break Year, and at the
time of termination he or she was a Participant in the Plan, the Period of
Credited Service to which he or she was entitled at the time of termination
shall be reinstated.
(d) If a Participant is transferred or is given a leave of absence
for a temporary or indefinite period for the purpose of becoming an employee
of a Subsidiary or an Affiliated Corporation which is not an Employer
hereunder, and such Participant is not treated as an Eligible Employee under
Section 14.18, he or she will continue as a Participant until his or her
<PAGE>
3
retirement date or earlier termination of service with the Corporation, all
Affiliated Corporations and all Subsidiaries, except that during such period
the Employee will make no contributions and will be credited with no Employer
contributions except for a pro rata share of his or her Employer's
contributions for the year in which the transfer is made or the leave began,
as the case may be, based upon his or her own contributions and service up to
the date of such transfer or the date such leave began, as the case may be.
If a Participant's employment with the Corporation, all Affiliated
Corporations and all Subsidiaries is terminated by reason of his or her
death, retirement or otherwise while he or she is employed by the
Corporation, any Affiliated Corporation or any Subsidiary which is not an
Employer hereunder, the Participant will be considered to have terminated his
or her employment with the Employers at the same time and for the same reason.
(e) In the case of maternity or paternity absence (as defined
below), an Employee shall be deemed to be employed by the Corporation, an
Affiliated Corporation, or any Subsidiary (solely for purposes of determining
whether the Employee has incurred a Break Year) during the calendar year
following the calendar year in which his or her employment terminated. A
"maternity or paternity absence" means an Employee's absence from work
because of the pregnancy of the Employee or birth of a child of the Employee,
the placement of a child with the Employee in connection with the adoption of
such child by the Employee, or for purposes of caring for the child
immediately following such birth or placement. The Administrator may require
the Employee to furnish such information as the Administrator considers
necessary to establish that the employee's absence was for one of the reasons
specified above.
2.4 DURATION OF PARTICIPATION. An individual who has become a
Participant under the Plan will remain a Participant for as long as an
Account is maintained under the Plan for his or her benefit, or until his or
her death, if earlier. Notwithstanding the preceding sentence and unless
otherwise expressly provided for under the Plan, no contributions under the
Plan shall be made on behalf of any Participant, unless the Participant is an
Eligible Employee at the time for which the contribution or allocation is
made.
2.5 PARTICIPANT RESTRICTED DUE TO CONFLICT OF INTEREST. If a conflict
of interest as defined in subsection (d) should arise with respect to any
Participant:
(a) Such Participant shall continue as a Participant until his or
her retirement date or earlier termination of service with the Employer, an
Affiliated Corporation or a Subsidiary, except that during the period of such
conflict of interest such Participant shall make no Basic After-Tax
Contributions, such Participant's Employer shall make no Basic Pre-Tax
Contributions on his or her behalf, and such Participant shall be credited
with no Employer Contributions except for a pro rata share of his or her
Employer's Employer Contributions for the year in which such conflict arises,
based on his or her Basic Contributions and service to the date such conflict
arises.
(b) Such Participant must, within 30 days after notice from the
Administrator, elect to have 100% of the value of the shares of Abbott Stock
credited to his or her Accounts transferred to the Putnam Stable Value Fund
or one of the other investment options available under the
<PAGE>
4
Plan (other than Abbott Stock). If the Participant fails to make such
election, the value of such shares will be fixed at the closing price of
common shares of the Company on the 30th day after such notice from the
Administrator (or the next preceding business day for which there is a sale
of Abbott Stock if there are no sales on such date) as reported by the New
York Stock Exchange Composite Reporting System, and transferred to the
default Investment Fund selected under Section 5.6. Any Basic After-Tax
Contributions, Basic Pre-Tax Contributions and pro-rata Employer
Contributions, any Supplemental After-Tax Contributions and Supplemental
Pre-Tax Contributions designated by the Participant under Section 5.1 to be
invested in shares of Abbott Stock, and any dividends on shares of Abbott
Stock held in the Participant's Accounts, made for or paid during the
calendar year in which such conflict of interest arises, shall likewise be
transferred to the investment option the Participant selects under the first
sentence of this subsection (b) or to the default Investment Fund referred to
in the second sentence. These transfers shall not be subject to any of the
investment restrictions described in Section 5.4.
(c) Such Participant may elect to make Supplemental After-Tax
Contributions and Supplemental Pre-Tax Contributions during the period of
such conflict of interest, notwithstanding the suspension of Basic After-Tax
Contributions and Basic Pre-Tax Contributions under subsection (a), provided
that no such contributions may be invested in shares of Abbott Stock.
(d) A "conflict of interest" means a business, professional,
family or other relationship involving the Participant which, as a result of
statute, ordinance, regulation or generally recognized professional standard
or rule requires divestiture by the Participant of shares of Abbott Stock.
The existence or non-existence of a conflict of interest for purposes of this
Section 2.5 shall be determined by the Administrator, which determination
shall be final and binding on all persons. Any determination made under this
subsection (d) shall have no effect on the application of any human resources
policies of any Employer regarding conflict of interest.
2.6 PARTICIPATION BY ADDITIONAL PARTICIPATING EMPLOYERS. Any
Subsidiary or Affiliated Corporation may adopt the Plan and become a
participating Employer hereunder by:
(a) filing with the Board of Directors and the Trustee a written
instrument to that effect, and
(b) filing with the Trustee a certified copy of a resolution of
the Board of Directors consenting to such action.
At the time the Plan is adopted by any Subsidiary or Affiliated Corporation
or any time thereafter, the Board of Directors may modify the Plan or any of
its terms as applied to said Subsidiary, or Affiliated Corporation and its
employees.
ARTICLE 3. CONTRIBUTIONS
3.1 PARTICIPANT CONTRIBUTIONS. Except as provided in Section 2.5, each
Participant who has satisfied the eligibility requirements of Section 2.1(b)
may have Basic Contributions made to the Plan on his or her behalf as
described in Section 3.2. Each Participant who has satisfied the eligibility
requirements of Section 2.1(a) may elect to have Supplemental Contributions
made to the Plan on his or her behalf as described in Section 3.3 at any time
after his or her date of hire; provided, however, that
<PAGE>
5
if the Participant is eligible to make Basic Contributions, he or she may make
Supplemental Contributions only if Basic Contributions are concurrently being
made.
3.2 BASIC CONTRIBUTIONS. Except as provided in Section 2.5, each
Participant who is an Eligible Employee may enter into a Contribution
Agreement with the Employer under which the Participant's Compensation for
each pay period shall be reduced by 2%, and the Employer will contribute to
the Trust an equal amount as a Basic Pre-Tax Contribution, or as a Basic
After-Tax Contribution, as the Participant elects. For purposes of this
Section 3.2, Compensation shall be limited to that portion of his or her
Compensation as is determined from time to time by the Board of Directors.
Each Participant who makes such contributions shall be eligible to share in
the Employer Contributions under Section 3.5.
3.3 SUPPLEMENTAL CONTRIBUTIONS. If a Participant has made the Basic
Contributions required under Section 3.2 (or is not yet eligible to make such
contributions because he or she has not completed two Years of Credited
Service), he or she may make Supplemental Contributions in an amount equal to
an additional 1% to 8% of his or her Compensation as Supplemental Pre-Tax
Contributions (1% to 10% of his or her compensation if he or she made Basic
After-Tax Contributions or is not yet eligible to make Basic Contributions
because he or she has not completed two Years of Credited Service) and an
additional 1% to 10% of his or her Compensation as Supplemental After-Tax
Contributions; provided that the aggregate Supplemental Contributions shall
not exceed 16% of the Participant's Compensation, and all Supplemental
Contributions shall be multiples of 1% of the Participant's Compensation.
The Participant shall elect in the Contribution Agreement described in
Section 3.4 to make such contributions either as Supplemental Pre-Tax
Contributions or as Supplemental After-Tax Contributions, or both, as
applicable. No Employer Contributions under Section 3.5 shall be made with
respect to such Supplemental Contributions.
3.4 CONTRIBUTION AGREEMENTS. Each Contribution Agreement shall be on a
form prescribed or approved by the Administrator or in such manner as the
Administrator finds acceptable, and may be entered into, changed or revoked
by the Participant, with such prior notice as the Administrator may
<PAGE>
6
prescribe, as of the first day of any pay period with respect to Compensation
payable thereafter. A Contribution Agreement shall be effective with respect
to Compensation payable to a Participant after the date determined by the
Administrator, but not earlier than the date the Agreement is entered into.
The Administrator may reject, amend or revoke the Contribution Agreement of
any Participant if the Administrator determines that the rejection, amendment
or revocation is necessary to ensure that the limitations referred to in
Section 3.8 and Article 11 are not exceeded.
3.5 EMPLOYER CONTRIBUTIONS. For each Plan Year beginning with the Plan
Year ending December 31, 1996, the Employers shall make Employer
Contributions to the Trust for the benefit of each Participant who is an
Eligible Employee at any time during the Plan Year and on whose behalf Basic
Contributions have been made at any time during the Plan Year. The amount of
Employer Contributions made by the Employers for the Plan Year shall be the
amount allocated under Section 1.4 of the Preamble to the Abbott Laboratories
Stock Retirement Program.
The Employers shall contribute quarterly to the Unallocated Account
one-quarter of the estimated Employer Contributions for the Plan Year. The
Trustee shall invest such funds in Abbott Stock periodically in accordance
with stock trading procedures established by the Committee and agreed to by
the Trustee. All dividends paid during the year on the Abbott Stock thus
purchased and held in the Unallocated Account and other income received on
Employer Contributions held in the Unallocated Account pending investment in
Abbott Stock shall be used to purchase additional Abbott Stock to the extent
such funds are not used to pay Plan expenses.
After the amount of Employer Contributions for the Plan Year has
been determined, the Employers shall pay the remaining Employer Contributions
to the Trust within 90 days after the end of the Plan Year. The Abbott Stock
purchased with such additional Employer Contributions and all shares of
Abbott Stock then held in the Unallocated Account shall be allocated among
the accounts of the eligible Participants as of the last day of the Plan
Year, based on the value of the Participant's earnings points and service
points determined as follows:
<PAGE>
7
(a) One earnings point will be allocated to each eligible Participant
for each $2 of Basic Contributions made on his or her behalf during the Plan
Year;
(b) Five service points will be allocated to each eligible Participant
for each full Year of Credited Service he or she has earned as of the end of
the Plan Year, not to exceed 175 service points;
(c) A Participant who dies, retires under the Abbott Puerto Rico
Retirement Plan, or terminates employment with an Employer on account of
total disability for which benefits are payable under the Abbott Puerto Rico,
Inc. Extended Disability Plan, at any time during the Plan Year, will be
considered as having continued to be employed until December 31 of that Year
and will thus earn a Year of Credited Service for purposes of subsection (b);
(d) A Participant who separates from service with the Corporation, all
Affiliated Corporations and all Subsidiaries for any reason other than death,
disability or retirement, at any time during the Plan Year, will be allocated
a pro rata portion of the service points the Participant would have received
had the Participant continued to be employed until December 31 of that Year,
prorated based on the months during the Plan Year prior to the Participant's
separation from service, and will thus earn a partial Year of Credited
Service for purposes of subsection (b);
(e) A Participant who is transferred or given a leave of absence in
circumstances described in Section 2.3(d) above, at any time during the Plan
Year, will be allocated a pro rata portion of the service points the
Participant would have received had the Participant continued until December
31 of that year, prorated based on the Participant's service up to the date
of such transfer or the date such leave began, as the case may be, and will
thus earn a partial Year of Credited Service for purposes of subsection (b);
(f) If (i) a Participant retires under the Abbott Puerto Rico
Retirement Plan and elects to receive the distribution of his or her Accounts
during the same Plan Year, (ii) a Participant dies during the Plan Year and
the Beneficiary elects to take a distribution of the Participant's Accounts
during the same Plan Year; or (iii) a Participant separates from service
during the Plan Year for reasons other than retirement or death and does not
elect to defer his or her distribution to a later Plan Year, the Employer
Contribution due in each case for the Plan Year shall be calculated using the
Point Value determined for the prior Plan Year. If a Participant or
Beneficiary who becomes eligible for a distribution during the Plan Year does
not take a distribution during the same Plan Year, as described in the prior
sentence, the Employer Contribution which would be allocable to his or her
Accounts shall be determined and allocated as of the end of the Plan Year
under subsection 3.5(g) below, as if the Participant were actively employed
as of the last day of the Plan Year, but shall be calculated as described in
(a)-(e) above based on the service recognized therein.
(g) The amount of the Abbott Stock which will be allocated as of the
end of the Plan Year to the Employer Contribution Account of each eligible
Participant for such Plan Year shall be determined by multiplying the
aggregate cost of the Abbott Stock held in the Unallocated Account at the end
of the Plan Year by a fraction, the numerator of which is the sum of the
Participant's earnings points and service points as of the end of the Plan
Year and the denominator of which is the aggregate of all earnings points and
all service points for all eligible Participants as of the end of such Plan
Year (less the points attributable to Participants to whom or on whose behalf
distributions are made during the Plan Year). Once the portion of the
aggregate cost which is attributable to each eligible Participant is
determined, the
<PAGE>
8
applicable number of shares represented by such cost shall be allocated to
the Participant's Employer Contribution Account. After the shares have been
allocated, the Point Value for the Plan Year will be calculated by dividing
the cost of the Abbott Stock allocated to a Participant's Accounts by the
number of points credited to such Participants for the Plan Year.
3.6 QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTIONS. The Employer, in its
discretion, may make Qualified Nonelective Employer Contributions to the
Trust for a Plan Year either (a) on behalf of all Participants for whom
Pre-Tax Contributions are made for the Plan Year, or (b) on behalf of only
those Participants for whom Pre-Tax Contributions for the Plan Year are made
and who are not Highly Compensated Employees for the Plan Year, as the Board
of Directors shall determine. Such Qualified Nonelective Employer
Contributions shall be made only if, when they are combined with all employer
contributions to all plans referred to in Section 3.5, the aggregate employer
contributions of the Employers for the Plan Year to all such plans do not
exceed 7.5 percent of the declared dividends of Abbott Laboratories for the
Plan Year. Except as otherwise expressly provided for, any Qualified
Nonelective Contribution Employer Contribution shall be treated as a Pre-Tax
Contribution for all purposes under the Plan.
3.7 TIME FOR MAKING AND CREDITING OF CONTRIBUTIONS. Basic and
Supplemental Pre-Tax and After-Tax Contributions will be withheld from the
Participants' Compensation through payroll deductions and will be paid in
cash to the Trust as soon as such contributions can reasonably be segregated
from the general assets of the Employers, but in any event within 90 days
after the date on which the Compensation to which such contributions relate
is paid. Such contributions will be credited to the Participants' respective
Pre-Tax Contribution and After-Tax Contribution Accounts as of the earlier of
(a) the date such contributions are received by the Trust and (b) the last
day of the Plan Year in which the Compensation is paid. In addition and
subject to the limits provided in Section 3.3, a Participant may make
Supplemental After-Tax Contributions by delivering to the Trustee, a
certified check in the amount of such contribution and the contribution shall
be credited to the Participant's Supplemental After-Tax Contribution Account
as of the date it is received by the Trustee. Any Employer Contributions or
Qualified Nonelective Employer Contributions for a Plan Year will be
<PAGE>
9
contributed to the Trust at such time as the Employer determines, but no
later than the time prescribed by law (including extensions) for filing the
Employer's federal or Puerto Rico income tax return for its taxable year in
or with which the Plan Year ends. Such contributions will be credited to the
Employer Contribution Accounts or Pre-Tax Contribution Accounts,
respectively, of Participants on whose behalf they are made at such time as
the Corporation determines, but no later than the last day of such Plan Year.
3.8 CERTAIN LIMITS APPLY. All contributions to this Plan are subject
to the applicable limits set forth under PR-Code sections 1165(e) and
1023(n), as further described in Article 11.
3.9 RETURN OF CONTRIBUTIONS. No property of the Trust or contributions
made by the Employers pursuant to the terms of the Plan shall revert to the
Employers or be used for any purpose other than providing benefits to
Eligible Employees or their Beneficiaries and defraying the expenses of the
Plan and the Trust, except as follows:
(a) Upon request of the Corporation, contributions made to the
Plan before the issuance of a favorable determination letter by the Puerto
Rico Treasury Department with respect to the initial qualification of the
Plan under section 1165(a) of the PR-Code may be returned to the contributing
Employer, with all attributable earnings, within one year after the Puerto
Rico Treasury Department refuses in writing to issue such a letter.
(b) Any amount contributed under the Plan by an Employer by a
mistake of fact as determined by the Employer may be returned to such
Employer upon its request, within one year after its payment to the Trust.
(c) Any amount contributed under the Plan by an Employer on the
condition of its deductibility under section 1023(n) of the PR-Code may be
returned to such Employer upon its request, within one year after the Puerto
Rico Treasury Department disallows the deduction in writing.
(d) Earnings attributable to contributions returnable under
paragraph (b) or (c) shall not be returned to the Employer, and any losses
attributable to those contributions shall reduce the amount returned.
In no event shall the return of a contribution hereunder cause any
Participant's Accounts to be reduced to less than they would have been had
the mistaken or nondeductible amount not been contributed. No return of a
contribution hereunder shall be made more than one year after the mistaken
payment of the contribution, or disallowance of the deduction, as the case
may be.
<PAGE>
10
ARTICLE 4. PARTICIPANT ACCOUNTS
4.1 ACCOUNTS. The Administrator will establish and maintain (or cause
the Trustee to establish and maintain) for each Participant a Basic After-Tax
Contribution Account, a Basic Pre-Tax Contribution Account, a Supplemental
After-Tax Contribution Account, a Supplemental Pre-Tax Contribution Account,
an Employer Contribution Account, a Rollover Contribution Account (if
applicable), a Transfer Contribution Account (if applicable) and such other
accounts or sub-accounts as the Administrator in its discretion deems
appropriate. All such Accounts shall be referred to collectively as the
"Accounts".
4.2 ADJUSTMENT OF ACCOUNTS. As of each Valuation Date, the
Administrator or Trustee, as the case may be, shall adjust the balances of
each Account maintained under the Plan on a uniform and consistent basis to
reflect the contributions, distributions, income, expense, and changes in the
fair market value of the assets attributable to such Account since the prior
Valuation Date, in such reasonable manner as the Administrator or Trustee, as
the case may be, shall determine. Employer Contributions made to the
Unallocated Account, Abbott Stock acquired under Section 3.5 with such
Employer Contributions, and dividends paid on such Abbott Stock will not be
valued as of each Valuation Date, but will be allocated to the Participants'
Accounts only as of the end of the Plan Year in accordance with Section 3.5
and thereafter such amounts will be valued in accordance with the first
sentence of this Section 4.2. Notwithstanding any other provision of the
Plan, to the extent that Participants' Accounts are invested in mutual funds
or other assets for which daily pricing is available ("Daily Pricing Media"),
all amounts contributed to the Trust will be invested at the time of their
actual receipt by the Daily Pricing Media, and the balance of each Account
shall reflect the results of such daily pricing from the time of actual
receipt until the time of distribution. Investment elections and changes
made pursuant to Section 5.5 shall be effective upon receipt by the Daily
Pricing Media.
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11
References elsewhere in the Plan to the investment of contributions "as of" a
date other than that described in this Section 4.2 shall apply only to the
extent, if any, that assets of the Trust are not invested in Daily Pricing
Media.
ARTICLE 5. INVESTMENT OF ACCOUNTS
5.1 ABBOTT STOCK. All Basic Contributions and Employer Contributions
shall be invested in shares of Abbott Stock. A Participant may also direct
that some or all of his or her Supplemental Contributions, Rollover
Contributions (if applicable) or Transfer Contributions (if applicable) be
invested in shares of Abbott Stock. Abbott Stock shall be purchased and sold
by the Trustee on the open market or from Abbott in accordance with stock
trading procedures established by the Committee and agreed to by the Trustee.
5.2 PUTNAM STABLE VALUE FUND. A Participant may direct that some or all
of his or her Supplemental Contributions, Rollover Contributions, or Transfer
Contributions be invested in the Putnam Stable Value Fund.
5.3 OTHER INVESTMENT FUNDS. The Committee may, from time to time,
direct the Trustee to establish one or more Investment Funds. A Participant
may invest some or all of his or her Supplemental Contributions, Rollover
Contributions or Transfer Contributions made on or after January 1, 1996 in
one or more of the Investment Funds available under the Plan in such
increments and in such manner as the Committee and the Trustee establish in
investment procedures. To the extent permitted by Section 5.4, a Participant
may instruct the Trustee that amounts held in his or her Accounts that are
invested in Abbott Stock be transferred to and invested in one or more of the
Investment Funds established under this Section 5.3. Any amounts held in a
Participant's Accounts that are not otherwise restricted as to investment
under Section 5.1 or 5.4 may be invested or reinvested in Abbott Stock or any
of the Investment Funds then available under the Plan in accordance with the
procedures established under Section 5.5.
<PAGE>
12
5.4 PRE-RETIREMENT FEATURE FOR REINVESTMENT OF ABBOTT STOCK. Effective
April 4, 1996 (or such subsequent date as the Administrator determines in his
or her sole discretion), and for periods thereafter, a Participant who
attains age 50 may direct the Trustee to liquidate all or a portion of the
Abbott Stock held in his or her Accounts and reinvest the proceeds in the
Putnam Stable Value Fund or any of the other Investment Funds described in
Section 5.3.
Basic Contributions made to the Plan with respect to a Participant
who is eligible for the Pre-Retirement Feature described in this Section 5.4
shall continue to be invested initially in shares of Abbott Stock, but will
be available for reinvestment under this Section 5.4.
The restrictions described herein shall apply to the Accounts of all
eligible active Participants, all Participants who terminate employment
(other than those who retire under the Abbott Puerto Rico Retirement Plan),
all Beneficiaries of Participants who died while employed or
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13
after termination of employment (other than Beneficiaries of Participants who
retired under the Abbott Puerto Rico Retirement Plan) and all Alternate
Payees to the extent the Participant, Beneficiary or Alternate Payee
satisfies the applicable age requirements of this Section 5.4.
5.5 INVESTMENT ELECTIONS. Subject to Sections 5.1, 5.2, and 5.4, a
Participant, Beneficiary or Alternate Payee may make or change investment
instructions with respect to the portion of the Accounts over which he or she
has investment direction at such times and at such frequency as the
Administrator shall permit in accordance with investment procedures
established for the Plan. Such investment instructions shall be in writing
or in such other form as is acceptable to the Trustee.
5.6 DEFAULT INVESTMENT FUND. The Administrator shall identify from time
to time one or more of the Investment Funds as the default Investment Fund
into which all contributions, for which the Participant has the right to
direct investment, shall be invested if the Participant fails to provide
complete and clear investment instructions for such contributions. Such
contributions shall remain in the default Investment Fund until the Trustee
receives investment instructions from the Participant in a form acceptable to
the Trustee.
5.7 PARTICIPANT DIRECTION OF INVESTMENTS. To the extent that this
Article 5 does not prohibit a Participant, Beneficiary or Alternate Payee
from directing the investment of his or her Accounts, the Plan is intended to
be a participant-directed plan and to comply with the requirements of ERISA
section 404(c) and the United States Department of Labor Regulations
2550.404c-1 as a participant-directed plan. To the extent this Section 5.7
applies, the Administrator shall direct the Trustee from time to time with
respect to such investments pursuant to the instructions of the Participant
(or, if applicable, the Alternate Payee, or the deceased Participant's
Beneficiary), but the Trustee may refuse to honor any investment instruction
if such instruction would cause the Plan to engage in a prohibited
transaction (as described in ERISA section 406) or cause the Trust to be
subject to income tax. The Administrator shall prescribe the form upon
which, or such other manner in which such instructions shall be made, as well
as the frequency with which such instructions may be made or changed and the
dates as of which such instructions shall be effective. The Board of
Directors reserves the right to amend the Plan to
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14
remove the right of Participants, Beneficiaries or Alternate Payees to give
investment instructions with respect to their Accounts. Nothing contained
herein shall provide for the voting of shares of Abbott Stock by any
Participant, Beneficiary or Alternate Payee, except as otherwise provided in
the Trust.
5.8 DIVIDENDS ON ABBOTT STOCK. Except with respect to shares of Abbott
Stock acquired during the Plan Year and held in the Unallocated Account, cash
dividends on shares of Abbott Stock shall be credited to the applicable
Accounts in which the shares are held and cash proceeds from the sale of any
rights or warrants received with respect to such Stock shall be invested in
shares of Abbott Stock when such dividends or proceeds are received by the
Trust, and thereafter such shares shall be credited to such Accounts based on
the average cost of all shares purchased with such dividends or proceeds.
Stock dividends or "split-ups" and rights or warrants appertaining to such
shares shall be credited to the applicable Accounts when received by the
Trust. Cash dividends received with respect to shares of Abbott Stock held
in the Unallocated Account and cash proceeds from the sale of rights or
warrants received with respect to such Abbott Stock shall be reinvested in
Abbott Stock and allocated under Section 3.5, to the extent not used to pay
expenses of the Plan. Any stock dividends or "split-ups" (and any rights or
warrants unless sooner sold) appertaining to shares of Abbott Stock held in
the Unallocated Account will be held in the Unallocated Account until the end
of the Plan Year and allocated under Section 3.5.
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE
6.1 IN-SERVICE WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS.
(a) SUPPLEMENTAL AFTER-TAX CONTRIBUTIONS. A Participant may elect
to withdraw from the Trust any or all of his or her Supplemental After-Tax
Contributions. Withdrawals shall be made from Abbott Stock, the Putnam
Stable Value Fund or any other Investment Fund as the Participant elects,
but only to the extent such total withdrawals under this subsection (a) do
not exceed the Participant's Supplemental After-Tax Contributions in his or
her Supplemental After-Tax Contribution Account.
(b) BASIC AFTER-TAX CONTRIBUTIONS. A Participant who has completed
five or more Years of Credited Service and has withdrawn all of his or her
Supplemental After-Tax Contributions under subsection (a) may then elect
to withdraw from the Trust any or all of his or her Basic After-Tax
Contributions. Withdrawals shall be made from Abbott Stock, the Putnam
Stable Value Fund or any other Investment Fund as the Participant elects,
but only to the extent
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15
such total withdrawals under this subsection (b) do
not exceed the Participant's Basic After-Tax Contributions in his or her
Basic After-Tax Contribution Account.
(c) VALUATION OF SHARES WITHDRAWN. Withdrawals of shares of Abbott
Stock under this Section 6.1 from Basic and Supplemental After-Tax
Contribution Accounts shall be in whole shares except when withdrawal of a
fractional share is necessary to exhaust the Abbott Stock allocated to such
Accounts in which event the cash value of such fractional share shall be
withdrawn.
(d) (i) For purposes of Section 6.1(a), shares of Abbott Stock
purchased with a Participant's Supplemental After-Tax Contributions
shall be determined as follows:
(A) FIRST, the average cost to the Trust of all withdrawn
shares of Abbott Stock purchased with the Participant's
Supplemental After-Tax Contributions and related dividends shall
be established.
(B) NEXT, the total of the Participant's unwithdrawn
Supplemental After-Tax Contributions and applied to purchase
Abbott Stock shall be divided by the average cost established
under subparagraph (A) above and the resulting amount shall be
the number of shares purchased with the Participant's
Supplemental After-Tax Contributions.
(ii) For purposes of Section 6.1(b), shares of Abbott Stock
purchased with a Participant's Basic After-Tax Contributions shall be
determined as follows:
(A) FIRST, the average cost to the Trust of all unwithdrawn
shares of Abbott Stock purchased with the Participant's Basic
After-Tax Contributions and related dividends shall be
established.
(B) NEXT, the total of the Participant's unwithdrawn Basic
After-Tax Contributions applied to purchase Abbott Stock shall be
divided by the average cost established under subparagraph (A)
above and the resulting amount shall be the number of shares
purchased with the Participant's Basic After-Tax Contributions.
For purposes of determining a Participant's unwithdrawn Basic After-Tax
Contributions, any shares of Abbott Stock purchased with the Participant's
Basic After-Tax Contributions that were withdrawn by the Participant as of
any date shall be charged at the average cost established under
subparagraph (i)(A) above as of such date.
(e) The foregoing provisions of this Section 6.1 are subject to the
following:
(i) Shares of Abbott Stock and other amounts that are withdrawn
by a Participant under this Section 6.1 shall be charged to his or her
respective After-Tax Contribution Account.
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16
(ii) No more than one withdrawal may be elected in any calendar
quarter; provided, however, that the Administrator, in his or her sole
discretion, may waive this limitation in unusual cases.
(iii) Distribution of the shares of Abbott Stock or other amounts
a Participant elects to withdraw under this Section 6.1 will be made
within such time period and in accordance with the procedures
established by the Administrator and agreed to by the Trustee. If the
Participant dies prior to the time distribution of such shares or
amounts is made, distribution shall be made to the Participant's
Beneficiary in the same manner as other distributions from the Trust.
(iv) Each request for a withdrawal shall be filed with the
Administrator, shall specify the dollar amount or the share amount
(or both) to be withdrawn, which amount shall not be less than $500,
and may not be revoked, amended or changed by the Participant after it
is filed. The Participant shall indicate in his withdrawal request
whether the withdrawal is to be made in cash or in Abbott Stock.
(v) Any fees associated with a withdrawal will be charged to the
Participant's Accounts.
(vi) Withdrawals under this Section 6.1 shall be subject to such
further conditions and limitations as the Administrator may establish
from time to time and apply on a uniform basis.
(vii) Any shares of Abbott Stock that are withdrawn will be
considered as having been withdrawn at the average cost, as of the date
of the withdrawal, of the shares of Abbott Stock reflected in the
Account from which it was withdrawn.
6.2 DISTRIBUTIONS REQUIRED BY A QUALIFIED DOMESTIC RELATIONS ORDER. To
the extent required by a Qualified Domestic Relations Order, the Administrator
shall make distributions from a Participant's Accounts to Alternate Payees
named in such order in a manner consistent with the distribution options
otherwise available under this Plan, regardless of whether the Participant is
otherwise entitled to a distribution at such time under the Plan.
6.3 PARTICIPANT'S CONSENT TO DISTRIBUTION OF BENEFITS. If a Participant
receives a withdrawal under Section 6.1 or an Alternative Payee receives a
distribution under Section 6.2, no distribution may be made unless:
(a) between the 30th and 90th day prior to the date distribution is
to be made or commence, the Administrator notifies the Participant or the
Alternate Payee (whichever is applicable) in writing that he or she may
defer distribution until age 65 and provides the Participant or the
Alternate Payee (whichever is applicable) with a written description of the
material features and (if applicable) the relative values of the forms of
distribution available under the Plan; and
<PAGE>
17
(b) the Participant consents to the distribution in writing after the
information described above has been provided to him or her, and files such
consent with the Administrator. Distribution to the Participant will be
made or commence as soon as practicable after such consent is received by
the Administrator. The Participant may waive the 30-day notice period
described in (a) above.
ARTICLE 7. LOANS TO PARTICIPANTS
7.1 IN GENERAL. Upon the request of an Eligible Borrower on a form
approved or procedure prescribed by the Administrator, and subject to the
conditions of this Article, the Administrator shall direct the Trustee to make
a loan from the Trust to the Eligible Borrower. For purposes of this Article,
an "Eligible Borrower" is:
(a) a Participant who is an Eligible Employee; or
(b) a Participant who is a former Employee and is a "party in
interest" within the meaning of ERISA section 3(14); or
(c) a deceased Participant's Beneficiary who has not yet received the
entire vested portion of the Participant's Accounts and who is a "party in
interest" as described in (b) above.
7.2 RULES AND PROCEDURES. The Administrator shall promulgate such rules
and procedures, not inconsistent with the express provisions of this Article,
as it deems necessary to carry out the purposes of this Article. All such
rules and procedures shall be deemed a part of the Plan for purposes of the
United States Department of Labor's Regulations section 2550.408b-1(d).
7.3 MAXIMUM AMOUNT OF LOAN. The following limitations shall apply in
determining the amount of any loan to an Eligible Borrower hereunder:
(a) The amount of the loan, together with any other outstanding
indebtedness under this Plan or any other qualified retirement plan of
Abbott, the Corporation, any Affiliated Corporation or any Subsidiary,
shall not exceed $50,000 reduced by the excess of (i) the highest
aggregate outstanding loan balance of the Eligible Borrower from such
plans during the one-year period ending on the day prior to the date on
which the loans are made, over (ii) the Eligible Borrower's outstanding
loan balance from such plans immediately prior to the loan.
(b) The amount of the loan shall not exceed 50 percent of the Eligible
Borrower's Accounts, determined as of the Valuation Date immediately
preceding the date of the loan.
(c) No loan may exceed the aggregate value of the Participant's Basic
Pre-Tax Contribution Account, Supplemental Pre-Tax Contribution Account,
Employer Contribution Account, Rollover Contribution Account and Transfer
Contribution Account (excluding any amount contributed by the Participant
on an after-tax basis).
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18
7.4 MINIMUM AMOUNT OF LOAN; NUMBER OF LOANS; FREQUENCY OF LOANS; FEES FOR
LOANS. The minimum amount of any single loan under the Plan shall be $500. A
Participant may have only two loans outstanding at any time under the Plan or
under any other plan referred to in Section 3.5. The Administrator may charge
a loan fee and such fee may be charged to the Participant's Accounts or taken
from the loan proceeds.
7.5 NOTE; SECURITY; INTEREST. Each loan shall be evidenced by a note
signed by the Eligible Borrower. The note shall be an asset of the Trust which
is allocated to the Accounts of the Eligible Borrower, and shall for purposes
of the Plan be deemed to have a value at any given time equal to the unpaid
principal balance of the note plus the amount of any accrued but unpaid
interest. The note shall be secured by that portion of the Accounts
represented by the note (not to exceed 50% of the Eligible Borrower's
vested interest in his or her Accounts determined as of the date of the loan).
The loan shall bear interest at an annual percentage interest rate to be
determined by the Administrator. In determining the interest rate, the
Administrator shall take into consideration interest rates currently being
charged by persons in the business of lending money with respect to loans
made in similar circumstances.
7.6 REPAYMENT. Each loan made to an Eligible Borrower who is receiving
regular payments of Compensation from the Employer shall be repayable by
payroll deduction. Loans made to other Eligible Borrowers (and, in all
events, where payroll deduction is no longer practicable) shall be repayable
in such manner as the Administrator may from time to time determine. In
each case payments shall be made not less frequently than quarterly, over a
specified term (as determined by the Administrator) not to extend beyond the
earlier of five years from the date of the loan or the Participant's
anticipated retirement date, with substantially level amortization. Where
the loan is being applied toward the purchase or construction of a principal
residence for the Eligible Borrower, the term for repayment shall not extend
beyond the earlier of 15 years from the date of the loan or the
Participant's anticipated retirement date. An Eligible Borrower may prepay
the full balance of an outstanding loan at any time by delivering to the
Trustee a certified check in the amount of such
<PAGE>
19
remaining balance and any accrued but unpaid interest. An Eligible Borrower
may also refinance an outstanding loan, provided that the limits under
Section 7.3 allow the Eligible Borrower to borrow an amount equal to, or
greater than, the balance due on the outstanding loan.
7.7 REPAYMENT UPON DISTRIBUTION. If, at the time benefits are to be
distributed (or to commence being distributed) to an Eligible Borrower with
respect to a separation from service, there remains any unpaid balance of a
loan hereunder, such unpaid balance shall, to the extent consistent with United
States Department of Labor regulations, become immediately due and payable in
full. Such unpaid balance, together with any accrued but unpaid interest on the
loan, shall be deducted from the Eligible Borrower's Accounts, subject to the
default provisions below, before any distribution of benefits is made. Except
as is provided in Section 7.1 or as may be required in order to comply (in a
manner consistent with continued qualification of the Plan under PR-Code
section 1165(a)) with United States Department of Labor regulations, no loan
shall be made to an Eligible Borrower under this Article after the Eligible
Borrower incurs a separation from service whether or not he or she has begun
to receive distribution of his or her Accounts.
7.8 DEFAULT. In the event of a default in making any payment of principal
or interest when due under the note evidencing any loan under this Article, if
such default continues for more than 90 days after written notice of the
default by the Trustee, the unpaid principal balance of the note shall
immediately become due and payable in full. Such unpaid principal, together
with any accrued but unpaid interest, shall thereupon be deducted from the
Eligible Borrower's Accounts, subject to the further provisions of this
Section. The amount so deducted shall be treated as distributed to the
Eligible Borrower and applied by the Eligible Borrower as a payment of the
unpaid interest and principal (in that order) under the note evidencing such
loan. In no event shall the Administrator apply the Eligible Borrower's
Accounts to satisfy the Eligible Borrower's repayment obligation, whether or
not he or she is in default, unless the amount so applied otherwise could be
distributed in accordance with the Plan.
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20
7.9 NONDISCRIMINATION. Loans shall be made available under this Article
to all Eligible Borrowers on a reasonably equivalent basis.
7.10 SOURCE OF LOAN PROCEEDS. The proceeds for a loan shall be drawn first
from an Eligible Borrower's Supplemental Pre-Tax Contribution Account and then
from his or her Basic Pre-Tax Contribution Account and then from his or her
Employer Contribution Account to the extent such contributions were
attributable to Pre-Tax Contributions, in each case drawing proportionately
from the various investments held in such Accounts.
7.11 REINVESTMENT OF LOAN REPAYMENTS. Loan repayments shall be made to the
Eligible Borrower's Basic Contribution, Supplemental Contribution and Employer
Contribution Accounts from which the proceeds were drawn under Section 7.10 in
the proportion that the loan was taken from each such Account at the
origination of the loan. Within each such Account, the proceeds will be
invested in accordance with the investment instructions or restrictions
applicable at the time of each loan repayment. If the Eligible Borrower is
not currently making contributions to any such Account at the time of loan
repayment, the proceeds will be invested within such Account in accordance
with any previous instructions on file by the Participant for the investment
of contributions in such Account, and if there are no such instructions on
file, the proceeds will be invested in the default investment fund
designated under Section 5.6. The Participant may change his or her
investment instructions in accordance with Section 5.5 for purposes of
reinvesting the loan repayments even if he or she is not then making
contributions to the Plan. Loan repayments made to the Eligible Borrower's
Supplemental Contribution Account shall, for purposes of Article 5, be
considered to be unrestricted as to investment and may be invested in any of
the Investment Funds then available under the Plan. Loan repayments made to
the Eligible Borrower's Basic Contribution and Employee Contribution
Accounts shall be restricted until eligible for reinvestment under Section 5.4.
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21
ARTICLE 8. BENEFITS UPON RETIREMENT, DEATH OR
SEPARATION FROM SERVICE
8.1 RETIREMENT OR SEPARATION FROM SERVICE FOR REASONS OTHER THAN DEATH.
Following a Participant's retirement or separation from the service with
Abbott, the Corporation, all Affiliated Corporations and all Subsidiaries
for any reason other than death, the Participant will receive the value of
his or her Accounts in a single sum payment. To the extent that the
Participant's Accounts hold Abbott Stock, he or she may receive the
distribution in whole shares of Abbott Stock and cash for any fractional share.
8.2 TIME OF DISTRIBUTIONS. Distribution with respect to a Participant's
separation from service (other than on account of death or retirement) normally
will be made or commence as soon as practicable after such separation. The
Employer Contribution made on the Participant's behalf under Section 3.5 for
the Plan Year will be based on the Point Value determined for the prior Plan
Year and distributed to the Participant in cash. In the case of a
Participant whose Accounts are valued in excess of $3,500 and who has not
yet attained age 65, however, distribution may not be made under this
Section unless:
(a) between the 30th and 90th day prior to the date
distribution is to be made or commence, the Administrator notifies the
Participant in writing that he or she may defer distribution until age 65
and provides the Participant with a written description of the material
features and (if applicable) the relative values of the forms of
distribution available under the Plan; and
(b) the Participant consents to the distribution in writing after the
information described above has been provided to him or her, and files such
consent with the Administrator. Distribution to the Participant will be
made or commence as soon as practicable after such consent is received by
the Administrator. The Participant may waive the 30-day notice period
described in (a) above.
The value of a Participant's Accounts will be considered to be in excess of
$3,500 if the value of such portion exceeds such amount at the time of the
distribution in question or exceeded such amount at the time of any prior
distribution to the Participant under the Plan. Distribution in all events
will commence no later than the 60th day after the close of the Plan Year in
which occurs the later of the Participant's separation from service or the
Participant's attainment of age 65.
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22
A Participant who is eligible for retirement under the terms of the
Abbott Puerto Rico Retirement Plan will normally receive a distribution as soon
as practicable after the end of the Plan Year in which he or she retires and
following the crediting of the Employer Contribution determined under Section
3.5 for such Plan Year. Such Participant may elect to receive the distribution
in the calendar year in which he or she retires, in which event the Employer
Contribution made on the Participant's behalf under Section 3.5 will be based
on the Point Value determined for the prior Plan Year and distributed to the
Participant in cash.
8.3 AMOUNT AND MANNER OF DISTRIBUTION.
(a) SINGLE SUM PAYMENT. In the case of a distribution to be made in
a single sum, the amount of such distribution shall be determined as of the
Valuation Date which immediately precedes or coincides with the date
distribution is to be made.
(b) CASHOUT OF SMALL BENEFITS. If the value of a Participant's
Accounts is $3,500 or less, distribution shall be made to the Participant in a
single sum payment as soon as practicable following the Participant's
separation from service. The amount of such distribution shall be determined
as of the Valuation Date immediately preceding or coinciding with the date the
distribution is made. The Participant's Accounts will not be considered to be
valued at $3,500 or less, if the value of such Accounts at the time in question
or at the time of any prior distribution to the Participant under the Plan
exceeds such amount.
8.4 DISTRIBUTIONS AFTER A PARTICIPANT'S DEATH.
(a) DEATH PRIOR TO SEPARATION FROM SERVICE. If a Participant dies
prior to his or her separation from service with Abbott, the Corporation, all
Affiliated Corporations and all Subsidiaries, the Participant's Beneficiary
will receive the Participant's Accounts in a single sum payment as soon as
practicable after the end of the Plan Year in which the Participant's death
occurs; provided, however, the Beneficiary may elect the distribution in the
Plan Year in which the Participant's death occurred, in which event the
Employer Contribution made on behalf of the Participant under Section 3.5 for
such Plan Year shall be based on the Point Value determined for the prior Plan
Year and shall be distributed in cash. Distribution must be made to the
Beneficiary who is not the Participant's spouse no later than December 31 of
the calendar year following the year of the Participant's death. If the
Beneficiary is the Participant's spouse, the Beneficiary may elect to defer
receipt of the distribution of the Participant's Accounts until any date, but
not later than the December 31 of the Plan Year in which the Participant would
have attained age 65;
(b) DEATH AFTER SEPARATION FROM SERVICE. If a Participant dies after
separation from service but before the complete distribution of his or her
Accounts has been made, the Participant's Beneficiary will receive the value of
the Participant's Accounts. Distribution will be made in a single sum payment
as soon as practicable after the Participant's death (but no later than
December 31 of the calendar year following the year of the Participant's
death); provided, however, that if distribution to the Participant had begun
following his or her separation from service in a form elected by the
Participant, distribution will continue to be
<PAGE>
23
made to the Beneficiary at least as rapidly in such form unless the
Beneficiary elects to receive distribution in cash in a single sum as soon
as practicable following the Participant's death. Any such election must be
made on a form approved by the Administrator and must be received by the
Administrator within such period following the Participant's death as the
Administrator may prescribe. To the extent the Participant's Accounts held
Abbott Stock at the time of the proposed distribution, the Beneficiary may
receive the distribution in whole shares of Abbott Stock and cash for any
fractional share.
(c) CASHOUT OF SMALL BENEFITS. If a Participant dies and the value
of a Participant's Accounts is $3,500 or less, distribution shall be made to
the Beneficiary in a single payment as soon as practicable following the
Participant's death (but in no event later than the 60th day following the
close of the Plan Year in which such separation from service occurs) or such
later date on which the amount of the distribution can be determined by the
Administrator. The amount of such distribution shall be determined as of the
Valuation Date immediately preceding or coinciding with the date the
distribution is made. The Participant's Accounts will not be considered to be
valued at $3,500 or less, if the value of such Accounts at the time in question
or at the time of any prior distribution to the Participant under the Plan
exceeds such amount.
8.5 DESIGNATION OF BENEFICIARY. Subject to the provisions of this
Section, a Participant's Beneficiary shall be the person or persons (or entity
or entities), if any, designated by the Participant from time to time on a form
or in a manner approved by the Administrator. In the absence of an effective
Beneficiary designation, a Participant's Beneficiary shall be his or her
surviving spouse, if any, or if none, the Participant's issue, or if none, the
Participant's estate. A non-spouse Beneficiary designation by a Participant
who is married at the time of his or her death shall not be effective unless
(a) prior to the Participant's death, the Participant's surviving
spouse consented to and acknowledged the effect of the Participant's
designation of a specific non-spouse Beneficiary (including any class of
Beneficiaries or any contingent Beneficiaries) in a written form approved by
the Administrator and witnessed by a notary public or a Plan representative; or
(b) it is established by the Participant prior to his or her death
(by furnishing the Administrator with a sworn statement), that the required
consent may not be obtained because there is no spouse, because the spouse
cannot be located, or because of such other circumstances as the Secretary of
the Treasury may prescribe; or
(c) the spouse had earlier executed a general consent form
permitting the Participant (i) to select from among certain specified persons
without any requirement of further consent by the spouse (and the Participant
designates a Beneficiary from the specified list), or (ii) to change his or her
Beneficiary without any requirement of further consent by the spouse. Any such
general consent shall be on a form approved by the Administrator, and must
acknowledge that the spouse has the right to limit consent to a specific
Beneficiary and that the spouse voluntarily elects to relinquish such right.
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24
Any consent and acknowledgment by a spouse, or the establishment that the
consent and acknowledgment cannot be obtained, shall be effective only with
respect to such spouse, but shall be irrevocable once made.
ARTICLE 9. ADMINISTRATION
9.1 ADMINISTRATOR. The Administrator will be the "administrator" of
the Plan as defined in section 3(16)(A) of ERISA and a "named fiduciary" for
purposes of section 402(a)(1) of ERISA with authority to control and manage
the operation and administration of the Plan, and will be responsible for
complying with all of the reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA. The Administrator will not, however, have
any authority over the investment of assets of the Trust or the selection of
Investment Funds.
9.2 POWERS OF ADMINISTRATOR. The Administrator will have full power to
administer the Plan in all of its details, other than the selection of
Investment Funds, subject, however, to the requirements of ERISA. For this
purpose the Administrator's power will include, but will not be limited to, the
following discretionary authority:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan or as
required to comply with applicable law;
(b) to interpret and enforce the Plan in accordance with the terms of
the Plan and the rules and regulations adopted under subsection (a), its
interpretation thereof in good faith to be final and conclusive;
(c) to decide all questions concerning the Plan and the eligibility
of any person to participate in the Plan;
(d) to compute the amounts to be distributed under the Plan, and to
determine the person or persons to whom such amounts will be distributed;
(e) to authorize the payment of distributions and to direct the
Trustee to make such payments from the Trust;
(f) to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be required under
the PR-Code, ERISA and applicable regulations, or under other federal, state
or local law and regulations;
(g) to allocate and delegate its ministerial duties and
responsibilities and to appoint such agents, counsel, accountants,
consultants, actuaries and insurance companies as may be required or desired
to assist in administering the Plan;
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25
(h) by written instrument, to allocate and delegate its fiduciary
responsibilities in accordance with ERISA section 405; and
(i) to furnish each Employer with such information and data as may be
required by it for tax and other purposes in connection with the Plan.
9.3 NONDISCRIMINATORY EXERCISE OF AUTHORITY. Whenever, in the
administration of the Plan, any discretionary action by the Administrator is
required, the Administrator shall exercise its authority in a nondiscriminatory
manner so that all persons similarly situated will receive substantially the
same treatment.
9.4 RELIANCE ON TABLES, ETC. In administering the Plan, the Administrator
will be entitled, to the extent permitted by law, to rely conclusively on all
tables, valuations, certificates, opinions and reports which are furnished by
any accountant, trustee, counsel, actuary, insurance company or other expert
who is employed or engaged by the Administrator or by Abbott or the Corporation
on the Administrator's behalf.
9.5 CLAIMS AND REVIEW PROCEDURES. The Administrator shall adopt
procedures for the filing and review of claims in accordance with ERISA section
503.
9.6 INDEMNIFICATION OF ADMINISTRATOR AND ASSISTANTS. The Corporation
agrees to indemnify and defend to the fullest extent of the law any of its or
Abbott's employees or former employees who serves or has served as
Administrator or who has been appointed to assist the Administrator in
administering the Plan or to whoever the Administrator has delegated any of its
duties or responsibilities against any liabilities, damages, costs and expenses
(including attorneys' fees and amounts paid in settlement of any claims
approved by the Corporation) occasioned by any act or omission to act in
connection with the Plan, if such act or omission to act is in good faith.
9.7 EXPENSES AND COMPENSATION. No compensation shall be paid to the
Administrator or any assistant who is a full-time employee of Abbott, the
Corporation, an Affiliated Corporation or a Subsidiary, but the Administrator
and his or her assistants shall be reimbursed for all expenses reasonably
incurred in the administration of the Plan. Such expenses shall be charged to
the Trust and paid first out of the dividends paid on Abbott Stock held in the
Unallocated Account and then from
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26
Employer Contributions prior to allocation under Section 3.5, unless the
Employers pay such expenses directly. To the extent that any recordkeeping
expense, withdrawal charge, loan fee or check fee is specifically
attributable to a Participant's Accounts, such expenses may be charged to
the Accounts of such Participant.
9.8 NOTICES; PARTICIPANT INFORMATION. Any notice required to be given to
or any document required to be filed with the Administrator, the Trustee or the
Committee will be given or filed properly if mailed by registered mail, postage
prepaid, or delivered, to the Administrator, the Trustee or the Committee, as
the case may be, in care of the Corporation. Participants (and their
Beneficiaries) must furnish to the Administrator such evidence, data, or
information as they consider necessary or desirable for the purpose of
administering the Plan, and the provisions of the Plan for each person are upon
the condition that he or she will furnish full, true and complete evidence,
data and information requested by the Administrator.
ARTICLE 10. AMENDMENT AND TERMINATION
10.1 AMENDMENT. The Corporation (through the Board of Directors)
reserves the power at any time or times to amend the provisions of the Plan
and Trust to any extent and in any manner that it may deem advisable. The
Corporation specifically reserves the right to amend Article 5 with respect
to the investment of Participant Accounts. However, the Corporation will
not have the power:
(a) to amend the Plan or Trust in such manner as would cause or
permit any part of the assets of the Trust to be diverted to purposes other
than for the exclusive benefit of each Participant and his or her Beneficiary
(except as permitted by Section 13.3 with respect to Qualified Domestic
Relations Orders, or by Section 3.9 with respect to the return of
contributions upon nondeductibility or mistake of fact), unless such
amendment is required or permitted by law, governmental regulation or ruling;
or
(b) to amend the Plan or Trust retroactively in such a manner as
would reduce the accrued benefit of ERISA section 204(g) of any Participant,
except as otherwise permitted or required by law; or
(c) to change the duties or liabilities of the Trustee, the Committee
or the Administrator without their consent.
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27
10.2 TERMINATION. The Corporation has established the Plan and
authorized the establishment of the Trust with the bona fide intention and
expectation that contributions will be continued indefinitely, but the
Corporation will have no obligation or liability whatsoever to maintain the
Plan for any given length of time and may discontinue contributions under the
Plan or terminate the Plan at any time by written notice delivered to the
Trustee and the Committee without liability whatsoever for any such
discontinuance or termination.
10.3 DISTRIBUTIONS UPON TERMINATION OF THE PLAN. Upon termination of the
Plan by the Corporation, the Trustee will distribute to each Participant (or
other person entitled to distribution) the value of the Participant's
Accounts determined as of the Valuation Date coinciding with or next
following the date of the Plan's termination. However, if a successor plan
is established, Accounts shall be distributed to Participants and their
Beneficiaries only in accordance with Article 6 relating to in-service
withdrawals and upon the actual separation from service by the Participant.
10.4 MERGER OR CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS. In case
of any merger or consolidation of the Plan with, or transfer of assets and
liabilities of the Plan to, any other plan, provision must be made so that
each Participant would, if the Plan then terminated, receive a benefit
immediately after the merger, consolidation or transfer which is equal to or
greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer if the Plan had then
terminated.
ARTICLE 11. LIMITS ON CONTRIBUTIONS
11.1 PR-CODE SECTION 1023(n) LIMITS. The sum of the contributions made
by the Employers under the Plan for any Plan Year shall not exceed the
maximum amount deductible under the applicable provisions of the PR-Code (all
such contributions being hereby conditioned on their deductibility under
PR-Code section 1023(n)).
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28
11.2 PR-CODE SECTION 1165(e)(7)(A) LIMITS.
(a) IN GENERAL. The maximum amount of Pre-Tax Contributions made on
behalf of any Participant for any calendar year, when added to the amount of
elective deferrals under all other plans, contracts and arrangements of Abbott,
the Corporation, all Affiliated Corporations and all Subsidiaries with respect
to the Participant for the calendar year, shall in no event exceed the lesser
of 10% of the Participants' Compensation or $7,000 or any other applicable
limit in effect for the calendar year under PR-Code section 1165(e)(7)(A).
(b) DISTRIBUTION OF EXCESS DEFERRALS. In the event that an amount is
included in a Participant's gross income for a taxable year as a result of an
excess deferral under PR-Code section 1165(e)(7)(A), and the Participant
notifies the Administrator on or before the March 1 following the taxable year
that all or a specified part of a Pre-Tax Contribution made or to be made for
his or her benefit represents an excess deferral, the Administrator shall make
every reasonable effort to cause such excess deferral, adjusted for allocable
income or loss, to be distributed to the Participant no later than the April 15
following the calendar year in which such excess deferral was made. No
distribution of an excess deferral shall be made during the taxable year in
which the excess deferral was made unless the correcting distribution is made
after the date on which the Plan received the excess deferral and both the
Participant and the Plan designates the distribution as a distribution of an
excess deferral. The amount of any excess deferrals that may be distributed to
a Participant for a taxable year shall be reduced by the amount of Pre-Tax
Contributions that were excess contributions and were previously distributed to
the Participant for the Plan Year beginning with or within such taxable year.
11.3 PR-CODE SECTION 1165(E)(3) LIMITS.
(a) ACTUAL DEFERRAL RATIOS. For each Plan Year, the Administrator will
determine the "actual deferral ratio" for each Participant who is eligible for
Pre-Tax Contributions. The actual deferral ratio shall be the ratio,
calculated to the nearest one-hundredth of one percent, of the Pre-Tax
Contributions made on behalf of the Participant for the Plan Year to the
Participant's Compensation for the applicable period. For purposes of
determining a Participant's actual deferral ratio,
(i) Pre-Tax Contributions will be taken into account only to the
extent permitted by the PR-Code and the Regulations;
(ii) The applicable period for each Participant for a given Plan Year
shall be that portion of the 12-month period ending on the last day of such
Plan Year during which the individual was a Participant.
(iii) Employer Contributions may be treated as Pre-Tax Contributions
to the extent permitted by the PR-Code and the Regulations.
(b) ACTUAL DEFERRAL PERCENTAGES. The actual deferral ratios for all
Highly Compensated Employees who are eligible for Pre-Tax Contributions for a
Plan Year shall be averaged to determine the actual deferral percentage for the
highly compensated group for the Plan Year, and the actual deferral ratios for
all Employees who are not Highly Compensated Employees but who are eligible for
Pre-Tax Contributions for the Plan Year shall be averaged to determine the
actual deferral percentage for the nonhighly compensated group for the Plan
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29
Year. The actual deferral percentages for any Plan Year must satisfy at least
one of the following tests, which shall be interpreted and applied by the
Administrator in a manner consistent with the PR-Code and the Regulations:
(i) The actual deferral percentage for the highly compensated group
does not exceed 125 percent of the actual deferral percentage for the
nonhighly compensated group; or
(ii) The excess of the actual deferral percentage for the highly
compensated group over the actual deferral percentage for the nonhighly
compensated group does not exceed two percentage points, and the actual
deferral percentage for the highly compensated group does not exceed twice
the actual deferral percentage of the nonhighly compensated group.
(c) ADJUSTMENTS BY ADMINISTRATOR. If, prior to the time all Pre-Tax
Contributions for a Plan Year have been contributed to the Trust, the
Administrator determines that Pre-Tax Contributions are being made at a rate
which will cause the PR-Code section 1165(e)(3) limits to be exceeded for the
Plan Year, the Administrator may, in its sole discretion, limit the amount of
Pre-Tax Contributions to be made with respect to one or more Highly Compensated
Employees for the balance of the Plan Year by suspending or reducing Pre-Tax
Contribution elections to the extent the Administrator deems appropriate. Any
Pre-Tax Contributions which would otherwise be made to the Trust shall instead
be paid in cash to the affected Participant.
(d) EXCESS CONTRIBUTIONS. If the PR-Code section 1165(e)(3) limits have
been exceeded for a Plan Year after all contributions for the Plan Year have
been made, the Administrator shall determine the amount of excess contributions
with respect to Participants who are Highly Compensated Employees. To do so,
the Administrator shall reduce the actual deferral ratio of the Highly
Compensated Employee with the highest actual deferral ratio to the extent
necessary to (i) enable the Plan to satisfy the 1165(e)(3) limits or (ii) cause
such Employee's actual deferral ratio to equal the actual deferral ratio of the
Highly Compensated Employee with the next highest actual deferral ratio, and
shall repeat this process until the Plan no longer exceeds the PR-Code section
1165(e)(3) limits. The amount of excess contributions for each Highly
Compensated Employee for the Plan Year shall equal the amount of Pre-Tax
Contributions (plus Employer Contributions which are treated as Pre-Tax
Contributions for purposes of the PR-Code section 1165(e)(3) limits) actually
made to the Trust for the Plan Year, less the product of the (i) the Highly
Compensated Employee's reduced actual deferral ratio as determined under the
preceding sentence, and (ii) his or her Compensation. Any excess contributions
will be distributed as provided below. In no event will excess contributions
remain unallocated or be allocated to a suspense account for allocation in a
future Plan Year.
(e) RECHARACTERIZATION OF EXCESS CONTRIBUTIONS. At the option of
the Administrator, a Participant's excess contributions may be
recharacterized as After-Tax Contributions, provided the Administrator
complies with the reporting requirements of the PR-Code for such
contributions and such recharacterization occurs no later than the March
15 following the Plan Year for which the contributions were made.
(f) DISTRIBUTION OF EXCESS CONTRIBUTIONS. A Participant's excess
contributions, adjusted for income or loss, will be designated by the
Employer as a distribution of excess contributions and distributed to the
Participant. Distribution of excess contributions will be made after the
close of the Plan Year to which the contributions relate, but within 12
months after the close of such Plan Year.
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30
(g) SPECIAL RULES. For purposes of distributing excess
contributions,
(i) the amount of excess contributions that may be distributed with
respect to a Highly Compensated Employee for a Plan Year shall be reduced
by the amount of excess deferrals previously distributed to the Highly
Compensated Employee for his or her taxable year ending with or within such
Plan Year.
(ii) Any distribution of less than the entire amount of excess
contributions with respect to a Highly Compensated Employee shall be
treated as a pro rata distribution of excess contributions and allocable
income or loss.
(h) RECORDKEEPING REQUIREMENT. The Administrator, on behalf of the
Employer, shall maintain such records as are necessary to demonstrate
compliance with the PR-Code section 1165(e)(3) limits including the
extent to which qualified matching contributions and Qualified
Nonelective Employer Contributions are taken into account in determining
the actual deferral ratios.
ARTICLE 12. ROLLOVER AND TRANSFER CONTRIBUTIONS
12.1 CONTRIBUTION OF AMOUNT DISTRIBUTED FROM ANOTHER QUALIFIED PLAN. An
Eligible Employee who was formerly a participant in a plan described in
section 1165(a) of the PR-Code (the "distributing plan") and who has received
a total distribution (within the meaning of section 1165(b) of the PR-Code)
from the distributing plan (the "distribution") may, within 60 days of
receipt of the distribution from the distributing plan, contribute to the
Trust, as a "Rollover Contribution", such distribution if it:
(a) does not exceed the fair market value of the distribution, and
(b) includes no property other than (i) money received in the
distribution, and (ii) money attributable to other property received in
the distribution which is sold and the proceeds of which are transferred.
12.2 MONITORING OF ROLLOVERS.
(a) The Administrator shall establish such procedures and require
such information from employees seeking to make Rollover Contributions as
it deems necessary to insure that such Contributions satisfy the
requirements for tax-free rollovers established by conditions of this
Article and the PR-Code and the Regulations.
(b) No amount may be contributed or transferred under this Article
until approved by the Administrator.
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31
12.3 TRANSFER CONTRIBUTION. Subject to such restrictions and procedures
as the Administrator may prescribe (which, without limitation, may include
restrictions as to the type of plan from which transfers will be permitted),
amounts held for the benefit of an Eligible Employee under a plan that is
qualified under section 1165(a) of the PR-Code and exempt from tax under
section 1165(a) of the PR-Code (the "distributing plan") may be transferred
(the "Transfer Contribution") directly by the distributing plan to this Plan.
A Transfer Contribution Account shall be established for each Eligible
Employee for whom a Transfer Contribution is made. To the extent determined
by the Administrator to be required under section 204(g) of ERISA, an
Eligible Employee for whom a Transfer Contribution Account is maintained
shall be entitled to distributions and withdrawals from such Account under
provisions not less restrictive than applied under the distributing plan. To
the extent the distributing plan was subject to the requirements of section
205 of ERISA, such requirements shall continue to apply to the transferred
amount.
12.4 TREATMENT OF TRANSFERRED AMOUNT UNDER THE PLAN.
(a) An individual who makes a Rollover Contribution to the Trust or
has a Transfer Contribution made to the Trust on his or her behalf shall
not be eligible to make or receive any other contributions under the Plan
until he or she has actually become a Participant and satisfied the
eligibility requirements otherwise applicable to such contributions.
However, for all other purposes under the Plan (including without
limitation, investment directions and distributions), an individual who
makes a Rollover Contribution or for whom a Transfer Contribution has
been made shall be treated as a Participant.
ARTICLE 13. MISCELLANEOUS
13.1 EXCLUSIVE BENEFIT RULE. No part of the corpus or income of the
Trust forming part of the Plan will be used for or diverted to purposes other
than for the exclusive benefit of each Participant and Beneficiary, except as
otherwise provided under the provisions of the Plan relating to Qualified
Domestic Relations Orders, and the return of contributions upon
nondeductibility, mistake of fact, or the failure of the Plan to qualify
initially.
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32
13.2 LIMITATION OF RIGHTS. Neither the establishment of the Plan or the
Trust, nor any amendment thereof, nor the creation of any fund or account,
nor the payment of any benefits, will be construed as giving to any
Participant or other person any legal or equitable right against Abbott, the
Corporation, any Affiliated Corporation, any Subsidiary, the Administrator,
the Trustee, or the Committee except as provided herein, and in no event will
the terms of employment or service of any Participant be modified or in any
way be affected hereby. It is a condition of the Plan, and each Participant
expressly agrees by his or her participation herein, that each Participant
will look solely to the assets held in the Trust for the payment of any
benefit to which he or she is entitled under the Plan.
13.3 NONALIENABILITY OF BENEFITS. The benefits provided hereunder will
not be subject to alienation, assignment, garnishment, attachment, execution
or levy of any kind, and any attempt to cause such benefits to be so
subjected will not be recognized, except to the extent as may be required by
law; provided, however, that if the Administrator receives any Qualified
Domestic Relations Order that requires the payment of benefits hereunder or
the segregation of any Account, such benefits shall be paid, and such Account
segregated, in accordance with the applicable requirements of such Qualified
Domestic Relations Order.
13.4 CHANGES IN VESTING SCHEDULE. A Plan amendment which changes a
vesting schedule under the Plan shall apply with respect to any Participant
who has completed three Years of Service prior to the expiration of the
period described below only to the extent that the Participant's vested
percentage in his or her Accounts determined under the amendment is greater
than the nonforfeitable percentage of his or her Accounts determined without
regard to the amendment. The period referred to in the preceding sentence
will begin on the date the amendment of the vesting schedule is adopted and
will end 60 days after the latest of the following dates:
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33
(a) the date on which such amendment is adopted;
(b) the date on which such amendment becomes effective; and
(c) the date on which the Participant is issued written notice of
such amendment by the Administrator.
13.5 GOVERNING LAW. The Plan and Trust will be construed, administered
and enforced according to the laws of the Commonwealth of Puerto Rico to the
extent such laws are not preempted by ERISA.
ARTICLE 14. DEFINITIONS
14.1 "Abbott" means Abbott Laboratories.
14.2 "Abbott Stock" means the common stock of Abbott Laboratories.
14.3 "Accounts" means, for any Participant, his or her Basic Pre-Tax
Contribution Account, Basic After-Tax Contribution Account, Supplemental
Pre-Tax Contribution Account, Supplemental After-Tax Contribution Account,
Employer Contribution Account, Rollover Contribution Account (if applicable),
Transfer Contribution Account (if applicable) and any other accounts or
subaccounts established on his or her behalf under the Plan by the
Administrator or the Trustee.
14.4 "Administrator" means the Senior Vice President, Human Resources, of
Abbott, unless the Board of Directors appoints another entity or person(s) to
administer the Plan.
14.5 "Affiliated Corporation" means:
(a) Any corporation which is a member of a controlled group of
corporations (as defined in ERISA section 210(c)) which includes the
Corporation; and
(b) Any trade or business (whether or not incorporated) which is
under common control (as defined in ERISA section 210(d)) with the
Corporation.
14.6 "Alternate Payee" means an alternate payee (as defined in section
206(d)(3)(k) of ERISA) who has rights to one or more Accounts under the Plan.
14.7 "Basic Contribution" means any contribution made pursuant to Section
3.2 entitling the Participant to a share in the Employer Contributions.
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34
14.8 "Basic After-Tax Contributions" means a Basic Contribution made to
the Plan by a Participant on an after-tax basis.
14.9 "Basic Pre-Tax Contribution" means a Basic Contribution made to the
Plan for the benefit of a Participant on a pre-tax basis.
14.10 "Basic Pre-Tax Contribution Account" means for any Participant, the
account established by the Administrator or Trustee to which Basic Pre-Tax
Contributions made for the Participant's benefit are credited.
14.11 "Beneficiary" means any person entitled to receive benefits under
the Plan upon the death of a Participant.
14.12 "Board of Directors" means the Board of Directors of the
Corporation.
14.13 "Break Year" means, with respect to any Employee, a 12 consecutive
month period of severance.
14.14 "Compensation" means, for purposes of determining the amount of
Pre-Tax, After-Tax, and Employer Contributions to be made on behalf of a
Participant, (i) the Participant's total compensation (prior to reduction for
contributions under PR-Code section 1165(e)) for personal services actually
rendered in the course of employment with the participating Employers, but
excluding (ii) any reimbursements, expense allowances, fringe benefits (cash or
noncash), moving expenses, or welfare benefits (whether or not those amounts
are includible in gross income), prizes, or any Christmas, anniversary, or
discretionary bonuses, or payments made under any nonqualified profit sharing,
bonus or similar plan, the Abbott Laboratories Division Incentive Plan,
Management Incentive Plan, Supplemental Pension Plan, 401(k) Supplemental Plan,
or plans maintained by any participating Employer which are determined by the
Administrator to be similar to such plans, or any suggestion or other special
awards. Compensation for any Participant for any Plan Year shall not exceed
$150,000 or such amount specified in section 401(a)(17) of the United States
Internal Revenue Code of 1986, as amended.
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35
14.15 "Contribution Agreement" means, for any Participant, the
agreement by which the Participant elects to defer a certain portion of his
or her regular pay and the Corporation agrees to contribute the deferred
amount to the Participant's Pre-Tax or After-Tax Contribution Account,
whichever is applicable.
14.16 "Corporation" means Abbott Chemicals, Inc. and any successor to
all or a major portion of its assets or business which assumes the
obligations of the Corporation.
14.17 "Committee" means the persons appointed by the Board of
Directors to serve as members of the Committee under the Trust.
14.18 "Eligible Employee" means any Employee who is employed by an
Employer provided that there shall be excluded (i) all leased employees, (ii)
any independent contractor, (iii) an Employee with respect to whom retirement
benefits have been the subject of good faith collective bargaining unless the
Employee is a member of a group of employees to whom the Plan has been
extended by a collective bargaining agreement between an Employer and its
collective bargaining representative, (iv) any Employee who does not perform
services primarily in Puerto Rico within the meaning of ERISA section
1022(i)(1) and the applicable regulations thereunder, (v) any Employee
considered a United States expatriate on the records of Abbott, the
Corporation or any Affiliated Corporation. For purposes of making
Supplemental Contributions, a seasonal employee (namely an Employee who is
hired to work for less than one year) shall become an Eligible Employee once
he or she has completed one Year of Credited Service.
14.19 "Employee" means any individual employed by the Corporation, an
Affiliated Corporation or a Subsidiary.
14.20 "Employer" means the Corporation, any Affiliated Corporation or
any Subsidiary with operations in Puerto Rico that has adopted the Plan as
provided in Section 2.6.
14.21 "Employer Contributions" means the contributions made by the
Employers under Section 3.5 for the benefit of the Participants under the
Plan on account of Basic Contributions.
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14.22 "Employer Contribution Account" means, for any Participant, the
account established by the Administrator or Trustee to which Employer
Contributions made under Section 3.5 for the Participant's benefit are
credited.
14.23 "Entry Date" means the first day of each payroll period.
14.24 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute or statutes of
similar import.
14.25 "Highly Compensated Employee" means any Eligible Employee who
has Compensation for a Plan Year that is greater than the Compensation for
such Plan Year of two-thirds (2/3) of all other Eligible Employees employed
by any Employer.
14.26 "Hour of Service" means, with respect to any Employee, each
hour for which the Employee is paid or entitled to payment for the
performance of duties for an Employer each such hour to be credited to the
Employee for the computation period in which the duties were performed.
14.27 "Investment Fund" means any investment fund described in
Article 5 or as subsequently selected by the Committee as an investment
option under the Plan.
14.28 "Participant" means each Eligible Employee who participates in
the Plan pursuant to its provisions or other individual for whom an Account
is maintained.
14.29 "Period of Credited Service" means with respect to any Employee
the aggregate of all time periods beginning on the date the Employee first
completes an Hour of Service or is reemployed and ending on the date a Break
Year begins, subject to the following adjustments:
(a) An Employee will be credited with one Year of Credited Service
for each year of credited service which would have been credited under
the Abbott Laboratories Stock Retirement Plan prior to January 1, 1996.
(b) On or after January 1, 1996, an Employee shall be credited with
1/12th of a Year of Credited Service for each calendar month of
employment (or portion thereof) during which he or she is employed by
the Corporation, an Affiliated Corporation or a Subsidiary, including
employment prior to January 1, 1996; provided, however, that the
Employee will not be credited with less service than would have been
credited to him under the Abbott Laboratories Stock Retirement Plan
prior to January 1, 1996.
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37
(c) An Employee will also receive credit for any period of
severance of less than 12 consecutive months. Fractional periods of a
year will be expressed in terms of days. In the case of an individual
who is absent from work for maternity or paternity reasons, the
12-consecutive month period beginning on the first anniversary of the
first day of such absence shall not constitute a Break Year. For
purposes of this Section,
(i) an absence from work for maternity or paternity reasons
means an absence (A) by reason of the pregnancy of the individual,
(B) by reason of the birth of a child of the individual, (C) by
reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or
(D) for purposes of caring for such child for a period beginning
immediately following such birth or placement;
(ii) a Break Year is a period of severance of at least 12
consecutive months;
(iii) a period of severance is a continuous period of time
during which the Employee is not employed by the Corporation, an
Affiliated Corporation or a Subsidiary. Such period begins on the
date the Employee retires, quits or is discharged, or if earlier,
the 12-month anniversary of the date on which the Employee was
otherwise first absent from service; and
(iv) in the case of a leave of absence for service in the
armed forces of the United States, no period shall be excluded
under this paragraph during which the Employee has reemployment
rights with respect to the Corporation, any Affiliated Corporation
or any Subsidiary under federal law.
(d) If, to the extent, and on the terms so provided by the Board of
Directors at the time of acquisition, or at any subsequent date or in
any Supplement to the Plan, the last continuous period of employment of
any employee with any prior separate business entity, part or all of
which is or was acquired by, or becomes part of an Employer will be
considered a Period of Credited Service.
14.30 "Plan" means the Abbott Laboratories Stock Retirement Plan
(Puerto Rico), as amended from time to time.
14.31 "Plan Year" means the calendar year.
14.32 "Point Value" means the dollar value of an earnings or service
point determined for a Plan Year by dividing the cost of the Abbott Stock
allocated to a Participant's Employer Contribution Account as of the last day
of the Plan Year by the number of earnings and service points credited to
such Participant under Section 3.5 for such Plan Year.
14.33 "PR-Code" means the Puerto Rico Internal Revenue Code of 1994,
as amended from time to time. Reference to any section of the PR-Code
includes reference to any comparable or succeeding provisions of any
legislation which amends, supplements or replaces such section or subsection.
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14.34 "Pre-Tax Contribution Account" means the Participant's Basic
Pre-Tax Contribution Account and his or her Supplemental Pre-Tax Contribution
Account.
14.35 "Pre-Tax Contributions" means, for any Participant, the
aggregate of the Participant's Basic Pre-Tax Contributions and Supplemental
Pre-Tax Contributions contributed to the applicable Pre-Tax Contribution
Account.
14.36 "Qualified Domestic Relations Order" means any judgment, decree
or order (including approval of a property settlement agreement) which
constitutes a "qualified domestic relations order" within the meaning of
ERISA section 206(d)(3)(B). A judgment, decree or order shall not be
considered not to be a Qualified Domestic Relations Order merely because it
requires a distribution to an alternate payee (or the segregation of accounts
pending distribution to an alternate payee) before the Participant is
otherwise entitled to a distribution under the Plan.
14.37 "Qualified Nonelective Employer Contribution" means a
contribution (other than an Employer Contribution) made for the benefit of a
Participant by the Employer in its discretion.
14.38 "Regulations" means regulations issued by the Puerto Rico
Department of the Treasury, or the United States Department of Labor, as the
case may be, including any final regulation, proposed regulation, temporary
regulation, as well as any modification of any such regulation contained in
any notice, revenue procedure, advisory or similar pronouncement issued by
the Puerto Rico Treasury Department or the United States Department of Labor,
whichever is applicable.
14.39 "Retirement Program" means the program of retirement benefits,
provided by the Corporation, of which the Plan and the Abbott Puerto Rico
Retirement Plan form a part.
14.40 "Rollover Contribution Account" means, for any Participant, the
account described in Section 12.1 or 12.2, as established by the
Administrator or the Trustee, to which the Participant's Rollover
Contribution, if any, is allocated.
14.41 "Rollover Contribution" means a contribution made by a
Participant which satisfies the requirements for rollover contributions as
set forth in Article 12.
14.42 "Section" means a section of the Plan.
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39
14.43 "Putnam Stable Value Fund" means the Investment Fund described
in 5.2.
14.44 "Subsidiary" means any corporation, partnership, joint venture
or business trust fifty percent (50%) or more of the control of which is
owned, directly or indirectly, by the Corporation.
14.45 "Supplemental Contribution" means any contribution made
pursuant to Section 3.3 and for which no Employer Contribution is made.
14.46 "Supplemental After-Tax Contribution" means a Supplemental
Contribution made to the Plan by the Participant on an after-tax basis.
14.47 "Supplemental After-Tax Contribution Account" means, for any
Participant, the account established by the Administrator or Trustee to which
Supplemental After-Tax Contributions made for the Participant's benefit are
credited.
14.48 "Supplemental Pre-Tax Contribution" means a Supplemental
Contribution made to the Plan for the benefit of a Participant on a pre-tax
basis.
14.49 "Supplemental Pre-Tax Contribution Account" means, for any
Participant, the account established by the Administrator or Trustee to which
Supplemental Pre-Tax Contributions made for the Participant's benefit are
credited.
14.50 "Transfer Contribution" means a contribution made on behalf of
a Participant by way of a trustee-to-trustee transfer as described in Section
12.3.
14.51 "Transfer Contribution Account" means, for any Participant, the
account described in Section 12.3 established by the Administrator or the
Trustee to which the Participant's Transfer Contribution, if any, is
allocated.
14.52 "Trust" means the trust established between the Corporation and
the Trustee in connection with the Plan, together with any and all amendments
thereto.
14.53 "Trustee" means the person(s) or entity appointed by the Board
of Directors to serve as Trustee under the Trust.
<PAGE>
40
14.54 "Unallocated Account" means the portion of the Trust to which
Employer Contributions are made during the Plan Year, in which shares of
Abbott Stock will be held prior to allocation to Participant Accounts, to
which dividends paid on such shares of Abbott Stock will be paid, and from
which expenses of the Plan will be paid.
14.55 "Valuation Date" means each business day of each Plan Year.
14.56 "Year of Credited Service" means, with respect to any Employee,
a twelve-month Period of Credited Service.
<PAGE>
Exhibit 5
January 7, 1997
Abbott Laboratories
Abbott Park, Illinois 60064-3500
and
Ms. Ellen M. Walvoord, Plan Administrator
of the Abbott Laboratories Stock Retirement Program
Gentlemen and Ms. Walvoord:
I have examined the Registration Statement on Form S-8 to which this is an
exhibit, to be filed with the Securities and Exchange Commission in
connection with the registration under the Securities Act of 1933, as
amended, of 10,000,000 common shares of Abbott Laboratories, without par
value, and of an indeterminate amount of interests to be offered or sold
pursuant to the Abbott Laboratories Stock Retirement Program, all as described
more fully in said Registration Statement. I, or members of my staff, have also
examined copies of the Articles of Incorporation and By-laws of Abbott
Laboratories (the "Company"), as amended, the Abbott Laboratories Stock
Retirement Trust (the "Trust"),the Abbott Laboratories Stock Retirement Trust
(Puerto Rico) (the "Puerto Rico Trust) and the Abbott Laboratories Stock
Retirement Program (the "Program"), and all amendments to the Trust, the Puerto
Rico Trust and the Program to the date hereof. In addition, I have made such
other examinations and have ascertained or verified to my satisfaction such
additional facts as I deem pertinent under the circumstances.
On the basis of such examinations, I am of the opinion that:
1. Abbott Laboratories is a corporation duly organized and existing under
the laws of the State of Illinois, with corporate power to own and
operate the property now owned by it.
2. The common shares to be offered and sold under the Program may be (a)
such as have been purchased for that purpose from the holders thereof;
or (b) such as shall be newly issued by Abbott Laboratories, all as
described more fully in said Registration Statement. All legal and
corporate proceedings necessary to the authorization and issuance of the
common shares heretofore issued have been duly taken and such common
shares have been legally issued, and when utilized for the purposes of
the Program according to the provisions thereof, will be legally issued,
fully paid and nonassessable outstanding common shares of the Company.
As to such common shares as may be issued hereafter, either directly for
the purposes of the Program or issued for other purposes and then
acquired from the holders, they will, upon due amendment of the Articles
of Incorporation and due authorization of the Board of Directors,
<PAGE>
Abbott Laboratories
January , 1997
Page 2 of 2
if required, and upon receipt of the consideration for said common shares
specified by the Board of Directors, be legally issued and, when utilized
for the purposes of the Program according to the provisions thereof, be
legally issued, fully paid and nonassessable outstanding common shares of
the Company.
3. The Program has been duly and legally authorized and adopted and both
the Trust and the Puerto Rico Trust, created to implement the Program,
have been duly and legally authorized and created. The Trust is a valid
trust enforceable according to its terms under the laws of the State of
Illinois and the participants in Part A of the Program have valid
beneficial interests in the Trust, subject to the terms of the Trust and
Part A of the Program. The Puerto Rico Trust is a valid trust
enforceable according to its terms under the laws of the Commonwealth of
Puerto Rico and the participants in Part B of the Program have valid
beneficial interests in the Puerto Rico Trust, subject to the terms of the
Puerto Rico Trust and Part B of the Program.
4. The Program, the Trust, and the Puerto Rico Trust, as amended to the date
hereof, comply with those requirements of the Employee Retirement Income
Security Act of 1974 that are applicable to the same.
I hereby consent to the use of this legal opinion as an exhibit to the
Registration Statement to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
Very truly yours,
/s/Jose M. de Lasa
Jose M. de Lasa
JMdL:jab
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of: (i) our
supplemental report dated January 15, 1996, included in the Abbott
Laboratories Form 10-K for the year ended December 31, 1995; (ii) our report
dated January 15, 1996, incorporated by reference in Abbott Laboratories Form
10-K for the year ended December 31, 1995; and, (iii) our report dated April
23, 1995, included in Abbott Laboratories Stock Retirement Plan Form 11-K for
the year ended December 31, 1995, and to all references to our Firm included
in this registration statement.
/s/ Arthur Andersen LLP
________________________________
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 7, 1997
