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As filed with the Securities and Exchange Commission on October 23, 2012

File No. 001-35565

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 4 to

Form 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

AbbVie Inc.
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  32-0375147
(I.R.S. employer
Identification number)

1 North Waukegan Road,
North Chicago, Illinois

(Address of principal executive offices)

 

60064
(Zip Code)

847-932-7900
(Registrant's telephone number, including area code)

        Securities to be registered pursuant to Section 12(b) of the Act:

Title of Each Class to be so Registered   Name of Each Exchange on which Each Class is to be
Registered
Common Stock, par value $0.01 per share   New York Stock Exchange

        Securities to be registered pursuant to Section 12(g) of the Act: None

   



ABBVIE INC.

INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10

        Certain information required to be included herein is incorporated by reference to specifically identified portions of the body of the information statement filed herewith as Exhibit 99.1. None of the information contained in the information statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.

Item 1.    Business.

        The information required by this item is contained under the sections of the information statement entitled "Information Statement Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," "Certain Relationships and Related Person Transactions," and "Where You Can Find More Information." Those sections are incorporated herein by reference.

Item 1A.    Risk Factors.

        The information required by this item is contained under the section of the information statement entitled "Risk Factors." That section is incorporated herein by reference.

Item 2.    Financial Information.

        The information required by this item is contained under the sections of the information statement entitled "Unaudited Pro Forma Combined Financial Statements," "Selected Historical Combined Financial Data," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Those sections are incorporated herein by reference.

Item 3.    Properties.

        The information required by this item is contained under the section of the information statement entitled "Business—Manufacturing Capabilities and Operations." That section is incorporated herein by reference.

Item 4.    Security Ownership of Certain Beneficial Owners and Management.

        The information required by this item is contained under the section of the information statement entitled "Security Ownership of Certain Beneficial Owners and Management." That section is incorporated herein by reference.

Item 5.    Directors and Executive Officers.

        The information required by this item is contained under the section of the information statement entitled "Management." That section is incorporated herein by reference.

Item 6.    Executive Compensation.

        The information required by this item is contained under the sections of the information statement entitled "Compensation Discussion and Analysis" and "Executive Compensation." Those sections are incorporated herein by reference.

Item 7.    Certain Relationships and Related Transactions.

        The information required by this item is contained under the sections of the information statement entitled "Management" and "Certain Relationships and Related Person Transactions." Those sections are incorporated herein by reference.



Item 8.    Legal Proceedings.

        The information required by this item is contained under the section of the information statement entitled "Business—Legal Proceedings." That section is incorporated herein by reference.

Item 9.    Market Price of, and Dividends on, the Registrant's Common Equity and Related Stockholder Matters.

        The information required by this item is contained under the sections of the information statement entitled "Dividend Policy," "Capitalization," "The Separation and Distribution," and "Description of AbbVie's Capital Stock." Those sections are incorporated herein by reference.

Item 10.    Recent Sales of Unregistered Securities.

        The information required by this item is contained under the sections of the information statement entitled "Description of Indebtedness" and "Description of AbbVie's Capital Stock—Sale of Unregistered Securities." Those sections are incorporated herein by reference.

Item 11.    Description of Registrant's Securities to be Registered.

        The information required by this item is contained under the sections of the information statement entitled "Dividend Policy," "The Separation and Distribution," and "Description of AbbVie's Capital Stock." Those sections are incorporated herein by reference.

Item 12.    Indemnification of Directors and Officers.

        The information required by this item is contained under the section of the information statement entitled "Description of AbbVie's Capital Stock—Limitations on Liability, Indemnification of Officers and Directors, and Insurance." That section is incorporated herein by reference.

Item 13.    Financial Statements and Supplementary Data.

        The information required by this item is contained under the section of the information statement entitled "Index to Financial Statements" and the financial statements referenced therein. That section is incorporated herein by reference.

Item 14.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

        None.

Item 15.    Financial Statements and Exhibits.

(a)    Financial Statements

        The information required by this item is contained under the section of the information statement entitled "Index to Financial Statements" and the financial statements referenced therein. That section is incorporated herein by reference.


(b)    Exhibits

        See below.

        The following documents are filed as exhibits hereto:

Exhibit
Number
  Exhibit Description
  2.1   Form of Separation and Distribution Agreement by and between Abbott Laboratories and AbbVie Inc.**

 

3.1

 

Form of Amended and Restated Certificate of Incorporation of AbbVie Inc.†

 

3.2

 

Form of Amended and Restated By-Laws of AbbVie Inc.†

 

10.1

 

Form of U.S. Transition Services Agreement by and between Abbott Laboratories and AbbVie Inc.†

 

10.2

 

Form of Ex-U.S. Transition Services Agreement by and between Abbott Laboratories and AbbVie Inc.†

 

10.3

 

Form of Tax Sharing Agreement by and between Abbott Laboratories and AbbVie Inc.†

 

10.4

 

Form of Special Products Master Agreement by and between Abbott Laboratories and AbbVie Inc.†

 

10.5

 

Form of Employee Matters Agreement by and between Abbott Laboratories and AbbVie Inc.**

 

10.6

 

Form of International Commercial Operations Agreement by and between Abbott Laboratories and AbbVie Inc.†

 

10.7

 

Form of Luxembourg International Commercial Operations Agreement by and between Abbott Investments Luxembourg S.à.r.l. and AbbVie Investments S.à.r.l.†

 

10.8

 

Form of Information Technology Agreement by and between Abbott Laboratories and AbbVie Inc.†

 

10.9

 

Intentionally Omitted

 

10.10

 

Form of Transitional Trademark License Agreement by and between Abbott Laboratories and AbbVie Inc.†

 

10.11

 

Form of Finished Goods Supply Agreements by and between Abbott Laboratories and AbbVie Inc.†

 

10.12

 

Form of Contract Manufacturing Agreements by and between Abbott Laboratories and AbbVie Inc.†

 

10.13

 

Form of Agreement Regarding Change in Control*

 

10.14

 

Form of AbbVie 2013 Incentive Stock Program†

 

10.15

 

Form of AbbVie 2013 Management Incentive Plan†

 

10.16

 

Form of AbbVie 2013 Performance Incentive Plan†

 

10.17

 

Form of AbbVie Deferred Compensation Plan†

 

10.18

 

Form of AbbVie Non-Employee Directors' Fee Plan†

 

10.19

 

Form of AbbVie Supplemental Pension Plan†

 

10.20

 

Form of AbbVie Supplemental Savings Plan†

Exhibit
Number
  Exhibit Description
  99.1   Information Statement of AbbVie Inc., preliminary and subject to completion, dated October 23, 2012.**

*
To be filed by amendment.

**
Filed herewith.

Previously filed.


SIGNATURES

        Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

    ABBVIE INC.

 

 

By:

 

/s/ RICHARD A. GONZALEZ

        Name:   Richard A. Gonzalez
        Title:   Chairman of the Board and Chief Executive Officer

Date: October 23, 2012




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ABBVIE INC.
INFORMATION REQUIRED IN REGISTRATION STATEMENT CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10
SIGNATURES

Exhibit 2.1

 

FORM OF

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

BY AND BETWEEN

 

ABBOTT LABORATORIES

 

AND

 

ABBVIE INC.

 

DATED AS OF [·], 2012

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

1

 

 

 

Section 1.01.

Definitions

1

 

 

 

ARTICLE II THE SEPARATION

19

 

 

 

Section 2.01.

Formation of AbbVie

19

Section 2.02.

The Separation

20

Section 2.03.

Deferred AbbVie Local Closings

22

Section 2.04.

Delayed Transfers of AbbVie Assets and AbbVie Liabilities

23

Section 2.05.

Delayed Transfers of Abbott Assets and Abbott Liabilities

24

Section 2.06.

Ancillary Agreements

25

Section 2.07.

Disclaimer of Representations and Warranties

25

Section 2.08.

Credit Facilities; Financing Arrangements; AbbVie Cash Distribution

27

Section 2.09.

Termination of Agreements

27

Section 2.10.

Settlement of Accounts between Abbott and AbbVie

28

Section 2.11.

Novation of Liabilities; Release of Guarantees

29

Section 2.12.

Mixed Contracts; Mixed Accounts

31

Section 2.13.

Further Assurances

33

Section 2.14.

Transition Committee

34

Section 2.15.

Accounting for Deferred Taxes

34

 

 

 

ARTICLE III THE DISTRIBUTION

34

 

 

 

Section 3.01.

Actions Prior to the Distribution

34

Section 3.02.

The Distribution

35

Section 3.03.

Fractional Shares; Unclaimed Shares

36

Section 3.04.

Sole Discretion of Abbott

37

Section 3.05.

Conditions to the Distribution

37

 

 

 

ARTICLE IV MUTUAL RELEASES; INDEMNIFICATION

39

 

 

 

Section 4.01.

Releases

39

Section 4.02.

Indemnification by AbbVie

41

Section 4.03.

Indemnification by Abbott

41

Section 4.04.

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

42

Section 4.05.

Procedures for Indemnification of Third Party Claims

42

Section 4.06.

Additional Matters

44

Section 4.07.

Right of Contribution

46

Section 4.08.

Covenant Not to Sue

46

Section 4.09.

Remedies Cumulative

47

Section 4.10.

Survival of Indemnities

47

 

i



 

TABLE OF CONTENTS
(continued)

 

 

Page

 

 

ARTICLE V CERTAIN OTHER MATTERS

47

 

 

 

Section 5.01.

No Right to Use Regulatory Information

47

Section 5.02.

Directors and Officers Insurance; Fiduciary Liability Insurance

47

Section 5.03.

Insurance Matters

48

Section 5.04.

Late Payments

50

Section 5.05.

Treatment of Payments for Tax Purposes

50

Section 5.06.

Inducement

50

Section 5.07.

Post-Effective Time Conduct

50

Section 5.08.

Licensed Patents

51

Section 5.09.

Non-Compete

54

 

 

 

ARTICLE VI EXCHANGE OF INFORMATION; CONFIDENTIALITY

55

 

 

 

Section 6.01.

Agreement for Exchange of Information; Archives

55

Section 6.02.

Ownership of Information

56

Section 6.03.

Stored Records

56

Section 6.04.

Limitations of Liability

56

Section 6.05.

Other Agreements Providing for Exchange of Information

57

Section 6.06.

Production of Witnesses; Records; Cooperation

57

Section 6.07.

Privileged Matters

57

Section 6.08.

Confidentiality

59

Section 6.09.

Protective Arrangements

60

 

 

 

ARTICLE VII DISPUTE RESOLUTION

61

 

 

 

Section 7.01.

Disputes

61

 

 

 

ARTICLE VIII TERMINATION

62

 

 

 

Section 8.01.

Termination

62

 

 

 

ARTICLE IX MISCELLANEOUS

62

 

 

 

Section 9.01.

Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures

62

Section 9.02.

Governing Law

63

Section 9.03.

Assignability

63

Section 9.04.

Third Party Beneficiaries

63

Section 9.05.

Notices

64

Section 9.06.

Severability

64

Section 9.07.

Force Majeure

65

Section 9.08.

No Set Off

65

Section 9.09.

Responsibility for Expenses

65

 

ii



 

TABLE OF CONTENTS
(continued)

 

 

Page

 

 

Section 9.10.

Headings

66

Section 9.11.

Survival of Covenants

66

Section 9.12.

Subsidiaries

66

Section 9.13.

Waivers of Default

66

Section 9.14.

Amendments

66

Section 9.15.

Interpretation

66

Section 9.16.

Public Announcements

67

Section 9.17.

Specific Performance

67

Section 9.18.

Mutual Drafting

67

 

iii



 

SCHEDULES AND EXHIBITS

 

Schedules

 

 

 

 

 

Schedule 1.01(a)

Specified Abbott Information

 

Schedule 1.01(b)

AbbVie Real Property

 

Schedule 1.01(c)

AbbVie Other Assets

 

Schedule 1.01(d)

Excluded Research and Development Projects

 

Schedule 1.01(e)

Excluded Discontinued Facilities Locations

 

Schedule 1.01(f)

Excluded Discontinued Products

 

Schedule 1.01(g)

AbbVie Former Businesses

 

Schedule 1.01(h)

AbbVie Patents and Trademarks

 

Schedule 1.01(i)

AbbVie Liabilities

 

Schedule 1.01(j)

AbbVie Proceedings

 

Schedule 1.01(k)

Depakote Proceedings

 

Schedule 1.01(l)

Exclusive AbbVie Products

 

Schedule 1.01(m)

Excluded Mixed Accounts

 

Schedule 1.01(n)

Excluded Mixed Contracts

 

Schedule 1.01(o)

Special Products

 

Schedule 1.01(p)

Transferred Entities

 

Schedule 2.03(a)

Specified Jurisdictions

 

Schedule 2.03(c)

Arrangements for Certain Deferred AbbVie Local Businesses

 

Schedule 2.09(b)(ii)

Intercompany Agreements

 

Schedule 2.09(b)(iv)

Non-Wholly Owned Subsidiaries

 

Schedule 2.10(c)

AbbVie Accounts

 

Schedule 4.01(a)

Releases

 

Schedule 4.05(b)

Specified Proceedings

 

Schedule 5.01

Right to Use Regulatory Information

 

Schedule 5.08(a)(i)

Abbott Non-Exclusive Licensed Patents

 

Schedule 5.08(a)(ii)

Abbott Exclusive Licensed Patents

 

Schedule 5.08(a)(iii)

Abbott Co-Exclusive Licensed Patents

 

Schedule 5.08(a)(iv)

AbbVie Non-Exclusive Licensed Patents

 

Schedule 5.08(a)(v)

AbbVie Co-Exclusive Licensed Patents

 

Schedule 6.03

Stored Records

 

Schedule 6.06

Production of Witnesses; Records; Cooperation

 

Schedule 7.01

Alternative Dispute Resolution Procedures

 

Schedule 9.16

Public Announcements

 

 

 

 

Exhibits

 

 

 

 

 

Exhibit A

Form of Amended and Restated Bylaws of AbbVie

 

Exhibit B

Form of Amended and Restated Certificate of Incorporation of AbbVie

 

 

iv



 

THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of [·], 2012, is by and between ABBOTT LABORATORIES, an Illinois corporation (“Abbott”), and ABBVIE INC., a Delaware corporation (“AbbVie”).

 

R E C I T A L S:

 

WHEREAS, the board of directors of Abbott has determined that it is appropriate and advisable to: (i) separate the AbbVie Business (as defined herein) from the Abbott Business (as defined herein) (the “Separation”); and (ii) following the Separation, make a distribution, on a pro rata basis, to holders of the outstanding common shares, without par value, of Abbott (the “Abbott Common Shares”) on the Record Date (as defined herein) of all of the outstanding shares of common stock, par value $0.01 per share, of AbbVie (the “AbbVie Common Stock”), owned by Abbott (the “Distribution”); and

 

WHEREAS, each of Abbott and AbbVie has determined that it is necessary and advisable to set forth the principal transactions required to effect the Separation and the Distribution and to describe other agreements that shall govern certain other matters prior to and following the Separation and the Distribution.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement (as defined herein), the Parties (as defined herein) hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.                          Definitions.  Reference is made to Section 9.15 regarding the interpretation of certain words and phrases used in this Agreement.  In addition, for the purpose of this Agreement, the following terms shall have the meanings set forth below.

 

Abbott” has the meaning set forth in the Preamble.

 

Abbott Accounts” has the meaning set forth in Section 2.10(b).

 

Abbott Assets” means all Assets of the Parties or their respective Subsidiaries as of the Effective Time, other than the AbbVie Assets.

 

Abbott Business” means all businesses, operations and activities (whether or not such businesses, operations or activities are or have been terminated, divested or discontinued) conducted at any time prior to the Effective Time by either Party or its Subsidiaries, other than the AbbVie Business.

 

Abbott Common Shares” has the meaning set forth in the Recitals.

 

Abbott Credit Facility” means the Five Year Credit Agreement, dated as of July 18, 2012, by and among Abbott Laboratories, an Illinois corporation, and JPMorgan Chase Bank, N.A., as administrative agent.

 



 

Abbott Indemnitees” means (i) Abbott and each Abbott Subsidiary; (ii) each of the respective past, present and future directors, officers, employees or agents of the entities described in (i) above, in each case in their respective capacities as such; and (iii) each of the heirs, executors, administrators, successors and assigns of any of the foregoing.

 

Abbott Indemnity Obligations” means all Liabilities to the extent such Liabilities relate to, arise out of or result from, directly or indirectly, any of the following items:

 

(i)                                     any Abbott Liability;

 

(ii)                                  any failure of Abbott or an Abbott Subsidiary or any other Person to pay, perform or otherwise promptly discharge any Abbott Liabilities in accordance with their terms, whether prior to, at or after the Effective Time;

 

(iii)                               the conduct of any business, operation or activity by Abbott or an Abbott Subsidiary from and after the Effective Time (other than the conduct of business, operations, or activities for the benefit of AbbVie pursuant to an Ancillary Agreement);

 

(iv)                              any breach by Abbott or an Abbott Subsidiary of this Agreement or any Ancillary Agreement; and

 

(v)                                 any untrue statement or alleged untrue statement of a material fact made explicitly in Abbott’s name in the Registration Statement or the Information Statement as the same may be amended prior to the Effective Time, or any omission or alleged omission to state a material fact necessary to make any such statement made explicitly in Abbott’s name not misleading; it being agreed that the information relating to Abbott and the Abbott Subsidiaries set forth in the Registration Statement and the Information Statement that is described on Schedule 1.01(a) shall be the only information that is made explicitly in Abbott’s name for purposes of this clause (v), and all other information contained in the Registration Statement and the Information Statement shall be deemed to be information supplied by AbbVie.

 

Abbott Liabilities” means the Liabilities relating to, arising out of or resulting from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time) of Abbott and the Abbott Subsidiaries and, prior to the Effective Time, AbbVie and the AbbVie Subsidiaries, in each case that are not AbbVie Liabilities or AbbVie Indemnity Obligations.

 

Abbott Subsidiary” means any Business Entity that is a Subsidiary of Abbott prior to, at or after the Effective Time (other than AbbVie or an AbbVie Subsidiary).

 

AbbVie” has the meaning set forth in the Preamble.

 

AbbVie Accounts” has the meaning set forth in Section 2.10(b).

 

AbbVie Assets” means only the following Assets:

 

2



 

(i)                                     all of the issued and outstanding capital stock or other equity interests of the Transferred Entities that are owned by either Party or any of its Subsidiaries as of the Effective Time or, in the case of a Transferred Entity formed after the Effective Time, as of the date on which such Transferred Entity is transferred from Abbott or an Abbott Subsidiary to AbbVie or an AbbVie Subsidiary;

 

(ii)                                  the Assets of either Party or any of its Subsidiaries as of the Effective Time included or reflected on the AbbVie Pro Forma Balance Sheet or any notes or subledgers thereto, it being understood that (x) the AbbVie Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of AbbVie Assets pursuant to this subclause (ii); and (y) the amounts set forth on the AbbVie Pro Forma Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of AbbVie Assets pursuant to this subclause (ii);

 

(iii)                               all other Assets of either Party or any of its Subsidiaries as of the Effective Time that are of a nature or type that would have resulted in such Assets being included as Assets on a pro forma combined balance sheet of AbbVie or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Assets included on the AbbVie Pro Forma Balance Sheet or any notes or subledgers thereto), it being understood that (x) the AbbVie Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of AbbVie Assets pursuant to this subclause (iii); and (y) the amounts set forth on the AbbVie Pro Forma Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of AbbVie Assets pursuant to this subclause (iii);

 

(iv)                              the Assets expressly allocated to AbbVie or an AbbVie Subsidiary pursuant to this Agreement or any Ancillary Agreement, including (a) the rights to the Special Products that are allocated to AbbVie or an AbbVie Subsidiary pursuant to the Special Products Master Agreement; and (b) any rights that are allocated to AbbVie or an AbbVie Subsidiary pursuant to any International Transition Period Agreement;

 

(v)                                 all rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time to the Exclusive AbbVie Products, including all rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time to all clinical study data, reports and analyses, product and marketing registrations and applications (which shall include all U.S. Food and Drug Administration and other regulatory drug approvals and licenses related to, and all related applications and other information submitted for the purposes of or prepared in connection with obtaining an approval for, an Exclusive AbbVie Product) to the extent related to the Exclusive AbbVie Products; provided that the AbbVie Assets shall not include any rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time related to Sevoflurane or Isoflurane within the Veterinary Field-of-Use;

 

3



 

(vi)                              all rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time under the AbbVie Contracts;

 

(vii)                           all rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time to any AbbVie Intellectual Property;

 

(viii)                        all other rights, interests and claims of either Party or any of their Subsidiaries as of the Effective Time with respect to Information that is exclusively related to the AbbVie Assets, the AbbVie Liabilities, the AbbVie Business or the Transferred Entities and, subject to the provisions of the applicable Ancillary Agreements, a non-exclusive right to all Information that is related to the AbbVie Assets, the AbbVie Liabilities, the AbbVie Business or the Transferred Entities (but is not exclusively related to such matters);

 

(ix)                              all rights, interests and claims of either Party or any of its Subsidiaries as of the Effective Time to the manufacturing, distribution, warehouse or research and development facilities and other real property listed on Schedule 1.01(b);

 

(x)                                 all Assets relating to, arising out of or resulting from the AbbVie Proceedings; and

 

(xi)                              the Assets of either Party or any of its Subsidiaries as of the Effective Time on Schedule 1.01(c).

 

The Parties agree that all Delayed AbbVie Assets shall be AbbVie Assets for purposes of this Agreement and the Ancillary Agreements regardless of when such Delayed AbbVie Assets are assumed by AbbVie or an AbbVie Subsidiary or designee.  The Parties also agree that, if any Transferred Entity holds an Abbott Asset, such Abbott Asset shall nonetheless be treated as an Abbott Asset and the Parties shall, and shall cause their respective Subsidiaries to, use their commercially reasonable efforts for such Abbott Asset to be transferred to Abbott or an Abbott Subsidiary.

 

AbbVie Business” means:

 

(i)                                     Exclusive AbbVie Products. The business, operations and activities conducted at any time prior to the Effective Time by either Party or any of its Subsidiaries relating to, arising out of or resulting from the Exclusive AbbVie Products (including the discovery, research, development, importation, exportation, manufacture, marketing, distribution, promotion and sale of such Exclusive AbbVie Products worldwide); provided that the AbbVie Business shall not include the business, operations and activities relating to, arising out of or resulting from Sevoflurane or Isoflurane within the Veterinary Field-of-Use;

 

(ii)                                  Special Products.  The business, operations and activities with respect to the Special Products, solely to the extent that the rights to such business, operations and activities are allocated to AbbVie or an AbbVie Subsidiary under the Special Products Master Agreement;

 

4



 

(iii)                               Research and Development. The business, operations and activities conducted at any time prior to the Effective Time by or on behalf of either Party or any of its Subsidiaries of: (a) discovery and research and development projects with respect to pharmaceutical products (except vaccines) for purposes of obtaining a first regulatory approval of a biological or a chemical pharmaceutical product; (b) pharmaceutical discovery and research and development (other than with respect to vaccines) conducted by or on behalf of GPRD; or (c) pharmaceutical manufacturing and supply chain discovery and research and development (other than with respect to vaccines) conducted by or on behalf of GPO, except, in each of cases (a), (b) and (c), for the discovery and research and development projects set forth on Schedule 1.01(d);

 

(iv)                              Contract Manufacturing.  Subject to Section 5.01, the business, operations and activities conducted at any time prior to the Effective Time by either Party or any of its Subsidiaries of manufacturing for any Third Party products at the manufacturing plants listed on Schedule 1.01(b); and

 

(v)                                 AbbVie Former Businesses, AbbVie Discontinued Products, AbbVie Discontinued Projects and AbbVie Discontinued Facilities.  The business, operations and activities conducted at any time prior to the Effective Time by either Party or any of its Subsidiaries to the extent such business, operations and activities relate to, arise out of or result from an AbbVie Former Business, an AbbVie Discontinued Product, an AbbVie Discontinued Project or an AbbVie Discontinued Facility.

 

AbbVie Cash Distribution” has the meaning set forth in Section 2.08(c).

 

AbbVie Common Stock” has the meaning set forth in the Recitals.

 

AbbVie Contracts” means the following contracts, agreements, arrangements, commitments or understandings to which either Party or any of its Subsidiaries is a party or by which it or its Assets is bound, whether or not in writing, in each case, prior to the Effective Time, except to the extent otherwise described in Schedule 1.01(c) and Schedule 1.01(i):

 

(i)                                     any contract, agreement, arrangement, commitment or understanding referenced in the Contract Database as a “PCo Contract” and that portion of any contract, agreement, arrangement, commitment or understanding referenced in the Contract Database as “mixed” that relates to the AbbVie Business;

 

(ii)                                  any contract, agreement, arrangement, commitment or understanding that was entered into after the time the Contract Database was compiled that is of a nature or type that would have resulted in such contract, agreement, arrangement, commitment or understanding being referenced in the Contract Database as a “PCo Contract” and that portion of any contract, agreement, arrangement, commitment or understanding that was entered into after the time the Contract Database was compiled that relates to the AbbVie Business and is of a nature or type that would have resulted in such contract, agreement, arrangement, commitment or understanding being referenced in the Contract Database as “mixed”;

 

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(iii)                               (A) any contract, agreement, arrangement, commitment or understanding of a Deferred AbbVie Local Business that is not included in the Contract Database and that is of a nature or type that would have resulted in such contract, agreement, arrangement, commitment or understanding being referenced in the Contract Database as a “PCo Contract”  had it been included in the Contract Database; and (B) that portion of any contract, agreement, arrangement, commitment or understanding of a Deferred AbbVie Local Business that is not included in the Contract Database that relates to the AbbVie Business and is of a nature or type that would have resulted in such contract, agreement, arrangement, commitment or understanding being referenced in the Contract Database as “mixed” had it been included in the Contract Database;

 

(iv)                              any contract, agreement, arrangement, commitment or understanding or portion thereof that is an AbbVie Liability;

 

(v)                                 any contract, agreement, arrangement, commitment or understanding or portion thereof to the extent related to the AbbVie Business;

 

(vi)                              any employment, change of control, retention, consulting, indemnification, termination, severance or other similar agreements with any employee or consultant of AbbVie or an AbbVie Subsidiary; and

 

(vii)                           any other contract, agreement, arrangement, commitment or understanding or portion thereof that is otherwise expressly contemplated pursuant to this Agreement or any Ancillary Agreement to be assigned to AbbVie or an AbbVie Subsidiary;

 

provided, however, that (A) such contracts, agreements, arrangements, commitments or understandings or portions thereof that are contemplated to be retained by Abbott or an Abbott Subsidiary pursuant to any provision of this Agreement or any Ancillary Agreement shall not be AbbVie Contracts; (B) such contracts, agreements, arrangements, commitments or understandings or portions thereof that relate to debt instruments, insurance arrangements, or employee benefit plans or programs shall be AbbVie Contracts only to the extent expressly provided for under the terms of this Agreement or any Ancillary Agreement; and (C) the rights and obligations of Abbott and the Abbott Subsidiaries under this Agreement and the Ancillary Agreements shall not be AbbVie Contracts.

 

AbbVie Credit Facility” means the Five Year Credit Agreement, dated as of July 18, 2012, by and among Abbott Laboratories, an Illinois corporation, AbbVie Inc., a Delaware corporation, and Bank of America, N.A., as administrative agent.

 

AbbVie Discontinued Facilities” means the closed or divested manufacturing, distribution, warehouse or research and development facilities or other real property operated prior to the Effective Time by either Party or any of its Subsidiaries that were solely or primarily related to the conduct of the pharmaceuticals business, operations and activities other than those set forth on Schedule 1.01(e).

 

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AbbVie Discontinued Products” means any pharmaceutical product that was, at any time prior to the Effective Time, owned, licensed by or to, sub-licensed by or to, manufactured, marketed, co-branded, co-promoted or otherwise promoted, distributed or sold anywhere in the world by or on behalf of either Party or any of its Subsidiaries, but in each case that, as of immediately prior to the Effective Time, neither Party nor any of their respective Subsidiaries is marketing, co-promoting, promoting, distributing or selling anywhere in the world (except pursuant to an agreement or arrangement with a Third Party who previously acquired any such promotion, distribution, commercialization or sale rights with respect to such product in specified jurisdictions throughout the world), other than those set forth on Schedule 1.01(f).

 

AbbVie Discontinued Projects” means any discovery or research and development projects that were conducted at any time prior to the Effective Time by or on behalf of GPRD or GPO and that were terminated, divested or discontinued prior to the Effective Time by either Party or any of its Subsidiaries, other than those set forth on Schedule 1.01(d).

 

AbbVie Former Businesses” means (i) the Former Businesses set forth on Schedule 1.01(g); and (ii) any Former Business to the extent associated with, or to the extent engaged in the discovery, research, development, importation, exportation, manufacture, marketing, distribution, promotion or sale of an AbbVie Discontinued Product.

 

AbbVie Indemnitees” means (i) AbbVie and each AbbVie Subsidiary; (ii) each of the respective past, present and future directors, officers, employees or agents of the entities described in (i) above, in each case in their respective capacities as such; and (iii) each of the heirs, executors, administrators, successors and assigns of any of the foregoing.

 

AbbVie Indemnity Obligations” means all Liabilities to the extent such Liabilities relate to, arise out of or result from, directly or indirectly, any of the following items:

 

(i)                                     any AbbVie Liability;

 

(ii)                                  any failure of AbbVie or an AbbVie Subsidiary or any other Person to pay, perform or otherwise promptly discharge any AbbVie Liabilities in accordance with their terms, whether prior to, at or after the Effective Time;

 

(iii)                               the conduct of any business, operation or activity by AbbVie or an AbbVie Subsidiary from and after the Effective Time;

 

(iv)                              any breach by AbbVie or an AbbVie Subsidiary of this Agreement or any Ancillary Agreement; and

 

(v)                                 any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the Registration Statement or the Information Statement (other than the matters described in clause (v) of the definition of Abbott Indemnity Obligations).

 

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AbbVie Intellectual Property” means (i) the Patents and Trademarks set forth on Schedule 1.01(h); (ii) the Other Intellectual Property owned by, licensed by or to, or sublicensed by or to either Party or any of its Subsidiaries that, as of the Effective Time, is exclusively used or held for use in the AbbVie Business; (iii) the rights to any Patents, Trademarks, and Other Intellectual Property that are allocated to AbbVie or an AbbVie Subsidiary pursuant to the Special Products Master Agreement or any other Ancillary Agreement; and (iv) the non-exclusive right to all Other Intellectual Property that: (x) as of the Effective Time, is used or held for use in the AbbVie Business (but is not used or held for use exclusively in the AbbVie Business); and (y) has not been allocated to AbbVie or an AbbVie Subsidiary as contemplated by clause (iii) of this definition.

 

AbbVie Liabilities” means all of the following Liabilities of either Party or any of its Subsidiaries:

 

(i)                                     all Liabilities included or reflected on the AbbVie Pro Forma Balance Sheet or any notes or subledgers thereto, subject to any discharge of such Liabilities after the date of such AbbVie Pro Forma Balance Sheet, it being understood that (x) the AbbVie Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of AbbVie Liabilities pursuant to this subclause (i); and (y) the amounts set forth on the AbbVie Pro Forma Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of AbbVie Liabilities pursuant to this subclause (i);

 

(ii)                                  all other Liabilities that are incurred or accrued by either Party or any of its Subsidiaries from the date of the AbbVie Pro Forma Balance Sheet to the Effective Time that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a pro forma combined balance sheet of AbbVie or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes or subledgers to be prepared on a basis consistent with the determination of the Liabilities included on the AbbVie Pro Forma Balance Sheet or any notes or subledgers thereto), it being understood that (x) the AbbVie Pro Forma Balance Sheet and the notes and subledgers thereto shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of AbbVie Liabilities pursuant to this subclause (ii); and (y) the amounts set forth on the AbbVie Pro Forma Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of AbbVie Liabilities pursuant to this subclause (ii);

 

(iii)                               all Liabilities relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent that such Liabilities relate to, arise out of or result from the AbbVie Business or an AbbVie Asset, except for Liabilities to the extent relating to, arising out of or resulting from the manufacture of

 

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products (other than the Special Products or the Exclusive AbbVie Products) for Abbott or any Abbott Subsidiary prior to the Effective Time at any of the manufacturing plants listed on Schedule 1.01(b);

 

(iv)                              all Liabilities for claims made by Third Parties, or the directors, officers, employees, agents of Abbott, AbbVie or their respective Subsidiaries or Affiliates against either Party or any of its Subsidiaries to the extent relating to, arising out of or resulting from the AbbVie Business or the AbbVie Assets;

 

(v)                                 all Liabilities expressly allocated to AbbVie or an AbbVie Subsidiary pursuant to this Agreement or any Ancillary Agreement, and the obligations of AbbVie or an AbbVie Subsidiary under such agreements, including (a) any Liability related to the Special Products that is allocated to AbbVie or an AbbVie Subsidiary pursuant to the Special Products Master Agreement; and (b) any Liability arising during the International Transition Period that is allocated to AbbVie or an AbbVie Subsidiary pursuant to any International Transition Period Agreement;

 

(vi)                              all Liabilities relating to, arising out of or resulting from the AbbVie Credit Facility or the Financing Arrangements;

 

(vii)                           all Liabilities relating to, arising out of or resulting from the AbbVie Proceedings;

 

(viii)                        all Liabilities relating to, arising out of, or resulting from the Plea Agreement or the CIA;

 

(ix)                              all Liabilities assumed by AbbVie or an AbbVie Subsidiary from a Third Party after the Effective Time (whether or not such Liabilities initially arose or accrued before the Effective Time); and

 

(x)                                 all other Liabilities set forth on Schedule 1.01(i).

 

The Parties agree that all Delayed AbbVie Liabilities shall be AbbVie Liabilities for purposes of this Agreement and the Ancillary Agreements regardless of when such Delayed AbbVie Liabilities are assumed by AbbVie or an AbbVie Subsidiary or designee.  The Parties also agree that, if any Transferred Entity holds an Abbott Liability, such Abbott Liability shall nonetheless be treated as an Abbott Liability and the Parties shall, and shall cause their respective Subsidiaries to, use their commercially reasonable efforts for such Abbott Liability to be assumed by Abbott or an Abbott Subsidiary.

 

AbbVie Pro Forma Balance Sheet” means the pro forma combined balance sheet of AbbVie and the AbbVie Subsidiaries, including any notes or subledgers thereto, as of [•], 2012, as presented in the Information Statement mailed to the Record Holders prior to the Effective Time.

 

AbbVie Proceedings” means all Proceedings that solely or primarily relate to, arise out of or result from the AbbVie Business, the AbbVie Assets or the AbbVie Liabilities, the

 

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Depakote Proceedings, and, to the extent described on Schedule 1.01(j), the other Proceedings set forth on Schedule 1.01(j).

 

AbbVie Subsidiary” means any Business Entity that is a Subsidiary of AbbVie prior to, at or after the Effective Time, including the Transferred Entities, which shall be deemed to have been AbbVie Subsidiaries at all times prior to, at and after the Effective Time.

 

Actual Deferred Taxes” means the deferred Taxes and prepaid Taxes as defined under GAAP as of the Distribution Date.

 

Adjustment” has the meaning set forth in Section 2.15.

 

ADR” has the meaning set forth in Section 7.01(a).

 

Affiliate” (including, with a correlative meaning, “affiliated”) means, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.  For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise.  The Parties agree that, prior to, at or after the Effective Time and for purposes of this Agreement and the Ancillary Agreements, neither AbbVie nor any of the AbbVie Subsidiaries, including the Transferred Entities, shall be deemed to be an Affiliate of Abbott or any of the Abbott Subsidiaries, and neither Abbott nor any of the Abbott Subsidiaries shall be deemed to be an Affiliate of AbbVie or any of the AbbVie Subsidiaries.

 

Agent” means Computershare Trust Company, N.A., or such other trust company or bank duly appointed to act as distribution agent, transfer agent and registrar for the AbbVie Common Stock in connection with the Distribution.

 

Agreement” means this Separation and Distribution Agreement and each of the Schedules and Exhibits hereto.

 

Ancillary Agreements” means all agreements entered into by the Parties or their Subsidiaries (but as to which no Third Party is a party) in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

Assets” means, with respect to any Person, the assets, rights, interests, claims and properties of all kinds, real and personal, tangible, intangible and contingent, wherever located (including in the possession of suppliers, distributors, other Third Parties or elsewhere), of such Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement and any rights or benefits pursuant to any Proceeding.

 

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Business Entity” means any corporation, general or limited partnership, trust, joint venture, unincorporated organization, limited liability entity or other entity.

 

Bylaws” means the Amended and Restated Bylaws of AbbVie, substantially in the form of Exhibit A.

 

Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of AbbVie, substantially in the form of Exhibit B.

 

Change of Control” means, with respect to a Party, the occurrence after the Effective Time of any of the following: (i) the sale, conveyance or disposition, in one or a series of related transactions, of all or substantially all of the assets of such Party to a Third Party that is not an Affiliate of such Party prior to such transaction or the first of such related transactions; (ii) the consolidation, merger or other business combination of a Party with or into any other Business Entity, immediately following which the then-current stockholders of the Party, as such, fail to own in the aggregate at least Majority Voting Power of the surviving party in such consolidation, merger or business combination or of its ultimate publicly-traded parent Business Entity; (iii) a transaction or series of transactions in which any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) acquires Majority Voting Power of such Party (other than (a) a reincorporation or similar corporate transaction in which each of such Party’s stockholders owns, immediately thereafter, interests in the new parent company in substantially the same percentage as such stockholder owned in such Party immediately prior to such transaction, or (b) in connection with a transaction described in clause (ii), which shall be governed by such clause (ii)); or (iv) a majority of the board of directors of such Party ceasing to consist of individuals who have become directors as a result of being nominated or elected by a majority of such Party’s directors.

 

CIA” has the meaning set forth in Section 2.02(e).

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Commission” means the United States Securities and Exchange Commission.

 

Competitive Business” has the meaning set forth in Section 5.09.

 

Consents” means any consents, waivers or approvals from, or notification requirements to, any Third Parties.

 

Contract Database” means the electronic database of contracts prepared by the Parties and their respective Subsidiaries in connection with the transactions contemplated by this Agreement and the Ancillary Agreements on the eKnow platform, as of immediately prior to the Effective Time.

 

Conveyance and Assumption Instruments” means, collectively, such deeds, bills of sale, asset transfer agreements, business transfer agreements, demerger plans, deeds or agreements, endorsements, assignments, assumptions (including Liability assumption agreements), leases, subleases, affidavits and other instruments of sale, conveyance, contribution, distribution, lease, transfer and assignment between Abbott or, where applicable, an Abbott

 

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Subsidiary or designee of Abbott, on the one hand, and AbbVie or, where applicable, an AbbVie Subsidiary, on the other hand, as may be necessary or advisable under the Laws of the relevant jurisdictions to effect the Separation.

 

Custodial Party” has the meaning set forth in Section 6.03(a).

 

Deferred AbbVie Local Business” has the meaning set forth in Section 2.03(a).

 

Delayed Abbott Asset” has the meaning set forth in Section 2.05(a).

 

Delayed Abbott Liability” has the meaning set forth in Section 2.05(a).

 

Delayed AbbVie Asset” has the meaning set forth in Section 2.04(a).

 

Delayed AbbVie Liability” has the meaning set forth in Section 2.04(a).

 

Depakote Proceedings” means the Proceedings that are set forth on Schedule 1.01(k).

 

Direct Claim” has the meaning set forth in Section 4.06(b).

 

Dispute” has the meaning set forth in Section 7.01(a).

 

Distribution” has the meaning set forth in the Recitals.

 

Distribution Date” means the date of the consummation of the Distribution, which shall be determined by the board of directors of Abbott in its sole discretion.

 

Effective Time” means 12:01 a.m. Eastern Time on the Distribution Date.

 

Employee Inventor Remuneration Entitlement” has the meaning set forth in Section 5.08(g).

 

Employee Matters Agreement” means the Employee Matters Agreement to be entered into by and between Abbott and AbbVie in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

Employment Tax” means withholding, payroll, social security, workers compensation, unemployment, disability and any similar tax imposed by any Tax Authority, and any interest, penalties, additions to tax or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined or unitary group of taxpayers.

 

Estimated Deferred Taxes” means the deferred Taxes and prepaid Taxes as defined under GAAP, as reflected on the pro forma balance sheet accounts of AbbVie and the AbbVie Subsidiaries, as of the Distribution Date as determined by the Parties within sixty (60) days after the Distribution Date.

 

Exchange Act” means the United States Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

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Ex-U.S. Transition Services Agreement” means the Ex-U.S. Transition Services Agreement to be entered into by and between Abbott and AbbVie or their respective Subsidiaries in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

Exclusive AbbVie Products” means the pharmaceutical products set forth on Schedule 1.01(l).

 

Field-of-Use” means, with respect to each Licensed Patent Schedule, the specific field-of-use set forth in such Licensed Patent Schedule.

 

Final Adjustment” has the meaning set forth in Section 2.15.

 

Financing Arrangements” means the financing arrangements and agreements (other than the AbbVie Credit Facility) to be entered into prior to the Effective Time pursuant to which AbbVie shall be entitled to borrow a principal amount of at least [•] dollars (US$[•]).

 

Force Majeure” means, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not reasonably have been foreseen by such Party (or such Person), or, if it could reasonably have been foreseen, was unavoidable, and includes acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities, other national or international calamities or acts of terrorism or failures of energy sources or distribution or transportation facilities.  Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.

 

Former Business” means any Business Entity, division, business unit or business, including any business within the meaning of Rule 11-01(d) of Regulation S-X promulgated under the Exchange Act (in each case, including any Assets and Liabilities comprising the same) that is not owned, leased or operated by a Party or any of its Subsidiaries as of immediately prior to the Effective Time because it has been sold, conveyed, assigned, transferred or otherwise disposed of or divested to one or more Persons (other than a Party or any of its Subsidiaries) or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated, in each case, prior to the Effective Time.

 

GAAP” means U.S. generally accepted accounting principles as applied by Abbott as of the Distribution Date.

 

Governmental Authority” means any supranational, international, national, federal, state, provincial or local court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority, including the NYSE and any similar self-regulatory body under applicable securities Laws.

 

GPO” means the Global Pharmaceutical Operations Division of either Party or any of its Subsidiaries, which shall be understood to exclude the Established Pharmaceuticals Division of either Party or any of its Subsidiaries.

 

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GPRD” means the Global Pharmaceutical Research and Development Division of either Party or any of its Subsidiaries, which shall be understood to exclude the Established Pharmaceuticals Division of either Party or any of its Subsidiaries.

 

Indemnifying Party” has the meaning set forth in Section 4.04(a).

 

Indemnitee” means an AbbVie Indemnitee or an Abbott Indemnitee, as appropriate.

 

Indemnity Payment” has the meaning set forth in Section 4.04(a).

 

Information” means information in written, oral, electronic or other tangible or intangible forms, including studies, reports, records, books, contracts, instruments, surveys, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, marketing plans, customer names, Privileged Information, and other technical, financial, employee or business information or data; provided that “Information” does not include Patents, Trademarks, or Other Intellectual Property.

 

Information Statement” means the information statement forming a part of the Registration Statement as the same may be amended or supplemented from time to time prior to the Effective Time.

 

Insurance Proceeds” means, with respect to any insured party, those monies, net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof, which are:  (i) received by an insured from an insurance carrier or its estate; (ii) paid by an insurance carrier or its estate on behalf of the insured; or (iii) received (including by way of setoff) from any Third Party in the nature of insurance, contribution or indemnification in respect of any Liability.

 

International Commercial Operations Agreements” means, collectively, (i) the International Commercial Operations Agreement to be entered into prior to the Effective Time by and between Abbott and AbbVie and (ii) the Luxembourg International Commercial Operations Agreement to be entered into prior to the Effective Time by and between Abbott Investments Luxembourg S.a.r.l. and AbbVie Investments Luxembourg S.a.r.l.

 

International Transition Period” means the period from the Effective Time to the later of: (i) the termination of the Ex-U.S. Transition Services Agreement; (ii) the Final Closing Date (as defined in the International Commercial Operations Agreement to be entered into between Abbott and AbbVie); and (iii) the Final Closing Date (as defined in the Luxembourg International Commercial Operations Agreement to be entered into between Abbott Investments Luxembourg S.a.r.l. and AbbVie Investments Luxembourg S.a.r.l.).

 

International Transition Period Agreements” means, collectively, such International Commercial Operations Agreements, Ex-U.S. Transition Services Agreement, silent partnership agreements, undisclosed agency agreements and other agreements to be entered into by and between Abbott, or where applicable, an Abbott Subsidiary, on the one hand, and AbbVie or, where applicable, an AbbVie Subsidiary, on the other hand, pursuant to which: (i) Abbott or an Abbott Subsidiary manages and operates all or a portion of a Deferred AbbVie

 

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Local Business, a Delayed AbbVie Asset or a Delayed AbbVie Liability during the International Transition Period in order for the benefits and burdens relating to such Deferred AbbVie Local Business, Delayed AbbVie Asset or Delayed AbbVie Liability to inure from and after the Effective Time to AbbVie or an AbbVie Subsidiary; and (ii) Abbott and the Abbott Subsidiaries on the one hand, and AbbVie and the AbbVie Subsidiaries on the other hand, provide certain transitional services to the other during the International Transition Period.

 

Law” means any supranational, international, national, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any Tax treaty), license, permit, authorization, approval, Consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case enacted, promulgated, issued or entered by a Governmental Authority.

 

Liabilities” means all debts, liabilities, obligations, responsibilities, response actions, losses, damages (whether compensatory, punitive, consequential, incidental, treble or other), fines, penalties and sanctions, absolute or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, joint, several or individual, asserted or unasserted, accrued or unaccrued, known or unknown, whenever arising, including those arising under or in connection with any Law or other pronouncements of Governmental Authorities having the effect of Law, Proceeding, threatened Proceeding, order or consent decree of any Governmental Authority or any award of any arbitration tribunal, and those arising under any contract, guarantee, commitment or undertaking, whether sought to be imposed by a Governmental Authority, private party, or Party, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and including any costs, expenses, interest, attorneys’ fees, disbursements and expenses of counsel, expert and consulting fees and costs related thereto or to the investigation or defense thereof.

 

Licensed Patents” means, with respect to each Licensed Patent Schedule, any of the following that Licensor or any of its Affiliates, at any time during the term of this Agreement, owns, whether directly or indirectly, and has the right to grant a license as provided for under Section 5.08 without violating the terms of any agreement or other arrangement with any Third Party, in each case to the extent represented on such Licensed Patent Schedule: (i) all national, regional and international patents and patent applications, including provisional patent applications and patent applications filed from an invention disclosure; (ii) all patent applications filed either from the patents, patent applications or provisional applications in clause (i) or from an application claiming priority from any of these, including divisionals, continuations, converted provisionals, and continued prosecution applications; (iii) claims of continuation-in-part applications to the extent directed to subject matter disclosed in the applications or patents enumerated in clause (i) or (ii); (iv) all patents that have issued or in the future issue from the foregoing patent applications specified in clauses (i) and (ii), including utility models, petty patents and design patents and certificates of invention; (v) all patent term extensions or restorations by existing or future extension or restoration mechanisms, including any supplementary protection certificates and the like, as well as any revalidations, reissues, re-examinations, oppositions and the like of the foregoing patents or patent applications specified in clauses (i), (ii) and (iii); and (vi) all similar rights, including so-called pipeline protection, or any importation, revalidation, confirmation or introduction patent or registration patent or patents of addition to each of such foregoing patent applications and patents.

 

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Licensed Patent Schedulehas the meaning set forth in Section 5.08(a).

 

Licensee” means, with respect to each Licensed Patent Schedule, the licensee of the licenses described in such Licensed Patent Schedule.

 

Licensor” means, with respect to each Licensed Patent Schedule, the licensor of the licenses described in such Licensed Patent Schedule.

 

Maintained Business” has the meaning set forth in Section 5.08(c).

 

Majority Voting Power” means a majority of the ordinary voting power in the election of directors of all the outstanding voting securities of the resulting Business Entity or of the Party, respectively.

 

Manufacture and Supply Agreements” means the Manufacture and Supply Agreements to be entered into by and between Abbott and AbbVie or their respective Subsidiaries in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

Mixed Account” means an account receivable or account payable relating to both the Abbott Business and the AbbVie Business, other than those accounts receivable or accounts payable that are described on Schedule 1.01(m).

 

Mixed Contract” means any agreement to which either Party or any of its respective Subsidiaries and one or more Third Parties are a party as of immediately prior to the Effective Time that inures to the benefit or burden of both the Abbott Business and the AbbVie Business, other than those agreements that are described on Schedule 1.01(n).

 

Non-Compete Period” has the meaning set forth in Section 5.09.

 

Non-Custodial Party” has the meaning set forth in Section 6.03(a).

 

Notice” means any written notice, request demand or other communication specifically referencing this Agreement and given in accordance with Section 9.05.

 

NYSE” means the New York Stock Exchange.

 

Other Intellectual Property” means all rights, title or interest in, under or in respect of: (i) published and unpublished works of authorship and copyrights therein, and all applications, registrations, and renewals in connection therewith; (ii) software, data, databases and compilations of information; (iii) common law Trademarks; and (iv) inventions (whether patentable or not), formulas, processes, developments, technology, trade secrets and know-how.

 

Parties” means the parties to this Agreement.

 

Patents” means: (i) all national, regional and international patents and patent applications, including provisional patent applications; (ii) all patent applications filed either from the patents, patent applications or provisional applications in clause (i) or from an

 

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application claiming priority from any of these, including divisionals, continuations, continuations-in-part, converted provisionals, and continued prosecution applications; (iii) all patents that have issued or in the future issue from the foregoing patent applications specified in clauses (i) and (ii), including utility models, petty patents, design patents and certificates of invention; (iv) all patent term extensions or restorations by existing or future extension or restoration mechanisms, including any supplementary protection certificates and the like, as well as any revalidations, reissues, re-examinations, oppositions and the like of the foregoing patents or patent applications specified in clauses (i), (ii) and (iii); and (v) all similar rights, including so-called pipeline protection, or any importation, revalidation, confirmation or introduction patent or registration patent or patents of addition to each of such foregoing patent applications and patents.

 

Person” means any (i) individual; (ii) Business Entity; or (iii) Governmental Authority.

 

Plea Agreement” has the meaning set forth in Section 2.02(e).

 

Prime Rate” means the rate that Bloomberg displays as Prime Rate by Country United States at http://www.bloomberg.com/markets/rates-bonds/key-rates/ or on a Bloomberg terminal at PRIMBB Index.

 

Privileged Information” means any information, in written, oral, electronic or other tangible or intangible forms, including any communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), as to which a Party or its respective Subsidiaries would be entitled to assert or have asserted a privilege, including the attorney-client and attorney work product privileges.

 

Proceeding” means any past, present or future suit, countersuit, action, alternative dispute resolution process, claim, counterclaim, demand, hearing, inquiry, investigation or proceeding before a judicial, quasi-judicial, tribunal, arbitration or mediation body, or by or before a Governmental Authority, in each case involving Abbott, an Abbott Subsidiary, an Abbott Indemnitee (but only if in a capacity entitling such Person to the rights of an Abbott Indemnitee), AbbVie, an AbbVie Subsidiary, or an AbbVie Indemnitee (but only if in a capacity entitling such Person to the rights of an AbbVie Indemnitee), in each case other than any such matter solely between Abbott or any Abbott Subsidiaries, on the one hand, and AbbVie or any AbbVie Subsidiaries, on the other hand, arising with respect to a controversy, dispute or claim under this Agreement or any Ancillary Agreement.

 

Record Date” means the close of business on the date to be determined by the Abbott board of directors as the record date for determining holders of Abbott Common Shares entitled to participate in the Distribution.

 

Record Holders” means the holders of record of Abbott Common Shares as of the close of business on the Record Date.

 

Records Facility” has the meaning set forth in Section 6.03(a).

 

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Registration Statement” means the registration statement on Form 10 filed under the Exchange Act on June 4, 2012, pursuant to which the AbbVie Common Stock to be distributed in the Distribution has been registered, together with all amendments and supplements thereto.

 

Remuneration Assessment” has the meaning set forth in Section 5.08(g)(ii).

 

Representatives” has the meaning set forth in Section 6.08(a).

 

Security Interest” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

 

Separation” has the meaning set forth in the Recitals.

 

Sold Business” has the meaning set forth in Section 5.08(c).

 

Special Products” means the pharmaceutical products set forth on Schedule 1.01(o).

 

Special Products Master Agreement” means the Special Products Master Agreement to be entered into by and between Abbott and AbbVie in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

Stored Records” has the meaning set forth in Section 6.03(a).

 

Subsidiary” or “subsidiary” shall mean, with respect to any Person, any Business Entity of which such Person: (i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Business Entity; (B) the total combined equity interests; or (C) the capital or profit interests, in the case of a partnership; or (ii) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

 

Tangible Information” means Information that is contained in written, electronic or other tangible forms.

 

Tax” means:  (i) any income, net income, gross income, gross receipts, profits, capital stock, franchise, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, customs duties, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any Tax Authority, and any interest, penalties, additions to tax or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined or unitary group of taxpayers; and (ii) any Employment Tax.

 

Tax Authority” means, with respect to any Tax, the Governmental Authority or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such Governmental Authority or subdivision.

 

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Tax Sharing Agreement” means the Tax Sharing Agreement to be entered into by and between Abbott and AbbVie or their respective Subsidiaries in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

Territory” means, with respect to a Licensed Patent, except as otherwise set forth on the applicable Licensed Patent Schedule, the entire world.

 

Third Party” means any Person other than the Parties or any of their respective Subsidiaries.

 

Third Party Claim” has the meaning set forth in Section 4.05(a).

 

Trademarks” means all trademarks, trade names, brand names, domain names, service marks, trade dress, logos and all other source indicators, including all goodwill associated therewith and all applications, registrations and renewals in connection therewith.

 

Transferred Entities” means the entities set forth on Schedule 1.01(p).

 

Transition Committee” has the meaning set forth in Section 2.14.

 

U.S.” or “United States” means the United States of America, including each of the fifty (50) states thereof, the District of Columbia, Puerto Rico, and all other territories and possessions of the United States of America.

 

U.S. Transition Services Agreement” means the U.S. Transition Services Agreement to be entered into by and between Abbott and AbbVie in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement.

 

Veterinary Field-of-Use” means any use of a product for ethical or over-the-counter veterinary applications and shall specifically exclude any use of such product for human applications.

 

ARTICLE II

 

THE SEPARATION

 

Section 2.01.                          Formation of AbbVie.

 

(a)                                 Incorporation of AbbVie.  The Parties acknowledge that:  (i) Abbott caused AbbVie to be incorporated in Delaware on April 10, 2012; and (ii) immediately prior to the Effective Time, Abbott shall be the sole stockholder of AbbVie.

 

(b)                                 Adoption of AbbVie’s Charter and Bylaws.  On or prior to the Distribution Date, Abbott and AbbVie shall take all necessary actions so that, as of the Effective Time, the Certificate of Incorporation and the Bylaws shall be the certificate of incorporation and bylaws of AbbVie.

 

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(c)                                  AbbVie’s Directors and Officers.  On or prior to the Distribution Date, Abbott and AbbVie shall take all necessary actions so that as of the Effective Time:  (i) the directors and executive officers of AbbVie shall be those set forth in the Information Statement mailed to the Record Holders prior to the Effective Time, unless otherwise agreed by the Parties; and (ii) AbbVie shall have such other officers as AbbVie shall appoint.

 

(d)                                 NYSE Listing.  AbbVie shall prepare and file, and shall use commercially reasonable efforts to have approved prior to the Effective Time, an application for the listing of the AbbVie Common Stock to be distributed in the Distribution and the shares of AbbVie Common Stock to be reserved for issuance pursuant to any director or employee benefit plan or arrangement on the NYSE (and such other stock exchanges as may be necessary or desirable), subject to official notice of distribution.

 

Section 2.02.                          The Separation.  The Parties acknowledge that the Separation is intended to result in AbbVie owning the AbbVie Assets and assuming the AbbVie Liabilities as set forth below in this Article II and in the applicable Ancillary Agreements.  Subject to Sections 2.03, 2.04 and 2.05, on or prior to the Distribution Date, in accordance with the plan of Separation for AbbVie:

 

(a)                                 Transfer and Assignment of AbbVie Assets.  Abbott shall, and shall cause the applicable Abbott Subsidiaries to, contribute, assign, transfer, convey and deliver to AbbVie or the applicable AbbVie Subsidiaries, and AbbVie or such AbbVie Subsidiaries shall accept from Abbott and the applicable Abbott Subsidiaries, all of Abbott’s and such Abbott Subsidiaries’ respective direct or indirect rights, title and interest in and to all of the AbbVie Assets, including all of the outstanding shares of capital stock or other ownership interests in the Transferred Entities, which shall result in AbbVie owning directly or indirectly all of the Transferred Entities (it being understood that if an AbbVie Asset shall be held by a Transferred Entity or a Subsidiary of a Transferred Entity, such AbbVie Asset may be assigned, transferred, conveyed and delivered for all purposes hereunder as a result of the transfer of all or substantially all of the equity interests in such Transferred Entity to AbbVie or an AbbVie Subsidiary).

 

(b)                                 Acceptance and Assumption of AbbVie Liabilities.  AbbVie and the applicable AbbVie Subsidiaries shall accept, assume and agree faithfully to perform, discharge and fulfill all of the AbbVie Liabilities in accordance with their respective terms, without regard for the manner in which or circumstances under which such AbbVie Liabilities arose or against whom they are asserted. AbbVie and the applicable AbbVie Subsidiaries shall be responsible for all AbbVie Liabilities, regardless of when or where such AbbVie Liabilities arose or arise, or whether the facts on which they are based occurred prior to, at or after the Effective Time, regardless of where or against whom such AbbVie Liabilities are asserted or determined (including any such AbbVie Liabilities arising out of claims made by Abbott’s or AbbVie’s respective Subsidiaries or Affiliates or by Representatives of Abbott or AbbVie or their respective Subsidiaries or Affiliates against either Party or any of its Subsidiaries or Affiliates) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by either Party or any of its Subsidiaries or Affiliates or any of their respective Representatives.

 

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(c)                                  Transfer and Assignment of Abbott Assets.  Abbott and AbbVie shall cause AbbVie and any Business Entity that shall be an AbbVie Subsidiary after the Effective Time to contribute, assign, transfer, convey and deliver to Abbott or a Business Entity designated by Abbott that shall be an Abbott Subsidiary after the Effective Time all of AbbVie’s and such AbbVie Subsidiary’s respective direct or indirect rights, title and interest in and to all Abbott Assets held by AbbVie or an AbbVie Subsidiary.

 

(d)                                 Acceptance and Assumption of Abbott Liabilities.  Abbott and the applicable Abbott Subsidiaries shall accept, assume and agree faithfully to perform, discharge and fulfill, all of the Abbott Liabilities held by AbbVie or any Business Entity that shall be an AbbVie Subsidiary after the Effective Time, and Abbott and the applicable Abbott Subsidiaries shall be responsible for all of such Abbott Liabilities in accordance with their respective terms, without regard for the manner in which or circumstances under which such Abbott Liabilities arose or against whom they are asserted.  Abbott and the applicable Abbott Subsidiaries shall be responsible for all Abbott Liabilities, regardless of when or where such Abbott Liabilities arose or arise, or whether the facts on which they are based occurred prior to, at or after the Effective Time, regardless of where or against whom such Abbott Liabilities are asserted or determined (including any such Abbott Liabilities arising out of claims made by Abbott’s or AbbVie’s respective Subsidiaries or Affiliates or by Representatives of Abbott or AbbVie or their respective Subsidiaries or Affiliates) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by either Party or any of its Subsidiaries or Affiliates or any of their respective Representatives.

 

(e)                                  Assumption of Plea Agreement and CIA.  Abbott and AbbVie agree and acknowledge that: (i) the conditions of probation and all other provisions of the Plea Agreement, dated May 7, 2012, between Abbott and the United States (the “Plea Agreement”) are fully binding on AbbVie; (ii) AbbVie will be deemed to carry a prior conviction for purposes of Title 21, United States Code, Section 333(a)(2), and waives any right it may have to argue that it does not have such prior conviction; (iii) AbbVie’s certification, resolution, and reporting requirements pursuant to the Plea Agreement will cover Abbott’s conduct for any time period for which Abbott did not submit a certificate, resolution or report as a result of the fact that the Effective Time will have occurred prior to the due date of such certificate, resolution or report; (iv) AbbVie shall be bound by all of the terms and conditions of, and shall assume all the obligations of Abbott under, the Corporate Integrity Agreement between the Office of the Inspector General of the U.S. Department of Health and Human Services and Abbott, dated May 7, 2012 (the “CIA”); and (v) the transactions contemplated by this Agreement shall automatically, and without any further action by Abbott, AbbVie, the Office of Inspector General of the United States Department of Health and Human Services, the United States or any instrumentality thereof, effect a novation of the CIA as of the Effective Time, with AbbVie becoming the party to and replacing Abbott in all respects under the CIA, whereupon AbbVie shall be fully responsible for complying with the CIA, and Abbott shall have no obligation or liability under the CIA whatsoever.

 

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Section 2.03.                          Deferred AbbVie Local Closings.

 

(a)                                 Deferral of Certain Transfers of AbbVie Assets and AbbVie Liabilities.  The Parties acknowledge that due to the requirements of applicable Laws, the need to obtain certain Consents from local Governmental Authorities or for other business reasons, the Parties have agreed to defer until after the Effective Time the transfer of legal title to all or a portion of the AbbVie Assets and the assumption of all or a portion of the AbbVie Liabilities from Abbott or the applicable Abbott Subsidiary to AbbVie or the applicable AbbVie Subsidiary or designee in each of the jurisdictions listed on Schedule 2.03(a) (each, a “Deferred AbbVie Local Business”).

 

(b)                                 Treatment of Deferred AbbVie Local Businesses.  In each case as set forth in more detail in the International Transition Period Agreements, from and after the Effective Time, and until such time as the applicable Deferred AbbVie Local Business has been transferred to AbbVie or the applicable AbbVie Subsidiary or designee for the relevant jurisdiction, (i) the Deferred AbbVie Local Business shall be held by Abbott or, where applicable, by an Abbott Subsidiary or designee, on behalf of and for the benefit of AbbVie or, where applicable, an AbbVie Subsidiary or designee; (ii) Abbott or, where applicable, an Abbott Subsidiary or designee shall pay, perform and discharge fully the Liabilities of the Deferred AbbVie Local Business; and (iii) insofar as reasonably practicable and to the extent permitted by applicable Law, Abbott or, where applicable, an Abbott Subsidiary or designee shall manage and operate the applicable Deferred AbbVie Local Business in accordance with the relevant International Transition Period Agreement and take such other actions as may reasonably be requested by AbbVie so that all the benefits and Liabilities relating to such Deferred AbbVie Local Business, including use, risk of loss, potential for gain and control over such Deferred AbbVie Local Business, shall inure from and after the Effective Time to AbbVie or an AbbVie Subsidiary or designee.  As and to the extent described in the International Transition Period Agreements, (i) Abbott or, where applicable, an Abbott Subsidiary or designee shall remit to AbbVie or an AbbVie Subsidiary or designee the amounts due in connection with the performance of each Deferred AbbVie Local Business; and (ii) AbbVie or, where applicable, an AbbVie Subsidiary or designee shall reimburse Abbott or an Abbott Subsidiary or designee for all payments made in connection with the performance of each Deferred AbbVie Local Business and the discharge of any Liabilities in connection therewith.

 

(c)                                  Alternative Arrangements for Transfers of Certain Deferred AbbVie Local Businesses.  Except as otherwise set forth on Schedule 2.03(c), if, in Abbott’s reasonable judgment, a transfer of a Deferred AbbVie Local Business is not reasonably likely to occur prior to the second (2nd) anniversary of the Distribution Date, then, unless the Parties otherwise mutually agree, Abbott may, by delivery of Notice to AbbVie, request that the Parties expeditiously identify alternative means or structures by which any remaining Deferred AbbVie Local Business (or the benefits or Liabilities thereof) may be transferred (or otherwise made available) to AbbVie or an AbbVie Subsidiary or designee and, if the Parties fail to agree on any such alternative means or structures within thirty (30) calendar days following such written request of Abbott, then Abbott or the applicable Abbott Subsidiary or designee shall proceed to wind down any such Deferred AbbVie Local Business in accordance with the provisions of the applicable International Transition Period Agreement.

 

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Section 2.04.                          Delayed Transfers of AbbVie Assets and AbbVie Liabilities.

 

(a)                                 Delayed AbbVie Transfers.  Subject to Section 2.03 and the terms of the International Transition Period Agreements, if and to the extent that the valid, complete and perfected transfer or assignment to AbbVie or an AbbVie Subsidiary or designee of any AbbVie Assets or the assumption by AbbVie or an AbbVie Subsidiary or designee of any AbbVie Liabilities would be a violation of applicable Law or requires a Consent that has not been obtained as of or prior to the Effective Time or the scheduled date of the local closing of a Deferred AbbVie Local Business under the terms of the applicable International Transition Period Agreement, as applicable, then, unless the Parties shall otherwise mutually agree, the transfer or assignment to AbbVie or the applicable AbbVie Subsidiary or designee of such AbbVie Assets or the assumption by AbbVie or the applicable AbbVie Subsidiary or designee of such AbbVie Liabilities shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Consent is obtained or, in the case of a Deferred AbbVie Local Business, until the consummation of the local closing of such Deferred AbbVie Local Business (any such AbbVie Asset, a “Delayed AbbVie Asset” and any such AbbVie Liability, a “Delayed AbbVie Liability”).  Notwithstanding the foregoing, any Delayed AbbVie Assets or Delayed AbbVie Liabilities shall continue to constitute AbbVie Assets or AbbVie Liabilities, respectively, for all other purposes of this Agreement.

 

(b)                                 Treatment of Delayed AbbVie Assets and Delayed AbbVie Liabilities.  Subject to Section 2.03 and the terms of the International Transition Period Agreements, from and after the Effective Time, Abbott shall, and shall cause the Abbott Subsidiaries to, hold on behalf of and for the benefit of AbbVie or, where applicable, an AbbVie Subsidiary or designee, all Delayed AbbVie Assets, and to pay, perform and discharge fully all Delayed AbbVie Liabilities.  AbbVie or the applicable AbbVie Subsidiary or designee shall promptly reimburse Abbott or the applicable Abbott Subsidiaries for all commercially reasonable payments made in connection with the performance and discharge of such Delayed AbbVie Liabilities.  Each such Delayed AbbVie Asset or Delayed AbbVie Liability shall be held by Abbott or, where applicable, an Abbott Subsidiary or designee for, insofar as reasonably practicable, the benefit and burden of AbbVie or the applicable AbbVie Subsidiary or designee.  Abbott and AbbVie shall, and shall cause their respective Subsidiaries to, take such other actions as may be reasonably requested by the other Party or any of its Subsidiaries in accordance with the provisions of this Agreement so that all the benefits and burdens relating to such Delayed AbbVie Asset and Delayed AbbVie Liability, including expenses, risk of loss, potential for gain and control of such Delayed AbbVie Asset and Delayed AbbVie Liability, shall inure from and after the Effective Time to AbbVie or the applicable AbbVie Subsidiaries or designees, without recourse of any kind to Abbott or any Abbott Subsidiary or designee. Any transfer taxes, registration fees or recordation fees required to be paid to a Governmental Authority in connection with the transfer of a Delayed AbbVie Asset or a Delayed AbbVie Liability shall be shared equally between the Parties.

 

(c)                                  Transfer of Delayed AbbVie Assets and Delayed AbbVie Liabilities.  When and as the Parties agree, subject to Section 2.03 and the terms of the International Transition Period Agreements and provided that, as of such agreed-upon time (i) the necessary Consents for each Delayed AbbVie Asset or Delayed AbbVie Liability shall have been obtained; and (ii) the

 

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assumption by AbbVie or an AbbVie Subsidiary or designee of each Delayed AbbVie Asset or Delayed AbbVie Liability is not at such time a violation of applicable Law (or, in the case of a Deferred AbbVie Local Business, if later, upon the consummation of the local closing of such Deferred AbbVie Local Business):

 

(A)                               Abbott shall, and shall cause each Abbott Subsidiary to, contribute, assign, transfer, convey and deliver to AbbVie or such AbbVie Subsidiaries or designees as AbbVie may determine, and AbbVie shall, and shall cause such AbbVie Subsidiaries or designees to, accept from Abbott and the Abbott Subsidiaries all of Abbott’s and the Abbott Subsidiaries’ respective rights, title and interest in and to such Delayed AbbVie Assets; and

 

(B)                               AbbVie shall, and shall cause such AbbVie Subsidiaries or designees as AbbVie may determine to, accept, assume and agree faithfully to perform, discharge and fulfill such Delayed AbbVie Liabilities, in accordance with their terms.

 

Section 2.05.                          Delayed Transfers of Abbott Assets and Abbott Liabilities.

 

(a)                                 Delayed Abbott Transfers.  If and to the extent that the valid, complete and perfected transfer or assignment to Abbott or an Abbott Subsidiary or designee of any Abbott Assets or the assumption by Abbott or an Abbott Subsidiary or designee of any Abbott Liabilities would be a violation of applicable Law or require a Consent that has not been obtained as of or prior to the Effective Time or the scheduled date of the local closing of a Deferred AbbVie Local Business under the terms of the applicable International Transition Period Agreement, as applicable, then, unless the Parties shall otherwise mutually agree, the transfer or assignment to Abbott or the applicable Abbott Subsidiary or designee of such Abbott Assets or the assumption by Abbott or the applicable Abbott Subsidiary or designee of such Abbott Liabilities shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Consent is obtained (any such Abbott Asset, a “Delayed Abbott Asset” and any such Abbott Liability, a “Delayed Abbott Liability”).  Notwithstanding the foregoing, any Delayed Abbott Assets or Delayed Abbott Liabilities shall continue to constitute Abbott Assets or Abbott Liabilities, respectively, for all other purposes of this Agreement.

 

(b)                                 Treatment of Delayed Abbott Assets and Delayed Abbott Liabilities.  Except as otherwise provided herein or in any Ancillary Agreement, from and after the Effective Time, AbbVie shall, and shall cause the AbbVie Subsidiaries or designees to, hold on behalf of and for the benefit of Abbott or, where applicable, an Abbott Subsidiary or designee, all Delayed Abbott Assets, and to pay, perform and discharge fully all Delayed Abbott Liabilities.  Abbott or the applicable Abbott Subsidiary or designee shall promptly reimburse AbbVie or the applicable AbbVie Subsidiaries or designees for all commercially reasonable payments made in connection with the performance and discharge of such Delayed Abbott Liabilities.  Each such Delayed Abbott Asset or Delayed Abbott Liability shall be held by AbbVie or, where applicable, an AbbVie Subsidiary or designee for, insofar as reasonably practicable, the benefit and burden of Abbott or the applicable Abbott Subsidiary or designee.  Abbott and AbbVie shall, and shall cause their respective Subsidiaries to, take such other actions as may be reasonably requested by the other Party or any of its Subsidiaries in accordance with the provisions of this Agreement so that all the benefits and burdens relating to such Delayed Abbott Asset and Delayed Abbott

 

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Liability, including expenses, risk of loss, potential for gain and control of such Delayed Abbott Asset and Delayed Abbott Liability, shall inure from and after the Effective Time to Abbott or the applicable Abbott Subsidiaries or designees, without recourse of any kind to AbbVie or any AbbVie Subsidiary.  Any transfer taxes, registration fees or recordation fees required to be paid to a Governmental Authority in connection with the transfer of a Delayed Abbott Asset or a Delayed Abbott Liability shall be shared equally between the Parties.

 

(c)                                  Transfer of Delayed Abbott Assets and Delayed Abbott Liabilities.  When and as the Parties agree and provided that, as of such agreed-upon time (i) the necessary Consents for each Delayed Abbott Asset or Delayed Abbott Liability shall have been obtained; and (ii) the assumption by Abbott or an Abbott Subsidiary or designee of each Delayed Abbott Asset or Delayed Abbott Liability is not at such time a violation of applicable Law:

 

(A)                               AbbVie shall, and shall cause each AbbVie Subsidiary to, contribute, assign, transfer, convey and deliver to Abbott or such Abbott Subsidiaries or designees as Abbott may determine, and Abbott shall, and shall cause such Abbott Subsidiaries or designees to, accept from AbbVie and the AbbVie Subsidiaries all of AbbVie’s and the AbbVie Subsidiaries’ respective rights, title and interest in and to such Delayed Abbott Assets; and

 

(B)                               Abbott shall, and shall cause such Abbott Subsidiaries or designees as Abbott may determine to, accept, assume and agree faithfully to perform, discharge and fulfill such Delayed Abbott Liabilities, in accordance with their terms.

 

Section 2.06.                          Ancillary Agreements.  Prior to the Effective Time, the Parties shall execute and deliver, or where applicable shall cause their respective Subsidiaries to execute and deliver, each Ancillary Agreement to which they are intended to be a party; provided, however, that if this Article II calls for an Ancillary Agreement to be executed and delivered on or as of a later time, it shall be executed and delivered on or as of such later time.

 

Section 2.07.                          Disclaimer of Representations and Warranties.

 

(a)                                 EACH OF ABBOTT (ON BEHALF OF ITSELF AND EACH OF THE ABBOTT SUBSIDIARIES) AND ABBVIE (ON BEHALF OF ITSELF AND EACH OF THE ABBVIE SUBSIDIARIES) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS: (X) REPRESENTING OR WARRANTING TO ANY OTHER PARTY HERETO OR THERETO IN ANY WAY AS TO (I) THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED, LICENSED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY; (II) ANY APPROVALS OR NOTIFICATIONS REQUIRED IN CONNECTION HEREWITH OR THEREWITH; (III) THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY; (IV) THE ABSENCE OR PRESENCE OF ANY DEFENSES TO OR RIGHT OF SETOFF AGAINST OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY PROCEEDING OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF EITHER PARTY; OR (V) THE LEGAL SUFFICIENCY OF ANY CONVEYANCE AND ASSUMPTION

 

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INSTRUMENTS OR ANY OTHER ANCILLARY AGREEMENT TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING OF SUCH CONVEYANCE AND ASSUMPTION INSTRUMENTS OR SUCH OTHER ANCILLARY AGREEMENTS; OR (Y) IS MAKING ANY OTHER REPRESENTATIONS OR GRANTING ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE.  EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY PATENTS, TRADEMARKS, OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.  EXCEPT AS MAY EXPRESSLY BE SET FORTH IN THIS AGREEMENT OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED OR LICENSED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES OR LICENSEES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (A) ANY CONVEYANCE AND ASSUMPTION INSTRUMENT OR ANY OTHER ANCILLARY AGREEMENT MAY PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ALL SECURITY INTERESTS; AND (B) ANY NECESSARY CONSENTS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS, AGREEMENTS, SECURITY INTERESTS OR JUDGMENTS ARE NOT COMPLIED WITH.

 

(b)                                 Each of Abbott (on behalf of itself and each of the Abbott Subsidiaries) and AbbVie (on behalf of itself and each of the AbbVie Subsidiaries) further understands and agrees that if the disclaimer of express or implied representations and warranties contained in Section 2.07(a) is held unenforceable or is unavailable for any reason under the Laws of any jurisdiction outside the United States or if, under the Laws of a jurisdiction outside the United States, both Abbott or any of the Abbott Subsidiaries, on the one hand, and AbbVie or any of the AbbVie Subsidiaries, on the other hand, are jointly or severally liable for any AbbVie Liability or any Abbott Liability, respectively, then, the Parties intend that, notwithstanding any provision to the contrary under the Laws of such foreign jurisdictions, the provisions of this Agreement and the Ancillary Agreements (including the disclaimer of all representations and warranties, allocation of Liabilities among the Parties and their respective Subsidiaries, releases, indemnification and contribution of Liabilities) shall prevail for any and all purposes among the Parties and their respective Subsidiaries.

 

(c)                                  AbbVie hereby waives compliance by itself and each and every AbbVie Subsidiary with the requirements and provisions of any “bulk-sale” or “bulk transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the AbbVie Assets to AbbVie or an AbbVie Subsidiary.

 

(d)                                 Abbott hereby waives compliance by itself and each and every Abbott Subsidiary with the requirements and provisions of any “bulk-sale” or “bulk transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any and all of the Abbott Assets to Abbott or an Abbott Subsidiary.

 

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Section 2.08.                          Credit Facilities; Financing Arrangements; AbbVie Cash Distribution.

 

(a)                                 Credit Facilities.  Prior to the Effective Time, Abbott shall enter into the Abbott Credit Facility, and Abbott and AbbVie shall enter into the AbbVie Credit Facility.  Abbott and AbbVie agree to take all necessary actions to assure the full release and discharge of Abbott and each of the Abbott Subsidiaries from all obligations (including any guarantees) under the AbbVie Credit Facility as of no later than the Effective Time.

 

(b)                                 Financing Arrangements.  Prior to the Effective Time, the Financing Arrangements shall have been consummated.  Abbott and AbbVie agree to take all necessary actions to assure the full release and discharge of Abbott and each of the Abbott Subsidiaries from all obligations thereunder as of no later than the Effective Time.

 

(c)                                  AbbVie Cash Distribution. Prior to the Effective Time, AbbVie shall make one or more cash distributions to Abbott in an aggregate amount equal to Thirteen Billion, Two Hundred Million Dollars ($13,200,000,000) (the “AbbVie Cash Distribution”).

 

(d)                                 Use of Proceeds from AbbVie Cash Distribution.  Upon receipt of the AbbVie Cash Distribution, Abbott shall deposit the proceeds in a segregated account and shall use the funds in that account to (i) repay a portion of Abbott’s maturing debt; and (ii) repurchase a portion of Abbott’s existing public debt in one (1) or more tender offers or otherwise, such repayments and repurchases to occur as promptly as practicable, including prior to the Distribution, but in no event later than one (1) year after the Effective Time.

 

(e)                                  Preparation of Materials.  Prior to the Effective Time, Abbott and AbbVie shall cooperate in the preparation of all materials as may be necessary or advisable to execute the Abbott Credit Facility, the AbbVie Credit Facility and the Financing Arrangements.

 

Section 2.09.                          Termination of Agreements.

 

(a)                                 Termination of Agreements Between Abbott and AbbVie.  Except as set forth in Section 2.09(b), the Parties agree that (i) all agreements, arrangements, commitments or understandings, whether or not in writing, entered into prior to the Effective Time between or among AbbVie or an AbbVie Subsidiary (other than a Transferred Entity that shall be transferred to AbbVie or an AbbVie Subsidiary after the Effective Time as part of a local closing of a Deferred AbbVie Local Business), on the one hand, and Abbott or an Abbott Subsidiary, on the other hand, shall be terminated effective as of immediately prior to the Effective Time; and (ii) all agreements, arrangements, commitments or understandings, whether or not in writing, entered into prior to a local closing of a Deferred AbbVie Local Business between or among a Transferred Entity that shall be transferred to AbbVie or an AbbVie Subsidiary after the Effective Time as part of a local closing of a Deferred AbbVie Local Business, on the one hand, and Abbott or an Abbott Subsidiary, on the other hand, shall be terminated effective as of immediately prior to such local closing; provided that the provisions of this Section 2.09(a) shall not terminate any rights or obligations (A) between Abbott and any of the Abbott Subsidiaries; or (B) between AbbVie and any of the AbbVie Subsidiaries.

 

(b)                                 Exceptions.  The provisions of Section 2.09(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the

 

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provisions thereof):  (i) this Agreement and the Ancillary Agreements; (ii) any agreements, arrangements, commitments or understandings listed or described on Schedule 2.09(b)(ii); (iii) any agreements, arrangements, commitments or understandings to which any Third Party is a party; and (iv) any agreements, arrangements, commitments or understandings, including any Mixed Contracts, to which any non-wholly owned Subsidiary of Abbott or AbbVie, as the case may be, is a party (except with respect to any Subsidiary listed on Schedule 2.09(b)(iv)) (it being understood that directors’ qualifying shares or similar interests shall be disregarded for purposes of determining whether a Subsidiary is wholly owned).  To the extent that the rights and obligations of Abbott or an Abbott Subsidiary under any agreements, arrangements, commitments or understandings not terminated under this Section 2.09 constitute AbbVie Assets or AbbVie Liabilities, they shall be assigned or assumed by AbbVie or the applicable AbbVie Subsidiary or designee pursuant to this Agreement.

 

Section 2.10.                          Settlement of Accounts between Abbott and AbbVie.

 

(a)                                 All intercompany receivables and payables (i) as to which there are no Third Parties; and (ii) that are between Abbott or an Abbott Subsidiary that is incorporated in the United States, on the one hand, and AbbVie or an AbbVie Subsidiary that is incorporated in the United States, on the other hand, that exist as of immediately prior to the Effective Time, shall, as of immediately prior to the Effective Time, be settled, capitalized, cancelled, assigned or assumed by AbbVie or one or more AbbVie Subsidiaries, in each case in the manner determined prior to the Effective Time by duly authorized representatives of Abbott and AbbVie.

 

(b)                                 All other intercompany receivables and payables (i) as to which there are no Third Parties; and (ii) that are between Abbott or an Abbott Subsidiary, on the one hand, and AbbVie or an AbbVie Subsidiary, on the other hand, that exist as of immediately prior to the Effective Time, shall, as of immediately after the Effective Time, continue as receivables or payables between Abbott or any Abbott Subsidiary, on the one hand, and AbbVie or any AbbVie Subsidiary, on the other hand, on the same terms and conditions as applied immediately prior to the Effective Time.

 

(c)                                  Abbott and AbbVie each agrees to take, or cause their respective Subsidiaries to take, prior to the Effective Time, all actions necessary to amend all AbbVie Contracts governing each bank and brokerage account owned by AbbVie or an AbbVie Subsidiary (collectively, the “AbbVie Accounts”), so that such AbbVie Accounts, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account owned by Abbott or an Abbott Subsidiary (collectively, the “Abbott Accounts”), including all Abbott Accounts listed or described on Schedule 2.10(c), are de-linked from the Abbott Accounts effective at or prior to the Effective Time.

 

(d)                                 With respect to any outstanding checks issued by Abbott, AbbVie, or any of their respective Subsidiaries prior to the Effective Time, such outstanding checks shall be honored following the Effective Time by the Person owning the account on which the check is drawn.

 

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(e)                                  As between Abbott and AbbVie (and their respective Subsidiaries) all payments and reimbursements received after the Effective Time by either Party (or any of its Subsidiaries) in respect or satisfaction of a business, Asset or Liability of the other Party (or any of its Subsidiaries), shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, as promptly as commercially practicable or as otherwise agreed between the Parties, upon receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause its applicable Subsidiary to pay over, to the other Party the amount of such payment or reimbursement.

 

Section 2.11.                          Novation of Liabilities; Release of Guarantees.

 

(a)                                 Novation of AbbVie Liabilities.

 

(i)                                     Each of Abbott and AbbVie, at the request of the other Party, shall use commercially reasonable efforts to obtain, or cause to be obtained, any Consent, substitution, approval or amendment required to novate or assign all AbbVie Liabilities and obtain in writing the unconditional release of Abbott and each Abbott Subsidiary that is a party to any such arrangements, so that, in any such case, AbbVie and the designated AbbVie Subsidiaries shall be solely responsible for such AbbVie Liabilities; provided, however, that, except as otherwise expressly provided in the Ancillary Agreements, neither Abbott nor AbbVie (nor any of their respective Subsidiaries) shall be obligated to contribute any capital, pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees to a Governmental Authority from whom such Consents, substitutions, approvals, amendments, terminations or releases are requested.

 

(ii)                                  If Abbott or AbbVie is unable to obtain, or to cause to be obtained, any such required Consent, substitution, approval, amendment, termination or release, Abbott or the applicable Abbott Subsidiary shall continue to be bound by such arrangement and, unless not permitted by the terms thereof or by Law, AbbVie shall, as agent or subcontractor for Abbott or such Abbott Subsidiary, as the case may be, pay, perform and discharge fully all the obligations or other Liabilities of Abbott or such Abbott Subsidiary, as the case may be, that constitute AbbVie Liabilities thereunder from and after the Effective Time.  Abbott shall cause each Abbott Subsidiary without further consideration, to pay and remit, or cause to be paid or remitted, to AbbVie, promptly all money, rights and other consideration received by it or an Abbott Subsidiary in respect of AbbVie’s performance as agent or subcontractor for Abbott or such Abbott Subsidiary, as the case may be, with respect to such Liabilities of Abbott or the applicable Abbott Subsidiary (unless any such consideration is an Abbott Asset).  Subject to Section 2.03, with respect to the local closing of a Deferred AbbVie Local Business, if and when any such Consent, substitution, approval, amendment, termination or release shall be obtained or the obligations under such arrangements shall otherwise become assignable or able to be novated, Abbott or the applicable Abbott Subsidiary shall promptly assign or novate, or cause to be assigned or novated, all its obligations and other Liabilities thereunder or any obligations of Abbott or an Abbott Subsidiary to AbbVie or its designated AbbVie Subsidiary without payment of further consideration and AbbVie or such AbbVie Subsidiary shall, without the payment of any further consideration, assume such obligations.

 

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(b)                                 Novation of Abbott Liabilities.

 

(i)                                     Each of Abbott and AbbVie, at the request of the other Party, shall use commercially reasonable efforts to obtain, or cause to be obtained, any Consent, substitution, approval or amendment required to novate or assign all Abbott Liabilities and obtain in writing the unconditional release of AbbVie and each AbbVie Subsidiary that is a party to any such arrangements, so that, in any such case, Abbott and the designated Abbott Subsidiaries shall be solely responsible for such Abbott Liabilities; provided, however, that, except as otherwise expressly provided in the Ancillary Agreements, neither Abbott nor AbbVie (nor any of their respective Subsidiaries) shall be obligated to contribute any capital, pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees to a Governmental Authority from whom such Consents, substitutions, approvals, amendments, terminations or releases are requested.

 

(ii)                                  If Abbott or AbbVie is unable to obtain, or to cause to be obtained, any such required Consent, substitution, approval, amendment, termination or release, AbbVie or the applicable AbbVie Subsidiary shall continue to be bound by such arrangement and, unless not permitted by the terms thereof or by Law, Abbott shall, as agent or subcontractor for AbbVie or such AbbVie Subsidiary, as the case may be, pay, perform and discharge fully all the obligations or other Liabilities of AbbVie or such AbbVie Subsidiary, as the case may be, that constitute Abbott Liabilities, as the case may be, thereunder from and after the Effective Time.  AbbVie shall cause each AbbVie Subsidiary without further consideration, to pay and remit, or cause to be paid or remitted, to Abbott, promptly all money, rights and other consideration received by it or an AbbVie Subsidiary in respect of Abbott’s performance as agent or subcontractor for AbbVie or such AbbVie Subsidiary, as the case may be, with respect to such Liabilities of AbbVie or the applicable AbbVie Subsidiary (unless any such consideration is an AbbVie Asset).  If and when any such Consent, substitution, approval, amendment, termination or release shall be obtained or the obligations under such arrangements shall otherwise become assignable or able to be novated, AbbVie or the applicable AbbVie Subsidiary shall promptly assign or novate, or cause to be assigned or novated, all its obligations and other Liabilities thereunder or any obligations of AbbVie or an AbbVie Subsidiary to Abbott or its designated Abbott Subsidiary without payment of further consideration and Abbott or such Abbott Subsidiary shall, without the payment of any further consideration, assume such obligations.

 

(c)                                  Release of Guarantees.

 

(i)                                     Except as otherwise expressly set forth in any International Transition Period Agreements, each of Abbott and AbbVie, at the request of the other Party, shall use commercially reasonable efforts, as soon as is reasonably practicable, to (A) have AbbVie or an AbbVie Subsidiary removed as guarantor of or obligor for any Abbott Liability to the extent that such guarantees or obligations relate to Abbott Liabilities, which shall include the removal of any Security Interest on or in any AbbVie Asset that may serve as collateral or security for any such Abbott Liability; and (B) have Abbott or an Abbott Subsidiary removed as guarantor of or obligor for any AbbVie Liability to the extent that such guarantees or obligations relate to AbbVie Liabilities, which shall include the removal of any Security Interest on or in any Abbott Asset that may serve as collateral or security for any such AbbVie Liability; provided, however, that, except as otherwise expressly provided in the Ancillary Agreements and without limiting the requirements under Section 2.11(c)(ii), the use of commercially reasonable efforts under this Section 2.11(c)(i) shall not obligate either Abbott or AbbVie (nor any of their

 

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respective Subsidiaries) to contribute any capital, pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees to a Governmental Authority from whom such Consents, substitutions, amendments, terminations or releases are requested.

 

(ii)                                  To the extent required to obtain a release from a guarantee:

 

(A)                               of Abbott or an Abbott Subsidiary, AbbVie shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any Abbott Asset that may serve as collateral or security for any such AbbVie Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either with which AbbVie (1) would be reasonably unable to comply or (2) would not reasonably be able to avoid breaching; and

 

(B)                               of AbbVie or an AbbVie Subsidiary, Abbott shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any AbbVie Asset that may serve as collateral or security for any such Abbott Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either with which Abbott (1) would be reasonably unable to comply or (2) would not reasonably be able to avoid breaching.

 

(iii)                               If Abbott or AbbVie is unable to obtain, or to cause to be obtained, any such required removal or release as set forth in clauses (i) and (ii) of this Section 2.11(c), (A) the Party or its relevant Subsidiary that has assumed the Liability with respect to such guarantee shall indemnify and hold harmless the guarantor or obligor against or from any Liability arising from or relating thereto (in accordance with the provisions of Article IV) and shall or shall cause one of its Subsidiaries, as agent or subcontractor for such guarantor or obligor, to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder; and (B) except as otherwise expressly set forth in the International Transition Period Agreements, each of Abbott and AbbVie, on behalf of themselves and their respective Subsidiaries, agree not to renew or extend the term of, increase its obligations under, or transfer to a Third Party, any loan, guarantee, lease, contract or other obligation for which the other Party or such Party’s Subsidiaries is or may be liable unless all obligations of such other Party and the Subsidiaries of such other Party with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such other Party.

 

Section 2.12.                          Mixed Contracts; Mixed Accounts.

 

(a)                                 Mixed Contracts.  Except as may otherwise be agreed by the Parties and except as otherwise contemplated by any International Transition Period Agreement, in the case of a Mixed Contract, the Parties shall use commercially reasonable efforts to cause such Mixed Contract to be: (i) assigned in relevant part to AbbVie or an AbbVie Subsidiary (or to Abbott or an Abbott Subsidiary if the contracting party is a Transferred Entity) if so assignable; (ii) appropriately amended, prior to, on or after the Effective Time (or, in the case of a Mixed Contract that inures to the benefit or burden of both Abbott or an Abbott Subsidiary, on the one

 

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hand, and a Transferred Entity that shall be transferred to AbbVie or an AbbVie Subsidiary after the Effective Time as part of a local closing of a Deferred AbbVie Local Business under the terms of the applicable International Transition Period Agreement, on the other hand, on or after such local closing); or (iii) replaced or otherwise addressed with suitable arrangements, in either case so that each Party or their respective Subsidiaries shall be entitled to the rights and benefits and shall assume the related portion of any obligations and Liabilities inuring to their respective businesses; provided, however, that in no event shall either Party or its respective Subsidiaries be required to assign or amend any Mixed Contract in its entirety or to assign a portion of any Mixed Contract that is not assignable or cannot be amended by its terms (including any terms imposing Consents or conditions on an assignment where such Consents or conditions have not been obtained or fulfilled).  If any Mixed Contract cannot be so partially assigned, or cannot be amended, or if such assignment or amendment would impair the benefit the parties thereto derive from such Mixed Contract and such Mixed Contract is not replaced or otherwise addressed with suitable arrangements, Abbott and AbbVie shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause:  (A) the Assets associated with that portion of each Mixed Contract that relates to the AbbVie Business to be enjoyed by AbbVie or an AbbVie Subsidiary; (B) the Liabilities associated with that portion of each Mixed Contract that relates to the AbbVie Business to be borne by AbbVie or an AbbVie Subsidiary; (C) the Assets associated with that portion of each Mixed Contract that relates to the Abbott Business to be enjoyed by Abbott or an Abbott Subsidiary; and (D) the Liabilities associated with that portion of each Mixed Contract that relates to the Abbott Business to be borne by Abbott or an Abbott Subsidiary.

 

(b)                                 Mixed Accounts.  Except as may otherwise be agreed by the Parties and except as otherwise contemplated by any International Transition Period Agreement, the Parties shall not seek to assign any Mixed Account.  Except as may otherwise be agreed by the Parties and except as otherwise contemplated by any International Transition Period Agreement, Abbott and AbbVie shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause (i) the Assets associated with that portion of each Mixed Account that relates to the Abbott Business to be enjoyed by Abbott or an Abbott Subsidiary; (ii) the Liabilities associated with that portion of each Mixed Account that relates to the Abbott Business to be borne by Abbott or an Abbott Subsidiary; (iii) the Assets associated with that portion of each Mixed Account that relates to the AbbVie Business to be enjoyed by AbbVie or an AbbVie Subsidiary; and (iv) the Liabilities associated with that portion of each Mixed Account that relates to the AbbVie Business to be borne by AbbVie or an AbbVie Subsidiary.

 

(c)                                  No Payments.  Nothing in this Section 2.12 shall require either Party or any of its Subsidiaries to make any payment (except to the extent advanced, assumed or agreed in advance to be reimbursed by the other Party or any of the other Party’s Subsidiaries), incur any obligation or grant any concession for the benefit of the other Party or any of the other Party’s Subsidiaries, in each case, in order to effect any transaction contemplated by this Section 2.12.

 

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Section 2.13.                          Further Assurances.

 

(a)                                 Additional Actions.  Except as set forth in Section 3.04 and Article VIII, in addition to the actions specifically provided for elsewhere in this Agreement, each Party shall, and shall cause each of its respective Subsidiaries to, use commercially reasonable efforts, prior to and after the Effective Time to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary or advisable under applicable Laws and agreements to consummate the transactions contemplated by this Agreement and the Ancillary Agreements; provided, however, that neither Abbott nor AbbVie (nor any of their respective Subsidiaries) shall be obligated under this Section 2.13(a) to pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees paid to a Governmental Authority.

 

(b)                                 Cooperation.  Without limiting the foregoing and except to the extent otherwise contemplated in connection with a Deferred AbbVie Local Business under Section 2.03, prior to and after the Effective Time, each Party shall, and shall cause each of its Subsidiaries to, cooperate with the other Party without any further consideration to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all Conveyance and Assumption Instruments and to make all filings with, and to obtain all Consents of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Consents), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transfers of the AbbVie Assets and the Abbott Assets and the assignment and assumption of the AbbVie Liabilities and the Abbott Liabilities as contemplated by this Agreement and the other transactions contemplated hereby and thereby.

 

(c)                                  Misallocations.  Except to the extent otherwise contemplated in connection with a Deferred AbbVie Local Business under Section 2.03, a Delayed AbbVie Asset or Delayed AbbVie Liability under Section 2.04 or a Delayed Abbott Asset or Delayed Abbott Liability under Section 2.05, in the event that, at any time or from time to time (whether prior to, at or after the Effective Time), one Party or any of its Subsidiaries shall receive or otherwise possess any Asset that is allocated to the other Party or any Subsidiary of such other Party pursuant to this Agreement or any Ancillary Agreement, the first Party shall promptly transfer, or cause its Subsidiary to transfer, such Asset to the Party so entitled thereto or such Party’s Subsidiary or designee and such Party or such Party’s Subsidiary or designee shall accept such Asset; provided that, the terms of this Section 2.13(c) are not intended to limit or otherwise modify in any way the Parties’ rights and obligations under this Agreement or the Tax Sharing Agreement.  Except to the extent otherwise contemplated in connection with a Deferred AbbVie Local Business under Section 2.03, a Delayed AbbVie Asset or Delayed AbbVie Liability under Section 2.04 or a Delayed Abbott Asset or Delayed Abbott Liability under Section 2.05, in the event that, at any time or from time to time (whether prior to, at or after the Effective Time), one Party or any of its Subsidiaries shall receive or otherwise assume any Liability that is allocated to the other Party or any Subsidiary of such other Party pursuant to this Agreement or any Ancillary Agreement, the first Party shall promptly transfer, or cause its Subsidiary to transfer, such Liability to the Party so entitled thereto or such Party’s Subsidiary or designee, and such Party or

 

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such Party’s Subsidiary or designee shall accept, assume and agree faithfully to perform such Liability; provided that, the terms of this Section 2.13(c) are not intended to limit or otherwise modify in any way the Parties’ rights and obligations under this Agreement or the Tax Sharing Agreement.

 

Section 2.14.                          Transition Committee.  Prior to the Effective Time, the Parties shall establish a transition committee (the “Transition Committee”) that shall consist of an equal number of members from Abbott and AbbVie.  The Transition Committee shall be responsible for monitoring and managing all matters related to any of the transactions contemplated by this Agreement or any Ancillary Agreements.  The Transition Committee shall have the authority to (a) establish one or more subcommittees from time to time as it deems appropriate or as may be described in any Ancillary Agreements, with each such subcommittee comprised of one or more members of the Transition Committee or one or more employees of either Party or any of its Subsidiaries, and each such subcommittee having such scope of responsibility as may be determined by the Transition Committee from time to time; (b) delegate to any such committee any of the powers of the Transition Committee; and (c) to combine, modify the scope of responsibility of, and disband any such subcommittees, and to modify or reverse any such delegations.  The Transition Committee shall establish general procedures for managing the responsibilities delegated to it under this Section 2.14, and may modify such procedures from time to time.  All decisions by the Transition Committee or any subcommittee thereof shall be effective only if mutually agreed by both Parties.  The Parties shall utilize the procedures set forth in Article VII to resolve any matters as to which the Transition Committee is not able to reach a decision.

 

Section 2.15.                          Accounting for Deferred Taxes.  No later than December [·], 2013, Abbott shall determine the difference, if any, between the Estimated Deferred Taxes and the Actual Deferred Taxes (the “Adjustment”) and shall provide AbbVie with a schedule that sets forth the Adjustment and how it was calculated.  AbbVie shall provide a Notice to Abbott of any disagreement with the Adjustment within twenty (20) days of receipt of the schedule setting forth the Adjustment and its calculation.  AbbVie and Abbott shall use commercially reasonable efforts to resolve any disagreement by January [·], 2014 and, if the Parties are unable to agree prior to such date, the Parties shall utilize the procedures set forth in Article VII (except those set forth in Section 7.01(a)(i)) to resolve such disagreement (such Adjustment, as modified to reflect the disposition of any disagreement, the “Final Adjustment”).  Abbott and AbbVie shall, and shall cause their respective Subsidiaries to, reflect the Final Adjustment to shareholders’ equity on their respective books.

 

ARTICLE III

 

THE DISTRIBUTION

 

Section 3.01.                          Actions Prior to the Distribution.  Prior to the Effective Time and subject to the terms and conditions set forth herein, the Parties shall take, or cause to be taken, the following actions in connection with the Distribution:

 

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(a)                                 Notice to NYSE.  Abbott shall, to the extent possible, give the NYSE not less than ten (10) days’ advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act.

 

(b)                                 Securities Law Matters.  AbbVie shall file any amendments or supplements to the Registration Statement as may be necessary or advisable in order to cause the Registration Statement to become and remain effective as required by the Commission or federal, state or other applicable securities Laws.  Abbott and AbbVie shall cooperate in preparing, filing with the Commission and causing to become effective registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or advisable in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.  Abbott and AbbVie shall take all such action as may be necessary or advisable under the securities or blue sky Laws of the United States (and any comparable Laws under any non-U.S. jurisdiction) in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

 

(c)                                  Mailing of Information Statement.  Abbott shall, as soon as is reasonably practicable after the Registration Statement is declared effective under the Exchange Act and the board of directors of Abbott has approved the Distribution, cause the Information Statement to be mailed to the Record Holders.

 

(d)                                 The Distribution Agent.  Abbott shall enter into a distribution agent agreement with the Agent or otherwise provide instructions to the Agent regarding the Distribution.

 

(e)                                  Stock-Based Employee Benefit Plans.  At or prior to the Effective Time, Abbott and AbbVie shall take all actions as may be necessary to approve the stock-based employee benefit plans of AbbVie in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the NYSE.

 

(f)                                   Satisfying Conditions to Distribution.  Abbott and AbbVie shall cooperate to cause the conditions to the Distribution set forth in this Article III to be satisfied and to effect the Distribution at the Effective Time.

 

Section 3.02.                          The Distribution.  Subject to the terms and conditions contained herein:

 

(a)                                 Delivery of AbbVie Common Stock.  On or prior to the Distribution Date, Abbott shall deliver to the Agent, for the benefit of the Record Holders, book-entry transfer authorizations for such number of the outstanding shares of AbbVie Common Stock as is necessary to effect the Distribution.

 

(b)                                 Effective Time of Distribution.  The Distribution shall be effective at the Effective Time.

 

(c)                                  Distribution of Shares and Cash.  Abbott shall instruct the Agent to distribute, as soon as practicable following the Effective Time, to each Record Holder the following:

 

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(i)                                     [·] of a share of AbbVie Common Stock for each Abbott Common Share held by such Record Holder as of the Record Date; and

 

(ii)                                  cash, if applicable, in lieu of fractional shares obtained in the manner provided in Section 3.03.

 

(d)                                 Transfer Authorizations.  AbbVie agrees to provide all book-entry transfer authorizations for shares of AbbVie Common Stock that Abbott or the Agent shall require (after giving effect to Section 3.03) in order to effect the Distribution.

 

Section 3.03.                          Fractional Shares; Unclaimed Shares.

 

(a)                                 No Fractional Shares.  Notwithstanding anything herein to the contrary, no fractional shares of AbbVie Common Stock shall be issued in connection with the Distribution, and any such fractional share interests to which a Record Holder would otherwise be entitled shall not entitle such Record Holder to vote or to any other rights as a stockholder of AbbVie.  In lieu of any such fractional shares, each Record Holder who, but for the provisions of this Section 3.03, would be entitled to receive a fractional share interest of AbbVie Common Stock pursuant to the Distribution, shall be paid cash, without any interest thereon, as hereinafter provided.  Abbott shall instruct the Agent to determine the number of whole shares and fractional shares of AbbVie Common Stock allocable to each Record Holder, to aggregate all such fractional shares into whole shares, to sell the whole shares obtained thereby in the open market at the then-prevailing prices on behalf of each Record Holder who otherwise would be entitled to receive fractional share interests and to distribute to each such Record Holder his, her or its ratable share of the total proceeds of such sale, after making appropriate deductions of the amounts required for U.S. federal income tax withholding purposes and after deducting any applicable transfer Taxes and the costs and expenses of such sale and distribution, including brokers fees and commissions.  The sales of fractional shares shall occur as soon after the Effective Time as practicable and as determined by the Agent.  None of Abbott, AbbVie or the Agent shall guarantee any minimum sale price for the fractional shares of Abbott Common Shares.  Neither Abbott nor AbbVie shall pay any interest on the proceeds from the sale of fractional shares.  The Agent shall have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares.  Neither the Agent nor the broker-dealers through which the aggregated fractional shares are sold shall be Affiliates of Abbott or AbbVie.

 

(b)                                 Beneficial Owners.  Solely for purposes of computing fractional share interests pursuant to this Section 3.03, the beneficial owner of Abbott Common Shares held of record in the name of a nominee in any nominee account shall be treated as the holder of record with respect to such shares.

 

(c)                                  Unclaimed Stock or Cash.  Any AbbVie Common Stock or cash in lieu of fractional shares with respect to AbbVie Common Stock that remain unclaimed by any Record Holder one hundred and eighty (180) days after the Distribution Date shall be delivered to AbbVie, AbbVie shall hold such AbbVie Common Stock for the account of such Record Holder and the Parties agree that all obligations to provide such AbbVie Common Stock and cash, if any, in lieu of fractional share interests shall be obligations of AbbVie, subject in each case to

 

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applicable escheat or other abandoned property Laws, and Abbott shall have no Liability with respect thereto.

 

Section 3.04.                          Sole Discretion of Abbott.  Notwithstanding anything to the contrary set forth in this Agreement or in any Ancillary Agreement, until the Effective Time, Abbott shall have the sole discretion to determine whether to proceed with the Distribution and any and all terms of the Distribution, including the form, structure and terms of any transaction(s) or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution.  In addition, Abbott may, in its sole discretion, determine the Distribution Date and may, at any time and from time to time until the Effective Time, modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of the Distribution.

 

Section 3.05.                          Conditions to the Distribution.

 

(a)                                 The Conditions.  In addition to Abbott’s rights under Section 3.04, the Distribution shall not occur unless each of the following conditions shall have been satisfied (or waived by Abbott, in whole or in part, in its sole discretion):

 

(i)                                     the transfer of the AbbVie Assets (other than any Delayed AbbVie Asset) and AbbVie Liabilities (other than any Delayed AbbVie Liability) contemplated to be transferred from Abbott to AbbVie on or prior to the Distribution Date shall have occurred as contemplated by Section 2.02;

 

(ii)                                  the Registration Statement shall have been declared effective by the Commission; no stop-order shall be in effect with respect thereto; no Proceeding for that purpose shall have been instituted or threatened by the Commission; and the Information Statement shall have been mailed to the Record Holders;

 

(iii)                               Abbott shall have received the proceeds from the AbbVie Cash Distribution and shall be satisfied in its sole discretion that, as of the Effective Time, it shall have no further Liability whatsoever under the AbbVie Credit Facility or the Financing Arrangements (including in connection with any guarantees provided by Abbott or an Abbott Subsidiary thereunder);

 

(iv)                              the actions and filings with regard to securities and blue sky Laws of the United States (and any comparable Laws under any foreign jurisdictions) described in Section 3.01 shall have been taken and, where applicable, shall have become effective or been accepted;

 

(v)                                 the AbbVie Common Stock to be distributed in the Distribution shall have been accepted for listing on the NYSE, subject to official notice of issuance;

 

(vi)                              no order, injunction or decree issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of the Distribution or any of the other transactions related thereto, including the Separation, contemplated by this Agreement or any Ancillary Agreement shall be in effect;

 

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(vii)                           Abbott shall have received a private letter ruling from the United States Internal Revenue Service to the effect that, among other things, the Distribution shall qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code and certain transactions related to the transfer to AbbVie or certain AbbVie Subsidiaries of certain AbbVie Assets and the assumption by AbbVie or certain AbbVie Subsidiaries of certain of the AbbVie Liabilities in connection with the Separation shall not result in the recognition of any gain or loss to Abbott, AbbVie, certain Abbott Subsidiaries, certain AbbVie Subsidiaries, Abbott’s shareholders or AbbVie’s stockholders for U.S. federal income tax purposes, and such private letter ruling shall not have been revoked or modified in any material respect;

 

(viii)                        Abbott shall have received an opinion from its outside counsel to the effect that the Separation and the Distribution shall qualify as a transaction that is described in Sections 355(a) and 368(a)(1)(D) of the Code;

 

(ix)                              no events or developments shall have occurred or exist that, in the judgment of the board of directors of Abbott, in its sole discretion, makes it inadvisable to effect the Separation, the Distribution or the other transactions contemplated by this Agreement or any Ancillary Agreement;

 

(x)                                 the Parties shall have executed and delivered or, where applicable, shall have caused their respective Subsidiaries to execute and deliver, the Ancillary Agreements that are contemplated by this Agreement to be executed and delivered on or prior to the Effective Time; and

 

(xi)                              [·], or another independent appraisal firm acceptable to Abbott, shall have delivered one or more opinions to the board of directors of Abbott confirming the solvency and financial viability of Abbott before the consummation of the Distribution and each of Abbott and AbbVie after consummation of the Distribution, and such opinions shall be acceptable to Abbott in form and substance in Abbott’s sole discretion and such opinions shall not have been withdrawn or rescinded.

 

(b)                                 Conditions for Benefit of Abbott.  The foregoing conditions are for the sole benefit of Abbott and not for the benefit of any other Person and shall not give rise to nor create any duty on the part of Abbott or Abbott’s board of directors to waive or not waive any such condition or in any way limit Abbott’s right to terminate this Agreement as set forth in Article VIII or alter the consequences of any such termination from those specified in such Article VIII.  Any determination made by Abbott prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.05 shall be conclusive and binding on the Parties hereto.  If Abbott waives any material condition, it shall promptly issue a press release disclosing such fact and file a report on Form 8-K with the Commission describing such waiver.

 

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ARTICLE IV

 

MUTUAL RELEASES; INDEMNIFICATION

 

Section 4.01.                          Releases.

 

(a)                                 AbbVie Release of Abbott.  Except as provided in Section 4.01(c) and in the provisos to this Section 4.01(a), effective as of the Effective Time, AbbVie does hereby, for itself, each of the AbbVie Subsidiaries, and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been directors, officers, agents or employees of AbbVie or any of the AbbVie Subsidiaries (in each case, in their respective capacities as such), remise, release and forever discharge:  (1) Abbott, each Abbott Subsidiary, and their respective successors and assigns; (2) all Persons who at any time are or have been shareholders, directors, officers, agents or employees of Abbott or an Abbott Subsidiary (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns; and (3) all Persons identified on Schedule 4.01(a), in each such case from:

 

(i)                                     all AbbVie Liabilities; and

 

(ii)                                  all Liabilities existing or arising:  (A) in connection with the implementation of the Separation and the Distribution; or (B) from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the AbbVie Business, the AbbVie Assets or the AbbVie Liabilities;

 

provided, however, that nothing in this Section 4.01(a) shall release the Persons released in this Section 4.01(a) from:  (x) any Liability expressly allocated to Abbott or an Abbott Subsidiary in this Agreement (including the indemnification obligations in Section 4.03 and the contribution obligations in Section 4.07), any Ancillary Agreement or any other agreement, arrangement, commitment or understanding to the extent expressly preserved pursuant to Section 2.09(b); (y) any intercompany receivables or payables that are not settled, capitalized, cancelled, assigned or assumed by AbbVie or one or more AbbVie Subsidiaries prior to the Effective Time; or (z) any Liability the release of which would result in the release of any Person other than the Persons released in this Section 4.01(a), and, provided, further, that nothing in this Section 4.01(a) shall relieve any Person released in this Section 4.01(a) who, after the Effective Time, is a director, officer or employee of AbbVie or an AbbVie Subsidiary and is no longer a director, officer or employee of Abbott or an Abbott Subsidiary from Liabilities arising out of, relating to or resulting from his or her service as a director, officer or employee of AbbVie or any of the AbbVie Subsidiaries after the Effective Time.

 

(b)                                 Abbott Release of AbbVie.  Except as provided in Section 4.01(c) and in the proviso to this Section 4.01(b), effective as of the Effective Time, Abbott does hereby, for itself, each of the Abbott Subsidiaries, and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been

 

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directors, officers, agents or employees of Abbott or any of the Abbott Subsidiaries (in each case, in their respective capacities as such), remise, release and forever discharge AbbVie, each AbbVie Subsidiary and their respective successors and assigns from:

 

(i)                                     all Abbott Liabilities; and

 

(ii)                                  all Liabilities existing or arising:  (A) in connection with the implementation of the Separation and the Distribution; or (B) from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the Abbott Business, the Abbott Assets or the Abbott Liabilities;

 

provided, however, that nothing in this Section 4.01(b) shall release the Persons released in this Section 4.01(b) from:  (x) any Liability expressly allocated to AbbVie or an AbbVie Subsidiary in this Agreement (including the indemnification obligations in Section 4.02 and the contribution obligations in Section 4.07), any Ancillary Agreement or any other agreement, arrangement, commitment or understanding to the extent expressly preserved pursuant to Section 2.09(b); (y) any intercompany receivables or payables that are not settled, capitalized, cancelled, assigned or assumed by AbbVie or one or more AbbVie Subsidiaries prior to the Effective Time; or (z) any Liability the release of which would result in the release of any Person other than the Persons released in this Section 4.01(b).

 

(c)                                  Abbott Obligations Not Affected.  Nothing contained in this Article IV shall release Abbott or an Abbott Subsidiary from honoring its obligations existing immediately prior to the Effective Time to (i) indemnify any director, officer or employee of AbbVie or an AbbVie Subsidiary who was a director, officer or employee of Abbott or an Abbott Subsidiary on or prior to the Effective Time, to the extent such director, officer or employee was entitled in such capacity to such indemnification pursuant to obligations existing immediately prior to the Effective Time; provided that if a director of AbbVie receives indemnification payments from Abbott or AbbVie, as the case may be, with respect to a particular Liability for which such director is entitled to indemnification, such director shall not be entitled to receive indemnification payments from the other Party with respect to the same Liability to the extent of the indemnification payments previously received by such director from Abbott or AbbVie, as the case may be; provided, further, that (A) to the extent the events underlying an indemnification claim would give rise to an Abbott Liability, then Abbott shall have primary responsibility for the administration of the indemnification claim and (B) to the extent that the events underlying an indemnification claim would give rise to an AbbVie Liability, then AbbVie shall have primary responsibility for the administration of the indemnification claim; or (ii) provide any employment, post-employment or retirement benefits to any director, officer or employee of AbbVie or an AbbVie Subsidiary who was a director, officer or employee of Abbott or an Abbott Subsidiary on or prior to the Effective Time, to the extent such director, officer or employee was entitled to such benefits pursuant to obligations existing immediately prior to the Effective Time, except as otherwise provided in the Employee Matters Agreement.

 

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(d)                                 No AbbVie Claims.  Without limiting the rights of either Party under Section 4.04, 4.05 or 4.06, AbbVie shall not make, and shall not permit an AbbVie Subsidiary to make, any claim or demand, or commence any Proceeding asserting any claim or demand, including any claim of contribution or indemnification, against Abbott or an Abbott Subsidiary or any other Person released pursuant to Section 4.01(a), with respect to any Liabilities released pursuant to Section 4.01(a).

 

(e)                                  No Abbott Claims.  Without limiting the rights of either Party under Section 4.04, 4.05 or 4.06, Abbott shall not make, and shall not permit an Abbott Subsidiary to make, any claim or demand, or commence any Proceeding asserting any claim or demand, including any claim of contribution or indemnification, against AbbVie or an AbbVie Subsidiary or any other Person released pursuant to Section 4.01(b), with respect to any Liabilities released pursuant to Section 4.01(b).

 

(f)                                   Subsidiary Releases.  At any time at or after the Effective Time, at the request of either Party, the other Party shall cause its Subsidiaries to execute and deliver releases reflecting the provisions of this Section 4.01.

 

Section 4.02.                          Indemnification by AbbVie.  Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, AbbVie and each of the AbbVie Subsidiaries shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless each of the Abbott Indemnitees from and against all AbbVie Indemnity Obligations; provided, however, that the indemnity in this Section 4.02 for AbbVie Liabilities shall not extend to a former director, officer, employee or agent of AbbVie or an AbbVie Subsidiary to the extent such Person would not be eligible for indemnification under the terms of (i) Abbott’s certificate of incorporation or bylaws in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter; or (ii) the directors’ and officers’ insurance policy of Abbott would not cover such Person in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter.

 

Section 4.03.                          Indemnification by Abbott.  Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, Abbott and each of the Abbott Subsidiaries shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless each of the AbbVie Indemnitees from and against all Abbott Indemnity Obligations; provided, however, that the indemnity in this Section 4.03 for Abbott Liabilities shall not extend to a former director, officer, employee or agent of Abbott or an Abbott Subsidiary to the extent (a) such Person would not be eligible for indemnification under the terms of (i) AbbVie’s certificate of incorporation or bylaws in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter or (ii) the directors’ and officers’ insurance policy of AbbVie would not cover such Person in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter.

 

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Section 4.04.                          Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

 

(a)                                 Insurance Proceeds and Other Amounts.  The Parties intend that any Liability subject to indemnification or contribution pursuant to this Agreement or any Ancillary Agreement:  (i) shall be reduced by any Insurance Proceeds or other amounts actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of any indemnifiable Liability; (ii) shall not be increased to take into account any Tax costs incurred by the Indemnitee arising from any Indemnity Payments received from the Indemnifying Party (as defined below); and (iii) shall not be reduced to take into account any Tax benefit received by the Indemnitee arising from the incurrence or payment of any Indemnity Payment.  Accordingly, the amount which either Party against whom a claim is made for indemnification under this Agreement (an “Indemnifying Party”) is required to pay to any Indemnitee shall be reduced by any Insurance Proceeds or any other amounts theretofore actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) by or on behalf of the Indemnitee in respect of the related Liability.  If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Liability (an “Indemnity Payment”) and subsequently receives Insurance Proceeds or any other amounts in respect of the related Liability, then the Indemnitee shall pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or such other amounts (net of any out-of-pocket costs or expenses incurred in the collection thereof) had been received, realized or recovered before the Indemnity Payment was made.

 

(b)                                 Insurers and Other Third Parties Not Relieved.  The Parties hereby agree that an insurer or other Third Party that would otherwise be obligated to pay any amount shall not be relieved of the responsibility with respect thereto or have any subrogation rights with respect thereto by virtue of any provision contained in this Agreement or any Ancillary Agreement, and that no insurer or any other Third Party shall be entitled to a “windfall” (e.g., a benefit they would not be entitled to receive in the absence of the indemnification or release provisions) by virtue of any provision contained in this Agreement or any Ancillary Agreement.  Each Party shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to collect or recover, or allow the Indemnifying Party to collect or recover, any Insurance Proceeds that may be collectible or recoverable respecting the Liabilities for which indemnification may be available under this Article IV.  Notwithstanding the foregoing, an Indemnifying Party may not delay making any indemnification payment required under the terms of this Agreement, or otherwise satisfying any indemnification obligation, pending the outcome of any Proceeding to collect or recover Insurance Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds prior to making a claim for indemnification or receiving any Indemnity Payment otherwise owed to it under this Agreement or any Ancillary Agreement.

 

Section 4.05.                          Procedures for Indemnification of Third Party Claims.

 

(a)                                 Notice of Claims.  If, at or following the date of this Agreement, an Indemnitee receives notice or otherwise learns of the assertion or commencement by a Third Party of any Proceeding against the Indemnitee with respect to which the Indemnitee believes that AbbVie (in the case of an Abbott Indemnitee) or Abbott (in the case of an AbbVie

 

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Indemnitee) is obligated to provide indemnification to such Indemnitee pursuant to this Agreement or any Ancillary Agreement (collectively, a “Third Party Claim”), such Indemnitee shall give such Indemnifying Party Notice thereof within ten (10) days (or sooner if the nature of the Third Party Claim so requires) after becoming aware of such Third Party Claim.  The Notice must describe the Third Party Claim in reasonable detail or, in the alternative, include copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.  Notwithstanding the foregoing, the failure of any Indemnitee to give the Notice as provided in this Section 4.05(a) shall not relieve the related Indemnifying Party of its obligations under this Article IV, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give the Notice in accordance with this Section 4.05(a).

 

(b)                                 Control of Defense.  An Indemnifying Party may elect to defend (and seek to settle or compromise), at its own expense and with its own counsel, any Third Party Claim.  Within thirty (30) days after the receipt of a Notice from an Indemnitee in accordance with Section 4.05(a) (or sooner, if the nature of the Third Party Claim so requires), the Indemnifying Party shall provide a Notice to the Indemnitee indicating whether the Indemnifying Party shall assume responsibility for defending the Third Party Claim and specifying any reservations or exceptions to its defense.  If an Indemnifying Party elects not to assume responsibility for defending any Third Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a Notice from an Indemnitee as provided in Section 4.05(a), then the Indemnitee that is the subject of such Third Party Claim shall be entitled to continue to conduct and control the defense of such Third Party Claim. Notwithstanding anything to the contrary in this Agreement, the defense of any Proceeding described on Schedule 4.05(b) shall be conducted and controlled as set forth on such schedule.

 

(c)                                  Allocation of Defense Costs.  If an Indemnifying Party has elected to assume the defense of a Third Party Claim, whether with or without any reservations or exceptions with respect to such defense, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnitee for any such fees or expenses incurred during the course of its defense of such Third Party Claim, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense.  If an Indemnifying Party elects not to assume responsibility for defending any Third Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a Notice from an Indemnitee as provided in Section 4.05(a), and the Indemnitee conducts and controls the defense of such Third Party Claim, then the Indemnifying Party shall be liable for all reasonable fees and expenses incurred by the Indemnitee in connection with the defense of such Third Party Claim.  Notwithstanding anything to the contrary, the costs and expenses of the Proceedings described on Schedule 4.05(b) shall be allocated as set forth on such Schedule.

 

(d)                                 Right to Monitor and Participate. An Indemnitee that does not conduct and control the defense of any Third Party Claim, or an Indemnifying Party that has failed to elect to defend any Third Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as necessary) of its own choosing to monitor and participate in (but not control) the defense of any Third Party Claim for which it is a potential Indemnitee or Indemnifying Party, but the fees and expenses of such counsel shall be at

 

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the expense of such Indemnitee or Indemnifying Party, as the case may be, and the provisions of Section 4.05(c) shall not apply to such fees and expenses.  Notwithstanding the foregoing, subject to Sections 6.06 and 6.07, such Party shall cooperate with the Party entitled to conduct and control the defense of such Third Party Claim in such defense and make available to the controlling Party, at the non-controlling Party’s expense, all witnesses, information and materials in such Party’s possession or under such Party’s control relating thereto as are reasonably required by the controlling Party.  In addition to the foregoing, if any Indemnitee shall in good faith determine that such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnitee shall have the right to employ separate counsel (including local counsel as necessary) and to participate in (but not control) the defense, compromise, or settlement thereof, and the Indemnifying Party shall bear the reasonable fees and expenses of such counsel for all Indemnitees.

 

(e)                                  No Settlement.  Neither Party may settle or compromise any Third Party Claim for which either Party is seeking to be indemnified hereunder without the prior written consent of the other Party, which consent may not be unreasonably withheld, unless such settlement or compromise is solely for monetary damages, does not involve any finding or determination of wrongdoing or violation of Law by the other Party and provides for a full, unconditional and irrevocable release of the other Party from all Liability in connection with the Third Party Claim.  The Parties hereby agree that if a Party presents the other Party with a Notice containing a proposal to settle or compromise a Third Party Claim for which either Party is seeking to be indemnified hereunder and the Party receiving such proposal does not respond in any manner to the Party presenting such proposal within thirty (30) days (or within any such shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the Party receiving such proposal shall be deemed to have consented to the terms of such proposal.

 

(f)                                   Pending Third Party Claims.  The provisions of this Article IV shall apply to Third Party Claims that are already pending or asserted as well as Third Party Claims brought or asserted after the date of this Agreement.  There shall be no requirement under this Section 4.05 to give a Notice with respect to any Third Party Claims that exist as of the Effective Time.

 

(g)                                  Allocation of Proceeding Liabilities.  The Parties acknowledge that Liabilities for Proceedings (regardless of the parties to the applicable Proceeding) may be partly Abbott Liabilities and partly AbbVie Liabilities.  If the Parties cannot agree on an allocation of any such Liabilities for Proceedings, they shall resolve the matter pursuant to the procedures set forth in Article VII.  Neither Party shall, nor shall either Party permit its Subsidiaries to, file Third Party claims or cross-claims against the other Party or its Subsidiaries in a Proceeding in which a Third Party Claim is being resolved.

 

Section 4.06.                          Additional Matters.

 

(a)                                 Timing of Payments.  Indemnity Payments or contribution payments in respect of any Liabilities for which an Indemnitee is entitled to indemnification or contribution under this Article IV shall be paid reasonably promptly (but in any event within sixty (60) days of the final determination of the amount that the Indemnitee is entitled to indemnification or

 

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contribution under this Article IV) by the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such Indemnity Payments or contribution payments, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities.  The indemnity and contribution provisions contained in this Article IV shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; and (ii) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification or contribution hereunder.

 

(b)                                 Notice of Direct Claims.  Any claim for indemnification under this Agreement or any Ancillary Agreement which does not result from a Third Party Claim (a “Direct Claim”) must be asserted by a Notice given by the Indemnitee to the applicable Indemnifying Party; provided, that the failure by an Indemnitee to so assert any such Direct Claim shall not prejudice the ability of the Indemnitee to do so at a later time except to the extent (if any) that the Indemnifying Party is prejudiced thereby.  Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such Notice within which to respond thereto.  If such Indemnifying Party does not respond within such thirty (30)-day period, such Direct Claim specified in such Notice shall be conclusively deemed a Liability of the Indemnifying Party under this Section 4.06(b) or, in the case of any Notice in which the amount of the Direct Claim (or any portion thereof) is estimated, on such later date when the amount of such Direct Claim (or such portion thereof) becomes finally determined.  If such Indemnifying Party does not respond within such thirty (30)-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such Indemnitee as contemplated by this Agreement or the Ancillary Agreements, as applicable, without prejudice to its continuing rights to pursue indemnification or contribution hereunder.

 

(c)                                  Subrogation.  In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person.  Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

 

(d)                                 Pursuit of Claims Against Third Parties.  If (i) a Party incurs any Liability arising out of this Agreement or any Ancillary Agreement; (ii) an adequate legal or equitable remedy is not available for any reason against the other Party to satisfy the Liability incurred by the incurring Party; and (iii) a legal or equitable remedy may be available to the other Party against a Third Party for such Liability, then the other Party shall use its commercially reasonable efforts to cooperate with the incurring Party, at the incurring Party’s expense, to permit the incurring Party to obtain the benefits of such legal or equitable remedy against the Third Party.

 

(e)                                  Substitution. In any Proceeding in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties

 

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shall endeavor to substitute the Indemnifying Party for the named defendant if they conclude that substitution is desirable and practicable.  If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Proceeding as set forth in Section 4.05 and this Section 4.06, and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Proceeding (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement, and the cost of any interest or penalties relating to any judgment or settlement.

 

Section 4.07.                          Right of Contribution.

 

(a)                                 Contribution.  If any right of indemnification contained in Section 4.02 or 4.03 is held unenforceable or is unavailable for any reason, or is insufficient to hold harmless an Indemnitee in respect of any Liability for which such Indemnitee is entitled to indemnification hereunder, then the Indemnifying Party shall contribute to the amounts paid or payable by the Indemnitees as a result of such Liability (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and its Subsidiaries, on the one hand, and the Indemnitees entitled to contribution, on the other hand, as well as any other relevant equitable considerations.

 

(b)                                 Allocation of Relative Fault.  Solely for purposes of determining relative fault pursuant to this Section 4.07:  (i) any fault associated with the business conducted with the Deferred AbbVie Local Businesses, Delayed AbbVie Assets or Delayed AbbVie Liabilities (except for the gross negligence or intentional misconduct of Abbott or an Abbott Subsidiary) or with the ownership, operation or activities of the AbbVie Business prior to the Effective Time shall be deemed to be the fault of AbbVie and the AbbVie Subsidiaries, and no such fault shall be deemed to be the fault of Abbott or an Abbott Subsidiary; (ii) any fault associated with the business conducted with Delayed Abbott Assets or Delayed Abbott Liabilities (except for the gross negligence or intentional misconduct of AbbVie or an AbbVie Subsidiary) shall be deemed to be the fault of Abbott and the Abbott Subsidiaries, and no such fault shall be deemed to be the fault of AbbVie or an AbbVie Subsidiary; and (iii) any fault associated with the ownership, operation or activities of the Abbott Business prior to the Effective Time shall be deemed to be the fault of Abbott and the Abbott Subsidiaries, and no such fault shall be deemed to be the fault of AbbVie or the AbbVie Subsidiaries.

 

(c)                                  Contribution Procedures.  The provisions of Sections 4.04 through 4.10 and Sections 5.04 through 5.07 shall govern any contribution claims.

 

Section 4.08.                          Covenant Not to Sue.  Each Party hereby covenants and agrees that none of it, its Subsidiaries or any Person claiming through it shall bring suit or otherwise assert any claim against any Indemnitee, or assert a defense against any claim asserted by any Indemnitee, before any court, arbitrator, neutral mediator or administrative agency anywhere in the world, alleging that:  (a) the assumption of any AbbVie Liabilities by AbbVie and the AbbVie Subsidiaries on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; (b) the retention of any Abbott Liabilities by Abbott and the Abbott Subsidiaries on the terms and conditions set forth in this Agreement

 

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and the Ancillary Agreements is void or unenforceable for any reason, or (c) the provisions of this Article IV are void or unenforceable for any reason.

 

Section 4.09.                          Remedies Cumulative.  The remedies provided in this Article IV shall be cumulative and, subject to the provisions of Sections 4.08 and 7.01, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

 

Section 4.10.                          Survival of Indemnities.  The rights and obligations of each of the Parties and their respective Indemnitees under this Article IV shall survive (a) the sale or other transfer by either Party or any of its respective Subsidiaries of any assets or businesses or the assignment by it of any Liabilities; or (b) any merger,  consolidation, business combination, sale of all or substantially all of the Assets, restructuring, recapitalization, reorganization or similar transaction involving either Party or any of its respective Subsidiaries.

 

ARTICLE V

 

CERTAIN OTHER MATTERS

 

Section 5.01.                          No Right to Use Regulatory Information.  Except as otherwise set forth on Schedule 5.01 or provided in the Manufacture and Supply Agreements, the Special Products Master Agreement, the U.S. Transition Services Agreement or any International Transition Period Agreement:  (a) none of Abbott or any of the Abbott Subsidiaries shall have a right of reference to or otherwise be entitled to use the regulatory filings, drug master file, or other regulatory information related to any Exclusive AbbVie Products; and (b) none of AbbVie or any of the AbbVie Subsidiaries shall have a right of reference to or otherwise be entitled to use the regulatory filings, drug master file, or other regulatory information owned or controlled by Abbott or any of the Abbott Subsidiaries for any products in the Abbott Business.

 

Section 5.02.                          Directors and Officers Insurance; Fiduciary Liability Insurance.

 

(a)                                 Prior to the Effective Time, Abbott shall obtain and fully pay for a directors and officers liability run-off insurance policy, for claims made after the Effective Time covering wrongful acts that have occurred prior to the Effective Time and arising out of or relating to AbbVie and the AbbVie Subsidiaries and the AbbVie Business (as the AbbVie Business exists as of immediately after the Effective Time), with a policy period of at least six (6) years from and after the Effective Time, covering (i) any Persons who, as of or at any time prior to the Effective Time, are or have been directors or officers of Abbott or the Abbott Subsidiaries; (ii) any Persons who, as of or at any time prior to the Effective Time, are or have been directors or officers of AbbVie or the AbbVie Subsidiaries; and (iii) Abbott and the Abbott Subsidiaries and AbbVie and the AbbVie Subsidiaries and the AbbVie Business (as the AbbVie Business exists as of immediately after the Effective Time).  Such directors and officers liability run-off insurance policy shall be consistent in all material respects with the directors and officers liability insurance policy maintained by Abbott as of the Effective Time (except for the policy period and provisions excluding coverage for wrongful acts occurring after the Effective Time).

 

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(b)                                 Prior to the Effective Time, Abbott shall obtain and fully pay for a fiduciary liability run-off insurance policy, for claims made after the Effective Time covering wrongful acts that have occurred prior to the Effective Time and arising out of or relating to AbbVie and the AbbVie Subsidiaries and the AbbVie Business (as the AbbVie Business exists as of immediately after the Effective Time), with a policy period of at least six (6) years from and after the Effective Time, covering (i) any Persons who, as of or at any time prior to the Effective Time, are or have been fiduciaries of Abbott or the Abbott Subsidiaries; (ii) any Persons who, as of or at any time prior to the Effective Time, are or have been fiduciaries of AbbVie or the AbbVie Subsidiaries or the AbbVie Business (as the AbbVie Business exists as of immediately after the Effective Time); and (iii) Abbott and the Abbott Subsidiaries and AbbVie and the AbbVie Subsidiaries and the AbbVie Business (as the AbbVie Business exists as of immediately after the Effective Time).  Such fiduciary liability run-off insurance policy shall be consistent in all material respects with the fiduciary liability insurance policy maintained by Abbott as of the Effective Time (except for the policy period and provisions excluding coverage for wrongful acts occurring after the Effective Time).

 

Section 5.03.                          Insurance Matters.

 

(a)                                 AbbVie acknowledges and agrees, on its own behalf and on behalf of each of the AbbVie Subsidiaries, that, from and after the Effective Time, neither AbbVie nor any of the AbbVie Subsidiaries shall have any rights to or under any of Abbott’s or the Abbott Subsidiaries’ insurance policies, other than any insurance policies acquired prior to the Effective Time directly by and in the name of a member of AbbVie or any of the AbbVie Subsidiaries or as expressly provided in Section 4.06(f) or this Section 5.03 or in the Employee Matters Agreement.

 

(b)                                 Notwithstanding Section 5.03(a), from and after the Effective Time, with respect to any Liability incurred by AbbVie or any of the AbbVie Subsidiaries prior to the Effective Time, Abbott shall provide AbbVie with access to, and AbbVie may make claims under insurance policies purchased by Abbott if and to the extent that the terms of such policies provide such coverage to AbbVie or the AbbVie Subsidiaries, and subject to the terms and conditions of such insurance policies, including any limits on coverage or scope, any deductibles and other fees and expenses, and subject to the following additional conditions:

 

(i)                                     AbbVie shall report claims under such policies directly to the applicable insurance company, as promptly as practicable, and shall provide a copy of all such claim reports to the Corporate Risk Management Department of Abbott, and if Abbott disagrees with any matter covered in such reports, Abbott may notify the applicable insurance company, and shall provide a copy of such communication to the Corporate Risk Management Department of AbbVie;

 

(ii)                                  AbbVie shall exclusively bear and be responsible for (and Abbott shall have no obligation to repay or reimburse AbbVie or any of the AbbVie Subsidiaries for) and pay the applicable insurers as required under the applicable insurance policies for any and all costs as a result of having access to, or making claims under, any insurance provided pursuant to this Section 5.03(b), including any deductibles and self-insured retention associated with such claims, retrospective, retroactive or prospective premium adjustments associated with the

 

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applicable insurance policies, catastrophic coverage charges, overhead, claim handling and administrative costs, Taxes, surcharges, state assessments, reinsurance costs, other related costs and claim payments, relating to all open, closed, re-opened claims covered by the applicable policies, whether such claims are made by AbbVie, its employees or Third Parties, and AbbVie shall indemnify, hold harmless and reimburse Abbott and the Abbott Subsidiaries for any deductibles and self-insured retention incurred by Abbott or the Abbott Subsidiaries to the extent resulting from any access to, any claims made by AbbVie or any of the AbbVie Subsidiaries under, any insurance provided pursuant to this Section 5.03(b), including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are made by AbbVie, any AbbVie Subsidiary, their respective employees or Third Parties;

 

(iii)                               AbbVie shall exclusively bear (and Abbott shall have no obligation to repay or reimburse AbbVie or any of the AbbVie Subsidiaries for) and shall be liable for all uninsured, uncovered, unavailable or uncollectible amounts of all such claims made by AbbVie or any of the AbbVie Subsidiaries under the policies as provided for in this Section 5.03(b); and

 

(iv)                              Neither AbbVie nor any AbbVie Subsidiary, in connection with making a claim under any insurance policy of Abbott or any Abbott Subsidiary pursuant to this Section 5.03(b), shall take any action that would be reasonably likely to: (A) have an adverse impact on the then-current relationship between Abbott or any Abbott Subsidiary, on the one hand, and the applicable insurance company, on the other hand; (B) result in the applicable insurance company terminating or reducing coverage, or increasing the amount of any premium owed by Abbott or any Abbott Subsidiary under the applicable insurance policy; or (C) otherwise compromise, jeopardize or interfere with the rights of Abbott or any Abbott Subsidiary under the applicable insurance policy.

 

At all times, the Parties shall, and shall cause their respective Subsidiaries to, cooperate with reasonable requests for information by the other Party or the insurance companies regarding any such insurance policy claim.

 

(c)                                  Any payments, costs and adjustments required pursuant to Section 5.03(b) shall be billed by Abbott, on behalf of itself and the Abbott Subsidiaries, to AbbVie on a monthly basis and AbbVie, on behalf of itself and the AbbVie Subsidiaries, shall pay such payments, costs and adjustments to Abbott within sixty (60) days from receipt of invoice.  If Abbott incurs costs to enforce AbbVie’s obligations under this Section 5.03, AbbVie agrees to indemnify Abbott for such enforcement costs, including reasonable attorneys’ fees.

 

(d)                                 At the Effective Time, AbbVie shall have in effect all insurance programs required to comply with AbbVie’s statutory and contractual obligations and such other insurance policies as reasonably necessary or customary for companies operating a business similar to the AbbVie Business.  Such insurance programs include general liability, commercial auto liability, workers’ compensation, employers liability, product liability, professional services liability, property, cargo, employment practices liability, employee dishonesty/crime, aircraft hull and liability, directors’ and officers’ liability, fiduciary liability and special accident.

 

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(e)                                  AbbVie agrees, on its own behalf and on behalf of the AbbVie Subsidiaries, that, from the Effective Time until the sixth (6th) anniversary of the Effective Time, Abbott and the Abbott Subsidiaries shall be named as additional insureds or loss payee, whichever is appropriate, under any of AbbVie’s or the AbbVie Subsidiaries’ insurance policies in respect of any Abbott Liabilities arising out of the AbbVie Business or any wrongful acts or omissions prior to the Effective Time to the extent the applicable insurance carrier permits it.  AbbVie shall indemnify, hold harmless and reimburse Abbott and the Abbott Subsidiaries for any and all costs incurred by Abbott or the Abbott Subsidiaries to the extent resulting from any AbbVie’s or the AbbVie Subsidiaries’ insurance policies in which Abbott or any of the Abbott Subsidiaries are named as additional insureds, including any deductibles, self-insured retentions or uninsured losses.

 

(f)                                   Except as otherwise provided in Section 4.06(e), neither Abbott nor any of the Abbott Subsidiaries shall have any obligation to secure extended reporting for any claims under any of Abbott’s or the Abbott Subsidiaries’ claims-made or occurrence-reported liability policies for any acts or omissions by AbbVie or any AbbVie Subsidiary incurred prior to the Effective Time.

 

(g)                                  This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of either Abbott or any Abbott Subsidiary in respect of any of the Abbott insurance policies and programs or any other contract or policy of insurance.

 

Section 5.04.                          Late Payments.  Except as provided in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within sixty (60) days of the date of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%.

 

Section 5.05.                          Treatment of Payments for Tax Purposes.  For all Tax purposes, the Parties agree to treat (i) any payment required by this Agreement (other than payments with respect to interest accruing after the Effective Time) as either a contribution by Abbott to AbbVie or a distribution by AbbVie to Abbott, as the case may be, occurring immediately prior to the Effective Time or as a payment of an assumed or retained Liability; and (ii) any payment of interest as taxable or deductible, as the case may be, to the Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise required by applicable Law.

 

Section 5.06.                          Inducement.  AbbVie acknowledges and agrees that Abbott’s willingness to cause, effect and consummate the Separation and the Distribution has been conditioned upon and induced by AbbVie’s covenants and agreements in this Agreement and the Ancillary Agreements, including AbbVie’s assumption of the AbbVie Liabilities pursuant to the Separation and the provisions of this Agreement and AbbVie’s covenants and agreements contained in Article IV.

 

Section 5.07.                          Post-Effective Time Conduct.  The Parties acknowledge that, after the Effective Time, each Party shall be independent of the other Party, with responsibility for its own

 

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actions and inactions and its own Liabilities relating to, arising out of or resulting from the conduct of its business, operations and activities following the Effective Time, except as may otherwise be provided in any Ancillary Agreement, and each Party shall (except as otherwise provided in Article IV, including Sections 4.02 and 4.03) use commercially reasonable efforts to prevent such Liabilities from being inappropriately borne by the other Party.

 

Section 5.08.                          Licensed Patents.  The Parties have determined that certain patents will need to be used by both Parties after the Separation and therefore wish to establish license terms with respect to such patents.

 

(a)                                 Grant of Rights to Licensee.  Subject to the terms of the applicable section of Schedule 5.08(a)(i) through Schedule 5.08(v) (each section of Licensed Patents set forth on each of Schedule 5.08(a)(i) through Schedule 5.08(v), a “Licensed Patent Schedule”), on a Licensed Patent Schedule-by-Licensed Patent Schedule basis:

 

(i)                                     Abbott, on behalf of itself and its Affiliates, to the extent each such Affiliate has granting rights, hereby grants to AbbVie and its Affiliates a non-exclusive, perpetual, irrevocable, fully paid and royalty free right and license to make, have made, use, sell, have sold, offer for sale, or import under the Licensed Patents set forth on the applicable section of Schedule 5.08(a)(i) in the Territory in the Field-of-Use.

 

(ii)                                  Abbott, on behalf of itself and its Affiliates, to the extent each such Affiliate has granting rights, hereby grants to AbbVie and its Affiliates an exclusive, perpetual, irrevocable, fully paid and royalty free right and license to make, have made, use, sell, have sold, offer for sale or import under the Licensed Patents set forth on the applicable section of Schedule 5.08(a)(ii) in the Territory in the Field-of-Use.

 

(iii)                               Abbott, on behalf of itself and its Affiliates, to the extent each such Affiliate has granting rights, hereby grants to AbbVie and its Affiliates a co-exclusive, perpetual, irrevocable, fully paid, royalty-free right and license to make, have made, use, sell, have sold, offer for sale or import under the Licensed Patents set forth on the applicable section of Schedule 5.08(a)(iii) in the Territory in the Field-of-Use.

 

(iv)                              AbbVie, on behalf of itself and its Affiliates, to the extent each such Affiliate has granting rights, hereby grants to Abbott and its Affiliates a non-exclusive, perpetual, irrevocable, fully paid and royalty free right and license to make, have made, use, sell, have sold, offer for sale, or import under the Licensed Patents set forth on the applicable section of Schedule 5.08(a)(iv) in the Territory in the Field-of-Use.

 

(v)                                 AbbVie, on behalf of itself and its Affiliates, to the extent each such Affiliate has granting rights, hereby grants to Abbott and its Affiliates a co-exclusive, perpetual, irrevocable, fully paid, royalty-free right and license to make, have made, use, sell, have sold, offer for sale or import under the Licensed Patents set forth on the applicable section of Schedule 5.08(a)(v) in the Territory in the Field-of-Use.

 

(b)                                 Sublicense Rights.  Subject to the terms of a particular Licensed Patent Schedule, Licensee or its Affiliates may grant sublicenses under the licenses in Section 5.08(a) solely to (i) Third Parties conducting research and development for Licensee or its Affiliates, or

 

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(ii) bona fide Third Party collaborators, co-marketers, distributors or other commercial partners of Licensee or its Affiliates, in each case, only to the extent such sublicense is: (x) pursuant to a written agreement with Licensee or its Affiliates; and (y) reasonably necessary for and limited to the purpose of the research, development, collaboration, co-marketing, distribution or other similar arrangement with Licensee or its Affiliates in the applicable Field-of-Use (i.e., excluding Third Parties who have no significant relationship with Licensee or its Affiliates other than the sublicense arrangement).  Licensee shall provide Notice to Licensor of each sublicense granted hereunder, and shall provide Licensor with the name and address of each sublicensee and a description of the rights granted and the territory covered by each sublicensee; provided such notice requirement does not apply to research agreements, clinical study agreements, investigator initiated studies, service agreements, manufacturing agreements, distribution agreements, promotion agreements and the like that may contain a limited express or implied sublicense to perform the research, study, services or other activities that are the subject of said agreement.

 

(c)                                  Sale of Business.  To the extent Licensee sells, divests or otherwise transfers to a Third Party an entire product line, Affiliate, division or other business unit (“Sold Business”) in a transaction that does not constitute a Change of Control of Licensee, and: (i) the activities of the Sold Business, but for the license granted under this Section 5.08, would infringe a claim of a Licensed Patent at the time of the sale or other transfer; and (ii) Licensee maintains a business that, but for the license granted under this Section 5.08, would infringe such Licensed Patent at the time of such sale, divestiture or other transfer (the “Maintained Business”), then Licensor hereby grants to Licensee the right to grant to the Third Party acquiring such Sold Business a non-exclusive sublicense to said Licensed Patent, subject to the terms and conditions of this Section 5.08 and the applicable Licensed Patent Schedule, and only to the extent the activities of the Sold Business would be infringing such Licensed Patent, but for the foregoing license, at the time of such sale, divestiture or other transfer.  Upon any such sale, divesture or other transfer involving a sublicense grant as contemplated by this Section 5.08(c), Licensee shall provide a Notice to Licensor setting forth the name and address of each such Third Party.  In the event Licensee sells, divests or otherwise transfers substantially all of the business related to such Licensed Patent, or engages in a Change of Control, then the rights of the Third Party acquiring such Sold Business will be determined in accordance with Section 9.03.

 

(d)                                 Obligations with Respect to Affiliates.  To the extent that any Affiliate of Licensee exercises any rights or obligations of Licensee under this Section 5.08, Licensee shall ensure that such Affiliate exercises such rights and obligations in a manner consistent with, and subject to the applicable provisions of, this Section 5.08.

 

(e)                                  Rights in Bankruptcy.  All Licensed Patents and licenses granted under or pursuant to this Section 5.08 are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code.  The Parties agree that each of them as a Licensee of such rights under this Section 5.08, as applicable, shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction.  The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, the Party that is not a party to such proceeding

 

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shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, which, if not already in the non-subject Party’s possession, shall be promptly delivered to it: (i) upon the subject Party’s receipt of a Notice from the non-subject Party requesting such information, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Section 5.08; or (ii) if not delivered under clause (i) above, following the rejection of this Section 5.08 by or on behalf of the subject Party upon receipt of a Notice from the non-subject Party requesting such information.

 

(f)                                   Prosecution, Maintenance and Enforcement of Patent Rights.  Unless otherwise set forth in a Licensed Patent Schedule, Licensor shall have the sole right, but not the obligation, to prepare, file, prosecute, maintain, enforce and defend the Licensed Patents at Licensor’s sole cost and expense.

 

(g)                                  Inventor Remuneration.  If, in respect of an invention underlying a Licensed Patent, any payment is owed from or after the Effective Time by Licensor or Licensee to any current or former employee who is, under the Law of any jurisdiction, entitled to such payment as a remuneration of such employee’s contribution to the invention (an “Employee Inventor Remuneration Entitlement”), the following shall apply:

 

(i)                                     If and to the extent that the actions or events that give rise to an Employee Inventor Remuneration Entitlement are related exclusively to Licensee, Licensee shall indemnify and hold harmless Licensor from and against the Employee Inventor Remuneration Entitlements resulting from such actions or events.  If and to the extent that the actions or events that give rise to an Employee Inventor Remuneration Entitlement are related exclusively to Licensor, Licensor shall indemnify and hold harmless Licensee from and against the Employee Inventor Remuneration Entitlements resulting from such actions and events.  If and to the extent that the actions or events that give rise to an Employee Inventor Remuneration Entitlement are related both to Licensee and Licensor, then the Party who is not legally obligated to pay the Employee Inventor Remuneration Entitlements shall indemnify and hold harmless the other Party from and against the Employee Inventor Remuneration Entitlements resulting from such actions or events on a pro rata basis, taking into account the relative benefit from such actions and events to the Party not legally obligated to pay the Employee Inventor Remuneration Entitlements,

 

(ii)                                  If the determination, adjustment, adaption or other assessment of an Employee Inventor Remuneration Entitlement is, or becomes after the Effective Time, the subject matter of: (x) any Proceeding; (y) any consultations, negotiations or agreement with the relevant employee or a body of employees; or (z) a unilateral decision of a Party (each of (x) through (z), including any appeals, a “Remuneration Assessment”), the Parties shall cooperate with respect to such Remuneration Assessment in good faith.  The Party against which a Remuneration Assessment is made shall: (A) provide Notice to the other Party about, and offer the other Party reasonable opportunity to participate in, the Remuneration Assessment; (B) take the other Party’s reasonable comments and requests into due consideration; and (C) refrain from acknowledging or settling, agreeing to or unilaterally deciding on the relevant Employee Inventor Remuneration Entitlement without the other Party’s prior written consent (which consent shall not be unreasonably delayed, conditioned or withheld).

 

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(iii)                               Each Party shall provide the other Party with any information about the commercial exploitation of the relevant Licensed Patent, including any payments or other economic benefits received from such exploitation, by the Party and its Subsidiaries reasonably requested by the other Party for any determination under subsections (i) and (ii) above.

 

(h)                                 License Term.  Each license granted pursuant to this Section 5.08 shall be effective as of the Effective Time and shall continue in full force and effect until the earlier of: (i) on a Licensed Patent Schedule-by-Licensed Patent Schedule basis, the expiration of the last to expire of the Licensed Patents on such Licensed Patent Schedule; (ii) the execution and delivery by each of the Parties of a written agreement terminating such license; or (iii) with respect to any Licensed Patent Schedule, delivery of a Notice by Licensee to Licensor terminating the licenses provided for in such Licensed Patent Schedule.  The provisions of Section 5.08(e) and Section 5.08(g) shall survive the expiration or termination of the applicable licenses granted pursuant to this Section 5.08 and shall remain in full force and effect thereafter.

 

Section 5.09.                          Non-Compete.  During the period commencing on the Distribution Date and ending on the tenth (10th) anniversary of the Distribution Date (or, if not enforceable for such period in any country under the antitrust/competition laws of such country, for such period as will be enforceable in such country under the antitrust/competition laws of such country) (the “Non-Compete Period”), except as otherwise expressly contemplated in this Agreement or the International Transition Period Agreements, Abbott and the Abbott Subsidiaries shall not, directly or indirectly, engage in the business of discovering, researching, developing, importing, exporting, manufacturing, marketing, distributing, promoting or selling anywhere in the world any anti-TNF antibody, JAK inhibitor or IL-12 inhibitor (the “Competitive Business”); provided, however, that this Section 5.09 shall not prevent Abbott or any of the Abbott Subsidiaries from (i) discovering, researching, developing, importing, exporting, manufacturing, marketing, distributing, promoting or selling any medical device that is sold separately by Abbott or any Abbott Subsidiary and is used in conjunction with and is ancillary to an anti-TNF antibody, JAK inhibitor or IL-12 inhibitor (e.g., a syringe), or any diagnostic product; (ii) purchasing or acquiring, or being the holder or beneficial owner for passive investment purposes of, equity securities of a Person that, directly or indirectly, engages in the Competitive Business; provided that, in the case of this clause (ii), the aggregate holdings of Abbott and the Abbott Subsidiaries of such equity securities in such Person during the Non-Compete Period shall not exceed five percent (5%) of the outstanding equity securities of such Person; or (iii) purchasing or acquiring (whether by merger, an asset, stock or equity acquisition or otherwise), and thereafter being the holder or beneficial owner of, at least a majority of the equity securities or consolidated assets of a Person that, directly or indirectly, engages in the Competitive Business; provided that, in the case of this clause (iii), Abbott shall cause such Person, as promptly as practicable following such purchase or acquisition (and in no event later than 12 months after such purchase or acquisition), to cease engaging in the Competitive Business during the Non-Compete Period, whether by divestiture or otherwise, for as long as such Person shall remain an Abbott Subsidiary.

 

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ARTICLE VI

 

EXCHANGE OF INFORMATION; CONFIDENTIALITY

 

Section 6.01.                          Agreement for Exchange of Information; Archives.

 

(a)                                 Exchange of Information.  Except as otherwise provided in any Ancillary Agreement, each of Abbott and AbbVie, on behalf of itself and its respective Subsidiaries and Affiliates, shall use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the other Party, at any time before or after the Effective Time, as soon as reasonably practicable after written request therefor, any Information (or a copy thereof) in the possession or under the control of either Party or any of its Subsidiaries to the extent that (i) such Information relates to the AbbVie Business, or any AbbVie Asset or AbbVie Liability, if AbbVie is the requesting Party, or to the Abbott Business, or any Abbott Assets or Abbott Liability, if Abbott is the requesting Party; (ii) such Information is required by the requesting Party to comply with its obligations under this Agreement or any Ancillary Agreement; or (iii) such Information is required by the requesting Party to comply with any obligation imposed by any Governmental Authority; provided, however, that, in the event that the Party to whom the request has been made determines that any such provision of Information could be commercially detrimental, violate any Law or agreement, or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit compliance with such obligations to the extent and in a manner that avoids any such harm or consequence.  The Party providing Information pursuant to this Section 6.01(a) shall only be obligated to provide such Information in the form, condition and format in which it then exists and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such Information, and nothing in this Section 6.01(a) shall expand the obligations of the Parties under Section 6.03.

 

(b)                                 Access to Specified Information.  Without limiting the generality of the foregoing, until the first AbbVie fiscal year end occurring after the Effective Time (and for a reasonable period of time afterwards as required for each of Abbott and AbbVie to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), each of Abbott and AbbVie shall use its commercially reasonable efforts to cooperate with the other Party’s Information requests to enable (i) the other Party to meet its timetable for dissemination of its earnings releases, financial statements and management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K promulgated under the Exchange Act; and (ii) the other Party’s accountants to timely complete their review of the quarterly financial statements and audit of the annual financial statements, including, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder and any other applicable Laws.

 

(c)                                  Compensation for Providing Information.  The Party requesting Information agrees to reimburse the other Party for the reasonable costs, if any, of creating,

 

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gathering, copying, transporting and otherwise complying with the request with respect to such Information (including any reasonable costs and expenses incurred in any review of Information for purposes of protecting the Privileged Information of the providing Party or in connection with the restoration of backup media for purposes of providing the requested Information).  Except as may be otherwise specifically provided elsewhere in this Agreement or in any Ancillary Agreement, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures.

 

Section 6.02.                          Ownership of Information.  The provision of any Information pursuant to Section 6.01 shall not affect the ownership of such Information (which shall be determined solely in accordance with the terms of this Agreement and the Ancillary Agreements), or constitute the grant of rights in or to any such Information.

 

Section 6.03.                          Stored Records.

 

(a)                                 The Parties agree and acknowledge that it is not practicable to separate all Tangible Information belonging to the Parties, and that following the Effective Time, each Party will have some of the Tangible Information of the other Party stored at the internal or Third Party records storage locations arranged for by Abbott’s Corporate Records or Records Information Center personnel, by the corresponding AbbVie personnel, or by the successor organizations within Abbott or AbbVie (each, a “Records Facility”).  Tangible Information held in a Records Facility maintained or arranged for by the Party other than the Party that owns such Tangible Information is referred to as “Stored Records”.  The Party that maintains the Records Facility where Stored Records are held is referred to as the “Custodial Party” and the Party that owns the Stored Records held in the other Party’s Records Facility is referred to as the “Non-Custodial Party”.

 

(b)                                 Each Party shall use commercially reasonable efforts: (i) to maintain the Stored Records as to which it is the Custodial Party in accordance with its regular records retention policies and procedures and the terms of this Section 6.03 and of Schedule 6.03; and (ii) to comply with the requirements of any “Litigation Hold” that relates to Stored Records as to which it is the Custodial Party that relate to (x) any Proceeding that is pending as of the Effective Time; or (y) any Proceeding that arises or becomes threatened or reasonably anticipated after the Effective Time as to which the Custodial Party has received a Notice of the applicable “Litigation Hold” from the Non-Custodial Party.

 

Section 6.04.                          Limitations of Liability.  Neither Party shall have any Liability to the other Party in the event that any Information exchanged or provided pursuant to this Agreement is found to be inaccurate in the absence of gross negligence or willful misconduct by the Party providing such Information.  Neither Party shall have any Liability to any other Party if any Information is destroyed after commercially reasonable efforts by such Party to comply with the provisions of this Article VI.

 

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Section 6.05.                          Other Agreements Providing for Exchange of Information.

 

(a)                                 The rights and obligations set forth under this Article VI are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth in any Ancillary Agreement.

 

(b)                                 Either Party that receives, pursuant to a request for Information in accordance with this Article VI, Tangible Information that is not relevant to its request shall (i) return it to the providing Party or, at the providing Party’s request, destroy such Tangible Information; and (ii) deliver to the providing Party a certificate certifying that such Tangible Information was returned or destroyed, as the case may be, which certificate shall be signed by an authorized Representative of the requesting Party.

 

(c)                                  When any Tangible Information provided by one Party to the other Party (other than Tangible Information provided pursuant to Section 6.03) is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement or is no longer required to be retained by applicable Law, the receiving Party shall promptly, after request of the other Party, either return to the other Party all Tangible Information in the form in which it was originally provided (including all copies thereof and all notes, extracts or summaries based thereon) or, if the providing Party has requested that the other Party destroy such Tangible Information, certify to the other Party that it has destroyed such Tangible Information (and such copies thereof and such notes, extracts or summaries based thereon); provided that this obligation to return or destroy such Tangible Information shall not apply to any Tangible Information solely related to the receiving Party’s business, Assets, Liabilities, operations or activities.

 

Section 6.06.                          Production of Witnesses; Records; Cooperation.  The Parties acknowledge that, from time to time after the Effective Time, a Party may desire cooperation, including the provision of information and witnesses in connection with a Proceeding.  The Parties agree that such matters shall be addressed as set forth in Schedule 6.06.

 

Section 6.07.                          Privileged Matters.

 

(a)                                 The Parties recognize that legal and other professional services that have been and shall be provided prior to the Effective Time have been and shall be rendered for the collective benefit of the Parties and their respective Subsidiaries, and that each Party and its respective Subsidiaries should be deemed to be the client with respect to such services for the purposes of asserting all privileges and immunities that may be asserted under applicable Law in connection therewith.

 

(b)                                 The Parties agree as follows:

 

(i)                                     Abbott shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the Abbott Business, whether or not the Privileged Information is in the possession or under the control of Abbott or an Abbott Subsidiary or AbbVie or an AbbVie Subsidiary.  Abbott shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any Abbott Liabilities resulting from any Proceedings that are now pending or may be asserted

 

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in the future, whether or not the Privileged Information is in the possession or under the control of Abbott or an Abbott Subsidiary or AbbVie or an AbbVie Subsidiary.

 

(ii)                                  AbbVie shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the AbbVie Business, whether or not the Privileged Information is in the possession or under the control of AbbVie or an AbbVie Subsidiary or Abbott or an Abbott Subsidiary.  AbbVie shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any AbbVie Liabilities resulting from any Proceedings that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of AbbVie or an AbbVie Subsidiary or Abbott or an Abbott Subsidiary.

 

(iii)                               If Abbott and AbbVie do not agree as to whether certain Information is Privileged Information, then the Information shall be treated as Privileged Information, and the Party who believes such Information is Privileged Information shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such Information unless the Parties otherwise agree.  The Parties shall utilize the procedures set forth in Article VII to resolve any disputes as to whether any Information relates solely to the Abbott Business, solely to the AbbVie Business, or to both the Abbott Business and the AbbVie Business.

 

(c)                                  Subject to Sections 6.07(d) and 6.07(e), the Parties agree that they shall have a shared privilege or immunity with respect to all privileges not allocated pursuant to Section 6.07(b) and all privileges and immunities relating to any Proceedings or other matters that involve both Parties (or one or more of their respective Subsidiaries) and in respect of which both Parties have Liabilities under this Agreement, and that no such shared privilege or immunity may be waived by either Party without the consent of the other Party.

 

(d)                                 If any dispute arises between Abbott and AbbVie, or any of their respective Subsidiaries, regarding whether a privilege or immunity should be waived to protect or advance the interests of either Party and/or their respective Subsidiaries, each Party agrees that it shall (i) negotiate with the other Party in good faith; (ii) endeavor to minimize any prejudice to the rights of the other Party; and (iii) not unreasonably withhold consent to any request for waiver by the other Party.  Further, each Party specifically agrees that it shall not withhold its consent to the waiver of a privilege or immunity for any purpose except to protect its own legitimate interests.

 

(e)                                  Upon receipt by AbbVie or by any of the AbbVie Subsidiaries of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Information subject to a shared privilege or immunity or as to which Abbott or any of the Abbott Subsidiaries has the sole right hereunder to assert a privilege or immunity, or if AbbVie obtains knowledge that any of its, or the AbbVie Subsidiary’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that may reasonably be expected to result in the production or disclosure of such Privileged Information, AbbVie shall promptly provide Notice to Abbott of the existence of the request (which Notice shall be delivered to Abbott no later than five (5) business days following the

 

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receipt of any such subpoena, discovery or other request) and shall provide Abbott a reasonable opportunity to review the Information and to assert any rights it or they may have, including under this Section 6.07 or otherwise, to prevent the production or disclosure of such Privileged Information.

 

(f)                                   Upon receipt by Abbott or by any of the Abbott Subsidiaries of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Information subject to a shared privilege or immunity or as to which AbbVie or any of the AbbVie Subsidiaries has the sole right hereunder to assert a privilege or immunity, or if Abbott obtains knowledge that any of its, or the Abbott Subsidiary’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that may reasonably be expected to result in the production or disclosure of such Privileged Information, Abbott shall promptly provide Notice to AbbVie of the existence of the request (which Notice shall be delivered to AbbVie no later than five (5) business days following the receipt of any such subpoena, discovery or other request) and shall provide AbbVie a reasonable opportunity to review the Information and to assert any rights it or they may have, including under this Section 6.07 or otherwise, to prevent the production or disclosure of such Privileged Information.

 

(g)                                  Any furnishing of, or access to, Information pursuant to this Agreement is made in reliance on the agreement of Abbott and AbbVie set forth in this Section 6.07 and in Section 6.08 to maintain the confidentiality of Privileged Information and to assert and maintain all applicable privileges and immunities.  The Parties further agree that (i) the exchange by one Party to the other Party of any Privileged Information that should not have been transferred pursuant to the terms of this Article VI shall not be deemed to constitute a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise with respect to such Privileged Information; and (ii) the Party receiving such Privileged Information shall promptly return such Privileged Information to the Party who has the right to assert the privilege or immunity.

 

(h)                                 In furtherance of, and without limitation to, the Parties’ agreement under this Section 6.07, Abbott and AbbVie shall, and shall cause their applicable Subsidiaries to, use reasonable efforts to maintain their respective separate and joint privileges and immunities, including by executing joint defense and/or common interest agreements where necessary or useful for this purpose.

 

Section 6.08.                          Confidentiality.

 

(a)                                 Confidentiality.  From and after the Effective Time, subject to Section 6.09 and except as contemplated by or otherwise provided in this Agreement or any Ancillary Agreement, Abbott, on behalf of itself and each of the Abbott Subsidiaries, and AbbVie, on behalf of itself and each of the AbbVie Subsidiaries, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives (each, a “Representative”) to hold, in strict confidence, with at least the same degree of care that applies to Abbott’s confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential and proprietary information concerning the other Party (or its business) and the other Party’s Subsidiaries (or their respective

 

59



 

businesses) that is either in its possession (including confidential and proprietary information in its possession prior to the Effective Time) or furnished by the other Party or the other Party’s Subsidiaries or their respective Representatives at any time pursuant to this Agreement or any Ancillary Agreement, and shall not use any such confidential and proprietary information other than for such purposes as may be expressly permitted hereunder or thereunder, except, in each case, to the extent that such confidential and proprietary information has been:  (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or any of their respective Representatives in violation of this Agreement; (ii) later lawfully acquired from other sources by such Party or any of its Subsidiaries, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary information; or (iii) independently developed or generated without reference to or use of the respective proprietary or confidential information of the other Party or any of its Subsidiaries.  If any confidential and proprietary information of one Party or any of its Subsidiaries is disclosed to another Party or any of its Subsidiaries in connection with providing services to such first Party or any of its Subsidiaries under this Agreement or any Ancillary Agreement, then such disclosed confidential and proprietary information shall be used only as required to perform such services.

 

(b)                                 No Release; Return or Destruction.  Each Party agrees not to release or disclose, or permit to be released or disclosed, any information addressed in Section 6.08(a) to any other Person, except its Representatives who need to know such information in their capacities as such, and except in compliance with Section 6.09.  Information furnished by the other Party after the Effective Time pursuant to this Agreement or any Ancillary Agreement shall be subject to the provisions of Section 6.03.

 

(c)                                  Third-Party Information; Privacy or Data Protection Laws.  Each Party acknowledges that it and its respective Subsidiaries may presently have and, following the Effective Time, may gain access to or possession of confidential or proprietary information of, or personal information relating to, Third Parties (i) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or the other Party’s Subsidiaries, on the other hand, prior to the Effective Time; or (ii) that, as between the two Parties, was originally collected by the other Party or the other Party’s Subsidiaries and that may be subject to and protected by privacy, data protection or other applicable Laws.  As may be provided in more detail in an applicable Ancillary Agreement, each Party agrees that it shall hold, protect and use, and shall cause its Subsidiaries and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary information of, or personal information relating to, Third Parties in accordance with privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Effective Time or affirmative commitments or representations that were made before the Effective Time by, between or among the other Party or the other Party’s Subsidiaries, on the one hand, and such Third Parties, on the other hand.

 

Section 6.09.                          Protective Arrangements.  In the event that either Party or any of its Subsidiaries is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant to applicable Law to disclose or provide any confidential or proprietary

 

60



 

information of the other Party (other than with respect to any such information furnished pursuant to the provisions of Sections 6.01 through 6.07), as applicable, that is subject to the confidentiality provisions hereof, such Party shall provide the other Party with Notice of such request or demand as promptly as practicable under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order, at such other Party’s own cost and expense.  In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority.

 

ARTICLE VII

 

DISPUTE RESOLUTION

 

Section 7.01.                          Disputes.

 

(a)                                 Alternative Dispute Resolution Procedures.  The Parties acknowledge that, from time to time after the Effective Time, a controversy, dispute or claim (a “Dispute”) may arise relating to either Party’s rights or obligations under this Agreement or any Ancillary Agreement.  The Parties agree that any such Dispute (whether arising in contract, tort or otherwise) arising out of or relating in any way to this Agreement or any Ancillary Agreement (including regarding whether any Assets are AbbVie Assets, any Liabilities are AbbVie Liabilities or the interpretation or validity of this Agreement) shall be resolved by the Alternative Dispute Resolution (“ADR”) provisions set forth in this Section 7.01 and in Schedule 7.01, the result of which shall be binding upon the Parties.

 

(i)                                     Notices.  Prior to initiating an ADR proceeding, a Party first must send Notice to the other Party (A) describing the Dispute; and (B) requesting attempted resolution of the Dispute by good faith negotiations in accordance with Section 7.01(a)(ii).

 

(ii)                                  Negotiations.  The CEOs or Presidents of each Party shall designate a group of no more than three individuals (with representatives of each Party’s respective counsel not counting against such three individual limit), to participate in good faith negotiations with a like group designated by the other Party aimed at resolving the Dispute.  The respective groups shall meet in person to conduct good faith negotiations during the twenty one (21) day period following receipt of the Notice.  By mutual written consent, the Parties may extend the twenty one (21)-day period for conducting such negotiations.  If the Parties fail to resolve the Dispute within the twenty one (21)-day period or the Parties fail to meet during such period, and the period is not extended by mutual written agreement, either Party may initiate an ADR proceeding as provided in Schedule 7.01.

 

(b)                                 Continuation of Services and Commitments.  Unless otherwise agreed in writing, the Parties shall, and shall cause their respective Subsidiaries to, continue to honor all commitments under this Agreement and each Ancillary Agreement to the extent required by such

 

61



 

Agreements during the course of dispute resolution pursuant to the provisions of this Article VII with respect to all matters related to such Dispute.

 

ARTICLE VIII

 

TERMINATION

 

Section 8.01.                          Termination.  This Agreement and all Ancillary Agreements may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Effective Time by and in the sole discretion of Abbott without the approval of any Person, including AbbVie.  In the event of such termination, this Agreement shall become null and void and no Party, nor any of its directors, officers or employees, shall have any Liability of any kind to any Person by reason of this Agreement.  After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by a duly authorized officer of each of the Parties.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.01.                          Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures.

 

(a)                                 Counterparts.  This Agreement and each Ancillary Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement.

 

(b)                                 Entire Agreement.  This Agreement, the Ancillary Agreements and the exhibits, schedules and annexes hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.  It is the intention of the Parties that the Conveyance and Assumption Instruments shall be consistent with the terms of this Agreement and the other Ancillary Agreements.  In the event of any conflict between the Conveyance and Assumption Instruments and this Agreement, the provisions of this Agreement shall control.  The Parties agree that the Conveyance and Assumption Instruments are not intended and shall not be construed in any way to enhance, modify or decrease any of the rights or obligations of Abbott, any Abbott Subsidiary, AbbVie or any AbbVie Subsidiary from those contained in this Agreement and the other Ancillary Agreements.

 

(c)                                  Corporate Power.  Abbott represents on behalf of itself and, to the extent applicable, each Abbott Subsidiary and AbbVie represents on behalf of itself and, to the extent applicable, each AbbVie Subsidiary as follows:

 

(i)                                     each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

 

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(ii)                                  this Agreement and each Ancillary Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

 

(d)                                 Signatures and Delivery.  Each Party acknowledges that it and the other Party may execute this Agreement and any Ancillary Agreement by manual, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement or any Ancillary Agreement.  Each Party expressly adopts and confirms a stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it shall not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it shall as promptly as reasonably practicable cause each such Agreement and Ancillary Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

 

Section 9.02.                          Governing Law.  This Agreement and, unless expressly provided therein, each Ancillary Agreement, shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws and principles of the State of Delaware, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

 

Section 9.03.                          Assignability.  Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the Parties and the parties thereto, respectively, and their respective successors and permitted assigns; provided, however, that neither Party nor any such party thereto may assign its rights or delegate its obligations under this Agreement or any Ancillary Agreement without the express prior written consent of the other Party hereto or the other parties thereto.  Notwithstanding the foregoing, no such consent shall be required for the assignment of a Party’s rights and obligations under this Agreement or the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement or in a Licensed Patent Schedule): (a) in whole in connection with a Change of Control of a Party; or (b) in part, on a Licensed Patent-by-Licensed Patent basis, in connection with the sale, transfer or other divestiture of a Sold Business by a Party (but only to the extent the partially assigned license rights are reasonably related to and necessary for such Sold Business), in either case, so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant Party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.  Nothing herein is intended to, or shall be construed to, prohibit either Party or any of its Subsidiaries from being party to or undertaking a Change of Control.

 

Section 9.04.                          Third Party Beneficiaries.  Except (a) for the indemnification rights under this Agreement of an Abbott Indemnitee or AbbVie Indemnitee in their respective capacities as such under Article IV; (b) for the releases under Section 4.01 of any Person provided therein;

 

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and (c) to the extent otherwise provided in Section 4.06(f), (i) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and their respective Subsidiaries, after giving effect to the Distribution, and their permitted successors and assigns, and are not intended to confer upon any Person except the Parties and their respective Subsidiaries, after giving effect to the Distribution, and their permitted successors and assigns, any rights or remedies hereunder; and (ii) there are no other third-party beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.

 

Section 9.05.                          Notices.  All Notices and, to the extent applicable and unless otherwise provided therein, under each of the Ancillary Agreements shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a Notice):

 

If to Abbott:

 

Abbott Laboratories
100 Abbott Park Road
Building AP6D, Dept. 364
Abbott Park, Illinois  60064-6020
Attn:  General Counsel
Facsimile:  (847) 938-6277

 

If to AbbVie:

 

AbbVie Inc.
1 North Waukegan Road
North Chicago, Illinois 60064
Attn:  General Counsel
Facsimile:  [
·]

 

Either Party may, by Notice to the other Party, change the address to which such Notices are to be given.

 

Section 9.06.                          Severability.  In the event that any one or more of the terms or provisions of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or any Ancillary Agreement, or the application of such term or provision to Persons or circumstances or in jurisdictions other than those as to which it has been determined to be invalid, illegal or unenforceable, and the Parties shall use their commercially reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into this Agreement (or the applicable Ancillary Agreement) which, insofar as

 

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practicable, implement the purposes and intent of the Parties.  Any term or provision of this Agreement or any Ancillary Agreement held invalid or unenforceable only in part, degree or within certain jurisdictions shall remain in full force and effect to the extent not held invalid or unenforceable to the extent consistent with the intent of the parties as reflected by this Agreement.  To the extent permitted by applicable Law, each party waives any term or provision of Law which renders any term or provision of this Agreement to be invalid, illegal or unenforceable in any respect.

 

Section 9.07.                          Force Majeure.  Neither Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for failure to fulfill any obligation so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.  A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide Notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement or any Ancillary Agreement as soon as reasonably practicable.

 

Section 9.08.                          No Set Off.  Except as set forth in any Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, neither Party nor any of its Subsidiaries shall have any right of set off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or any Ancillary Agreement; or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement or any Ancillary Agreement.

 

Section 9.09.                          Responsibility for Expenses.

 

(a)                                 Expenses Incurred on or Prior to the Effective Time.  Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, all costs and expenses incurred on or prior to the Effective Time in connection with the preparation, execution, delivery and implementation of this Agreement and any Ancillary Agreement, the Separation, the Registration Statement, the plan of Separation and the Distribution and the consummation of the transactions contemplated hereby and thereby shall be charged to and paid by Abbott.

 

(b)                                 Expenses Incurred or Accrued After the Effective Time.  Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, each Party shall bear its own costs and expenses incurred or accrued after the Effective Time; provided that: (i) any costs and expenses incurred in obtaining any Consent or novation from a Third Party in connection with the assignment to and assumption by a Party or its Subsidiary of any contracts, commitments or understandings in connection with the Separation shall be borne by the Party or its Subsidiary to which such contract, commitment or understanding is being assigned; and (ii) the Parties intend that ongoing cost obligations that each may have (x) as a provider of services under either the U.S. Transition Services Agreement or an International Transition Period Agreement following termination of such services, and (y)

 

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in connection with overhead absorption and spending variances at certain pharmaceutical manufacturing facilities, shall be shared for a period of time, on terms to be agreed from time to time between the Parties.

 

Section 9.10.                          Headings.  The Article, Section and Paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

 

Section 9.11.                          Survival of Covenants.  Except as expressly set forth in this Agreement or any Ancillary Agreement, the covenants and other agreements contained in this Agreement and each Ancillary Agreement, and liability for the breach of any obligations contained herein or therein, shall survive the Effective Time and shall remain in full force and effect thereafter.

 

Section 9.12.                          Subsidiaries.  Abbott shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by an Abbott Subsidiary and AbbVie shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by an AbbVie Subsidiary.

 

Section 9.13.                          Waivers of Default.  Waiver by either Party of any default by the other Party of any provision of this Agreement or any Ancillary Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party.

 

Section 9.14.                          Amendments.  No provisions of this Agreement or any Ancillary Agreement shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of both Parties or their relevant Subsidiaries, as the case may be.  No provisions of this Agreement or any Ancillary Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the Party or relevant Subsidiary against whom it is sought to be enforced.

 

Section 9.15.                          Interpretation.  Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires.  The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto and thereto) and not to any particular provision of this Agreement.  Article, Section, Exhibit and Schedule references are to the Articles, Sections, Exhibits, and Schedules to this Agreement unless otherwise specified.  Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement.  The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified.  The word “or” shall not be exclusive.  Unless otherwise specified in a particular case, the word “days” refers to calendar days.  References herein to this Agreement or any Ancillary Agreement shall be deemed to refer to this Agreement or such Ancillary Agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified.  References to the performance, discharge

 

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or fulfillment of any Liability in accordance with its terms shall have meaning only to the extent such Liability has terms.  If the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.

 

Section 9.16.                          Public Announcements.  From and after the Effective Time, Abbott and AbbVie shall consult with each other before issuing, and give each other the opportunity to review and comment upon, that portion of any press release or other public statements that relates to the transactions contemplated by this Agreement or the Ancillary Agreements, and shall not issue any such press release or make any such public statement prior to such consultation, except (a) as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system; or (b) as otherwise set forth on Schedule 9.16.

 

Section 9.17.                          Specific Performance.  Subject to the provisions of Article VII, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement or the Ancillary Agreements, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any Proceeding for specific performance that a remedy at Law would be adequate is waived.

 

Section 9.18.                          Mutual Drafting.  This Agreement and the Ancillary Agreements shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

 

* * * * *

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

 

 

ABBOTT LABORATORIES

 

ABBVIE INC.

 

 

 

 

 

 

By:

 

 

By:

 

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

 

[Signature Page to Separation and Distribution Agreement]

 




Exhibit 10.5

 

FORM OF

 

EMPLOYEE MATTERS AGREEMENT

 

BY AND BETWEEN

 

ABBOTT LABORATORIES

 

AND

 

ABBVIE INC.

 

DATED AS OF [·], 2012

 



 

TABLE OF CONTENTS

 

 

Page

 

 

ARTICLE I DEFINITIONS

1

 

 

Section 1.01.   Defined Terms

1

 

 

ARTICLE II GENERAL PRINCIPLES

11

 

 

Section 2.01.   Allocation of Liabilities

11

Section 2.02.   Employment with AbbVie

12

Section 2.03.   Establishment of AbbVie Plans

13

Section 2.04.   Post-Distribution Employment Transfers

14

Section 2.05.   Collective Bargaining

16

Section 2.06.   Distributorship Model

16

 

 

ARTICLE III U.S. QUALIFIED AND NON-QUALIFIED RETIREMENT PLANS

16

 

 

Section 3.01.   AbbVie Pension Plan

16

Section 3.02.   Abbott-AbbVie Multiple Employer Pension Plan

19

Section 3.03.   Stock Retirement/Savings Plan

22

Section 3.04.   Pension Plan for Former BASF and Former Solvay Employees

23

Section 3.05.   Supplemental Pension Plan

26

Section 3.06.   Deferred Compensation Plan

27

Section 3.07.   Supplemental Savings Plan

28

Section 3.08.   Deferred Compensation Plan for Former Employees of Solvay and Supplemental Pension Plan for Former BASF and Former Solvay Employees

28

 

 

ARTICLE IV NON-U.S. RETIREMENT PLANS

29

 

 

Section 4.01.   Establishment of Non-U.S. Retirement Plans and Transfers of Assets and Liabilities

29

Section 4.02.   Shared Plan Model

31

Section 4.03.   Overseas Managers Pension Plan and Territorial Pension Plan

33

 

 

ARTICLE V WELFARE AND FRINGE BENEFIT PLANS

34

 

 

Section 5.01.   U.S. Health and Welfare Plans

34

Section 5.02.   COBRA and HIPAA

36

Section 5.03.   U.S. Life Insurance Trust

36

Section 5.04.   Vacation, Holidays and Leaves of Absence

37

Section 5.05.   Severance and Unemployment Compensation

37

Section 5.06.   Workers’ Compensation

37

Section 5.07.   Non-U.S. Shared Health and Welfare Plans

37

 

i



 

ARTICLE VI EQUITY, INCENTIVE, AND EXECUTIVE COMPENSATION PROGRAMS

38

 

 

Section 6.01.   Equity Incentive Programs

38

Section 6.02.   Employee Stock Purchase Plan

41

Section 6.03.   Annual Incentive Plans

41

Section 6.04.   Performance Incentive Plan and Management Incentive Plan

42

Section 6.05.   Directors’ Fee Plan

43

Section 6.06.   Grantor Trusts

43

 

 

ARTICLE VII PUERTO RICO PLANS

43

 

 

Section 7.01.   Puerto Rico Retirement Plans

43

Section 7.02.   Puerto Rico Stock Retirement/Savings Plans

46

Section 7.03.   Puerto Rico Supplemental Retirement Plans

48

Section 7.04.   Puerto Rico Health and Welfare Plans

49

Section 7.05.   COBRA and HIPAA

51

 

 

ARTICLE VIII MISCELLANEOUS

51

 

 

Section 8.01.   Transfer of Records and Information

51

Section 8.02.   Cooperation

52

Section 8.03.   Employee Agreements

52

Section 8.04.   Repayment Assets

52

Section 8.05.   Compliance

52

Section 8.06.   Conflict With Conveyance and Assumption Instruments

53

Section 8.07.   Preservation of Rights

53

Section 8.08.   Transition Services

53

Section 8.09.   Reimbursement

53

Section 8.10.   Matching Grant Plan and Employee Giving Campaign

53

Section 8.11.   Clara Abbott Foundation

54

Section 8.12.   Not a Change in Control

54

Section 8.13.   Reverse Jurisdictions

54

Section 8.14.   Incorporation by Reference

54

Section 8.15.   Limitation on Enforcement

54

Section 8.16.   Further Assurances and Consents

54

Section 8.17.   Third Party Consent

55

Section 8.18.   Effect if Distribution Does Not Occur

55

Section 8.19.   Disputes

55

Section 8.20.   Schedules

55

 

ii



 

EMPLOYEE MATTERS AGREEMENT

 

This EMPLOYEE MATTERS AGREEMENT dated as of [·], 2012, is by and between ABBOTT LABORATORIES, an Illinois corporation (“Abbott”), and ABBVIE INC., a Delaware corporation (“AbbVie”).

 

RECITALS:

 

WHEREAS, the Abbott Board (as defined below) has determined that it is appropriate and advisable to separate Abbott’s research-based pharmaceuticals business from its other businesses;

 

WHEREAS, to achieve the foregoing, the Parties (as defined below) have executed a Separation and Distribution Agreement which provides for, among other things, the contribution from Abbott to AbbVie of certain Assets, the assumption by AbbVie of certain Liabilities (as defined below) from Abbott, the distribution by Abbott of AbbVie Common Stock (as defined below) to Abbott shareholders, and the execution and delivery of this Agreement (as defined below) and certain other agreements to facilitate and provide for the foregoing, in each case subject to the terms and conditions set forth therein;

 

WHEREAS, the Employees (as defined below) of the AbbVie Business (as defined below) are currently employed by the Abbott Group (as defined below) and are expected to become Employees of the AbbVie Group (as defined below); and

 

WHEREAS, this Agreement describes the principal employment, compensation and employee benefit plan arrangements between the Parties.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

 

AGREEMENT

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.  Defined Terms. The following capitalized terms as used in this Agreement shall have the meaning set forth below unless otherwise specified herein:

 

Abbott” has the meaning set forth in the first sentence of this Agreement.

 

Abbott ARP” means the Abbott Laboratories Annuity Retirement Plan.

 

Abbott Benefit Plan” means a Benefit Plan sponsored by, maintained by, or contributed to by the Abbott Group, except that such term shall not include the Abbott-AbbVie MEPP.

 



 

Abbott Board” means the Abbott board of directors.

 

Abbott Cash Profit Sharing Plan” means the Abbott Laboratories Cash Profit Sharing Plan.

 

Abbott Common Shares” has the meaning set forth in the Separation and Distribution Agreement.

 

Abbott Compensation Committee” means the compensation committee of the Abbott Board.

 

Abbott DCP” means the Abbott Laboratories Deferred Compensation Plan.

 

Abbott Directors’ Fee Plan” means the Abbott Laboratories Non-Employee Directors’ Fee Plan.

 

Abbott ESPP” means the Abbott Laboratories 2009 Employee Stock Purchase Plan for Non-U.S. Employees and any sub-plan established thereunder.

 

Abbott Former Employee” means a Former Employee who is not an AbbVie Former Employee.

 

Abbott Group” means Abbott and its Subsidiaries (excluding, after the Distribution, any member of the AbbVie Group).

 

Abbott Health and Welfare Plan” means a Health and Welfare Plan sponsored by, maintained by, or contributed to by the Abbott Group.

 

Abbott KSP” means the Abbott Laboratories 401(k) Supplemental Plan.

 

Abbott Life Insurance Trust” means the Abbott Laboratories Life Insurance Trust.

 

Abbott LTD Participant” means an Abbott Former Employee who is, as of the Distribution Date, receiving long-term disability benefits under the Abbott Laboratories Extended Disability Plan or the Abbott Laboratories Puerto Rico Long Term Disability Plan.

 

Abbott Management Incentive Plan” means the 1986 Abbott Laboratories Management Incentive Plan.

 

Abbott OMPP” means the Abbott Overseas Managers Pension Plan.

 

Abbott Performance Incentive Plan” means the 1998 Abbott Laboratories Performance Incentive Plan.

 

Abbott Post-Distribution Stock Value” means the opening per-share price, as reported on the NYSE, of Abbott Common Shares on the Distribution Date (or, if the Distribution Date is not an NYSE trading day, on the first trading day following the Distribution Date).

 

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Abbott PR” means Abbott Healthcare (Puerto Rico) Ltd. or, where the context so requires, its appropriate Affiliate or Subsidiary that employs Employees in Puerto Rico.

 

Abbott PR Health and Welfare Plan - New” means, following the Distribution, a PR Health and Welfare Plan sponsored by, maintained by, or contributed to by the Abbott Group and established pursuant to Section 7.04.

 

Abbott PR Retirement Plan - New” means the Abbott Puerto Rico Retirement Plan established pursuant to Section 7.01.

 

Abbott PR SERP - New” means the Abbott Puerto Rico Supplemental Pension Plan established pursuant to Section 7.03.

 

Abbott PR SRP - New” means the Abbott Laboratories Stock Retirement Plan (Puerto Rico) established pursuant to Section 7.02.

 

Abbott Ratio” means the quotient obtained by dividing the Abbott Stock Value by the Abbott Post-Distribution Stock Value.

 

Abbott Retained Employee” means any Employee other than an AbbVie Employee.

 

Abbott Retiree Health Care Plan” means the Abbott Laboratories Retiree Health Care Plan.

 

Abbott Retiree Life Plan” means the Abbott Laboratories Retiree Life Insurance Plan.

 

Abbott SERP” means the Abbott Laboratories Supplemental Pension Plan.

 

Abbott SRP” means the Abbott Laboratories Stock Retirement Plan.

 

Abbott Stock Programs” means, collectively, the Abbott Laboratories 2009 Incentive Stock Program, the Abbott Laboratories 1996 Incentive Stock Program, and any incentive compensation program or arrangement that governs the terms of equity-based incentive awards assumed by the Abbott Group in connection with a corporate transaction and that is maintained by the Abbott Group immediately prior to the Distribution Date, and any sub-plans established under those programs.

 

Abbott Stock Value” means the sum of the Abbott Post-Distribution Stock Value and the AbbVie Stock Value.

 

Abbott TPP” means the Abbott Laboratories Territorial Pension Plan.

 

Abbott Trust” means the Abbott Laboratories Annuity Retirement Trust.

 

Abbott Value Factor” means the quotient obtained by dividing (i) the Abbott Post-Distribution Stock Value, by (ii) the sum of (A) the Adjusted AbbVie Stock Value and (B) the Abbott Post-Distribution Stock Value.

 

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Abbott-AbbVie MEPP” means the Abbott-AbbVie Multiple Employer Pension Plan established pursuant to Section 3.02, which shall be in substantially the form set forth as Exhibit A hereto.

 

AbbVie” has the meaning set forth in the first sentence of this Agreement.

 

AbbVie Award” means an AbbVie Option, AbbVie Restricted Stock Award, or AbbVie RSU Award granted pursuant to Section 6.01.

 

AbbVie Benefit Plan” means, following the Distribution, each Benefit Plan sponsored by, maintained by, or contributed to by the AbbVie Group, provided that such term shall not include the Abbott-AbbVie MEPP, and, provided, further, that such term shall include, following the consummation of a Local Closing Transaction, each Benefit Plan sponsored by, maintained by, or contributed to by the applicable Deferred AbbVie Local Business.

 

AbbVie Board” means the AbbVie board of directors.

 

AbbVie Business” has the meaning set forth in the Separation and Distribution Agreement.

 

AbbVie Cash Profit Sharing Plan” means the AbbVie Cash Profit Sharing Plan.

 

AbbVie Common Stock” has the meaning set forth in the Separation and Distribution Agreement.

 

AbbVie DCP” means the AbbVie Deferred Compensation Plan.

 

AbbVie Directors’ Fee Plan” means the AbbVie Non-Employee Directors’ Fee Plan.

 

AbbVie Employee” means any Employee who is (i) employed by the AbbVie Group as of immediately prior to the Distribution Date, (ii) designated prior to the Distribution Date by Abbott as an individual whose employment is to transfer (referred to internally by the Parties as “map”) from the Abbott Group to the AbbVie Group, (iii) hired by the Abbott Group on or after the Distribution Date (but prior to the consummation of the applicable Local Closing Transaction) who is primarily employed in connection with a Deferred AbbVie Local Business, or (iv) designated as an AbbVie Employee by joint agreement of the Parties (in all cases, other than an Employee who is designated by Abbott prior to the Distribution Date as intended not to transfer to the AbbVie Group).  The Parties shall cooperate in good faith prior to the Distribution Date to develop procedures intended to identify clearly the Employees designated for transfer from the Abbott Group to the AbbVie Group and the Employees designated as intended to remain with the Abbott Group.

 

AbbVie ESPP” means the AbbVie 2013 Employee Stock Purchase Plan for Non-U.S. Employees and any sub-plan established thereunder.

 

AbbVie Former Employee” means a Former Employee who, immediately prior to such individual’s termination of employment with or by the Abbott Group, either (i) was designated by Abbott as an Employee whose employment was to transfer (“map”) to the AbbVie

 

4



 

Group or (ii) if not so designated by Abbott, was primarily employed or engaged in the AbbVie Business (other than a Former Employee who was designated by Abbott as intended to become an Abbott Retained Employee).

 

AbbVie Group” means AbbVie and its Subsidiaries.

 

AbbVie Health and Welfare Plan” means, following the Distribution, a Health and Welfare Plan sponsored by, maintained by, or contributed to by the AbbVie Group.

 

AbbVie ISP” means the AbbVie 2013 Incentive Stock Program.

 

AbbVie Life Insurance Trust” means the AbbVie Employee Insurance Trust.

 

AbbVie LTD Participant” means an AbbVie Former Employee who is, as of the Distribution Date, receiving long-term disability benefits under the Abbott Laboratories Extended Disability Plan or the Abbott Laboratories Puerto Rico Long Term Disability Plan.

 

AbbVie OMPP” means the AbbVie Overseas Managers Pension Plan.

 

AbbVie Pension Plan” means the AbbVie Pension Plan.

 

AbbVie PR” means AbbVie Ltd. (formerly known as Abbott Pharmaceuticals (Puerto Rico) Ltd.) or, where the context so requires, its appropriate Affiliate or Subsidiary that employs Employees in Puerto Rico.

 

AbbVie PR Health and Welfare Plans” means the PR Health and Welfare Plans sponsored by, maintained by, or contributed to by the AbbVie Group.

 

AbbVie PR Pension Plan” means the AbbVie Puerto Rico Pension Plan (formerly known as the Abbott Puerto Rico Retirement Plan).

 

AbbVie PR Savings Plan” means the AbbVie Puerto Rico Savings Plan (formerly known as the Abbott Laboratories Stock Retirement Plan (Puerto Rico)).

 

AbbVie PR SERP” means the AbbVie Puerto Rico Supplemental Pension Plan (formerly known as the Abbott Puerto Rico Supplemental Pension Plan).

 

AbbVie Ratio” means the quotient obtained by dividing the Abbott Stock Value by the AbbVie Stock Value.

 

AbbVie Savings Plan” means the AbbVie Savings Plan.

 

AbbVie SERP” means the AbbVie Supplemental Pension Plan.

 

AbbVie SSP” means the AbbVie Supplemental Savings Plan.

 

AbbVie Stock Value” means the opening per-share price, as reported on the NYSE, of AbbVie Common Stock on the Distribution Date (or, if the Distribution Date is not an NYSE trading day, on the first trading day following the Distribution Date).

 

5



 

AbbVie TPP” means the AbbVie Territorial Pension Plan.

 

AbbVie Value Factor” means the quotient obtained by dividing (i) the Adjusted AbbVie Stock Value, by (ii) the sum of (A) the Adjusted AbbVie Stock Value and (B) the Abbott Post-Distribution Stock Value.

 

Adjusted Abbott Award” means an Adjusted Abbott Option, Adjusted Abbott Restricted Stock Award, or Adjusted Abbott RSU Award.

 

Adjusted AbbVie Stock Value” means the product obtained by multiplying (i) the AbbVie Stock Value times (ii) the Distribution Ratio.

 

Affiliate” has the meaning set forth in the Separation and Distribution Agreement.

 

Agreement” means this Employee Matters Agreement and each of the Schedules hereto.

 

Asset” has the meaning set forth in the Separation and Distribution Agreement.

 

Benefit Plan” means any (i) “employee benefit plan,” as defined in ERISA Section 3(3) (whether or not such plan is subject to ERISA); and (ii) employment, compensation, severance, salary continuation, bonus, thirteenth month, incentive, retirement, thrift, superannuation, savings, pension, workers’ compensation, termination benefit (including termination notice requirements), termination indemnity, other indemnification, supplemental unemployment benefit, redundancy pay, profit sharing, deferred compensation, stock ownership, stock purchase, stock option, stock appreciation right, restricted stock, “phantom” stock, performance share, restricted stock unit, other stock-based incentive, change in control, paid time off, perquisite, fringe benefit, vacation, disability, life, or other insurance, death benefit, hospitalization, medical, or other compensatory or benefit plan, program, fund, agreement, arrangement, or policy of any kind (whether written or oral, qualified or nonqualified, funded or unfunded, foreign or domestic, currently effective or terminated), and any trust, escrow or similar agreement related thereto, whether or not funded, excluding any plan, program, fund, agreement, arrangement, or policy (other than for workers’ compensation Liabilities) that is mandated by and maintained solely pursuant to applicable Law.

 

COBRA” means coverage required by Code Section 4980B or ERISA Section 601 et. seq.

 

Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

Conveyance and Assumption Instruments” has the meaning set forth in the Separation and Distribution Agreement.

 

Deferred AbbVie Local Business” has the meaning set forth in the Separation and Distribution Agreement.

 

Distribution” has the meaning set forth in the Separation and Distribution Agreement.

 

6



 

Distribution Date” has the meaning set forth in the Separation and Distribution Agreement.

 

Distribution Ratio” means the number of shares of AbbVie Common Stock distributed in the Distribution in respect of one Abbott Common Share.

 

Employee” means an employee of the Abbott Group or the AbbVie Group, as applicable (not including any Former Employee), including any employee absent from work on account of vacation, jury duty, funeral leave, personal leave, sickness, short-term disability, long-term disability or workers’ compensation leave (in each case, unless treated as a separated employee for employment purposes), military leave, family leave, pay continuation leave, or other approved leave of absence or for whom an obligation to recall, rehire or otherwise return to employment exists under a contractual obligation or Law.

 

Employee Agreement” means an employment contract between a member of the Abbott Group and an Employee, including, without limitation, the U.S. standard-form employee agreement customarily signed by certain Employees of the Abbott Group.

 

Employee Recoupment Asset” means an employer’s right to repayment from an employee in respect of a tax equalization payment, sign-on bonus payment, relocation expense payment, tuition payment, reimbursement, loan, or other similar item, including any agreement related thereto.

 

Employment Tax” means withholding, payroll, social security, workers’ compensation, unemployment, disability and any similar tax imposed by any Tax Authority or social security authority, and any interest, penalties, additions to tax, or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined, or unitary group of taxpayers.  With respect to any Employment Tax, the term “Tax Authority” means the governmental entity or political subdivision thereof that imposes such Employment Tax, and the agency (if any) charged with the collection of such Employment Tax for such entity or subdivision.

 

ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.

 

ESOP” means an employee stock ownership plan, as defined in ERISA Section 407(d)(6) and Code Section 4975(e)(7).

 

Former Employee” means any individual whose employment with the Abbott Group terminated on or prior to the Distribution Date, excluding any employee absent from work immediately prior to the Distribution Date on account of vacation, jury duty, funeral leave, personal leave, sickness, short-term disability, long-term disability or workers’ compensation leave (in each case, unless treated as a separated employee for employment purposes), military leave, family leave, pay continuation leave, or other approved leave of absence or for whom an obligation to recall, rehire or otherwise return to employment exists under a contractual obligation or Law.

 

7



 

Health and Welfare Plan” means any Benefit Plan established or maintained to provide, for Employees or Former Employees who work primarily in the United States or their beneficiaries, through the purchase of insurance or otherwise, medical, dental, prescription, vision, short-term disability, long-term disability, death benefits, life insurance, accidental death and dismemberment insurance, business travel accident insurance, employee assistance program, group legal services, wellness, cafeteria (including premium payment, health care flexible spending account, and dependent care flexible spending account components), travel reimbursement, transportation, vacation benefits, apprenticeship or other training programs, day care centers, or prepaid legal services benefits, including any “employee welfare benefit plan” (as defined in ERISA Section 3(1)) that is not a severance plan.

 

HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended.

 

Incurred Claim” means a Liability related to services or benefits provided under a Benefit Plan, and shall be deemed to be incurred: (i) with respect to medical, dental, vision, and prescription drug benefits, upon the rendering of services giving rise to such Liability; (ii) with respect to death benefits, life insurance, accidental death and dismemberment insurance, and business travel accident insurance, upon the occurrence of the event giving rise to such Liability; (iii) with respect to disability benefits, upon the date of disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such Liability; (iv) with respect to a period of continuous hospitalization, upon the date of admission to the hospital; and (v) with respect to tuition reimbursement or adoption assistance, upon completion of the requirements for such reimbursement or assistance, whichever is applicable.

 

Law” has the meaning set forth in the Separation and Distribution Agreement.

 

Liabilities” has the meaning set forth in the Separation and Distribution Agreement.

 

Local Closing Transaction” means the local closing transaction involving a Deferred AbbVie Local Business.

 

LTD Participant” means a Former Employee who is either an Abbott LTD Participant or an AbbVie LTD Participant.

 

Non-U.S. Abbott Benefit Plan” means an Abbott Benefit Plan established, maintained, or contributed to by the Abbott Group that is primarily for the benefit of Employees or Former Employees who work primarily outside of the United States.

 

Non-U.S. AbbVie Benefit Plan” means an AbbVie Benefit Plan established, maintained, or contributed to by the AbbVie Group that is primarily for the benefit of Employees or Former Employees who work primarily outside of the United States.

 

Non-U.S. AbbVie Employee” means an AbbVie Employee who works primarily outside of the United States or primarily in Puerto Rico.

 

8



 

Option” means (i) when immediately preceded by “Abbott,” an option to purchase one or more Abbott Common Shares granted under an Abbott Stock Program and outstanding immediately prior to the Distribution Date (whether or not then exercisable); (ii) when immediately preceded by “Adjusted Abbott,” an option to purchase one or more Abbott Common Shares adjusted in accordance with Section 6.01; and (iii) when immediately preceded by “AbbVie,” an option to purchase one or more shares of AbbVie Common Stock granted by AbbVie in accordance with Section 6.01.

 

Parties” means the parties to this Agreement.

 

Pension Plan for Former BASF and Former Solvay Employees” means the Abbott Laboratories Pension Plan for Former BASF and Former Solvay Employees.

 

Post-Distribution AbbVie Employee” means an AbbVie Employee whose intended transfer from the Abbott Group to the AbbVie Group in connection with the Distribution is to occur after the Distribution Date.

 

PR Health and Welfare Plans” means any and all Benefit Plans established or maintained to provide, for Employees or Former Employees who work primarily in Puerto Rico or their beneficiaries, through the purchase of insurance or otherwise, medical, dental, prescription, vision, short-term disability, long-term disability, death benefits, life insurance, accidental death and dismemberment insurance, business travel accident insurance, employee assistance program, group legal services, wellness, cafeteria (including premium payment, health care flexible spending account, and dependent care flexible spending account components), travel reimbursement, transportation, vacation benefits, apprenticeship or other training programs, day care centers, or prepaid legal services benefits, including any “employee welfare benefit plan” (as defined in ERISA Section 3(1)) that is not a severance plan.

 

Purchase Cycle” has the meaning set forth in the Abbott ESPP.

 

Purchase Date” has the meaning set forth in the Abbott ESPP.

 

QDRO” means a qualified domestic relations order within the meaning of ERISA Section 206(d) and Code Section 414(p).

 

Rehired Employee” means (i) a Transferred Employee who terminates employment with the AbbVie Group after the Distribution Date (or, with respect to a Post-Distribution AbbVie Employee employed by a Deferred AbbVie Local Business, after the consummation of the applicable Local Closing Transaction) and is subsequently rehired by the Abbott Group during the Transition Period (including an individual whose employment is transferred pursuant to the procedures contemplated by Section 2.04(b)); (ii) an Abbott Retained Employee who terminates employment with the Abbott Group after the Distribution Date and is subsequently hired by the AbbVie Group during the Transition Period (including an individual whose employment is transferred pursuant to the procedures contemplated by Section 2.04(b)); or (iii) a Former Employee who commences employment with the Abbott Group or the AbbVie Group during the Transition Period.

 

9



 

Restricted Stock Award” means (i) when immediately preceded by “Abbott,” a restricted stock award granted pursuant to an Abbott Stock Program and outstanding immediately prior to the Distribution Date; (ii) when immediately preceded by “Adjusted Abbott,” an Abbott Restricted Stock Award adjusted in accordance with Section 6.01; and (iii) when immediately preceded by “AbbVie,” a restricted stock award granted by AbbVie in accordance with Section 6.01.

 

RSU Award” means (i) when immediately preceded by “Abbott,” a restricted stock unit award granted pursuant to an Abbott Stock Program and outstanding immediately prior to the Distribution Date; (ii) when immediately preceded by “Adjusted Abbott,” a restricted stock unit award granted pursuant to an Abbott Stock Program adjusted in accordance with Section 6.01; and (iii) when immediately preceded by “AbbVie,” a restricted stock unit award granted by AbbVie in accordance with Section 6.01.

 

Securities Act” means the U.S. Securities Act of 1933, as amended.

 

Separation” has the meaning set forth in the Separation and Distribution Agreement.

 

Separation and Distribution Agreement” means the Separation and Distribution Agreement by and between the Parties, dated [·].

 

Subsidiary” has the meaning set forth in the Separation and Distribution Agreement.

 

Transfer Date” means, with respect to each (i) AbbVie Employee (other than a Post-Distribution AbbVie Employee), the Distribution Date; and (ii) Post-Distribution AbbVie Employee, the date on which such person first becomes employed by the AbbVie Group following the Distribution Date.  With respect to LTD Participants, where the Transfer Date concept is relevant, “Transfer Date” means the Distribution Date.

 

Transferred Employee” has the meaning set forth in Section 2.02(a)(i).

 

Transferred Flexible Spending Account Balances” has the meaning set forth in Section 5.01(d)(iii).

 

Transferred Non-U.S. Employee” means a Transferred Employee who works primarily outside of the United States or primarily in Puerto Rico.

 

Transition Period” means the period beginning on the Distribution Date and ending on the date that is the 30-month anniversary of the Distribution Date.

 

Transition Services Agreements” has the meaning set forth in the Separation and Distribution Agreement.

 

10



 

ARTICLE II

 

GENERAL PRINCIPLES

 

Section 2.01.  Allocation of Liabilities.

 

(a)           AbbVie Liabilities.  Effective as of the Distribution Date, and except as expressly provided in this Agreement, AbbVie hereby assumes (or retains) and agrees to pay, perform, fulfill, and discharge all Liabilities to the extent relating to, arising out of, or resulting from:

 

(i)            the employment (or termination of employment) of each AbbVie Employee by the Abbott Group up to the applicable Transfer Date and by the AbbVie Group on and after the applicable Transfer Date (including, in each case, all Liabilities relating to, arising out of, or resulting from Employment Taxes, any Abbott Benefit Plan or any AbbVie Benefit Plan);

 

(ii)           the employment (or termination of employment) of each AbbVie Former Employee (including, in each case, all Liabilities relating to, arising out of, or resulting from Employment Taxes, any Abbott Benefit Plan or any AbbVie Benefit Plan); and

 

(iii)          obligations, Liabilities, and responsibilities expressly assumed or retained by AbbVie pursuant to this Agreement.

 

(b)           Abbott Liabilities.  Effective as of the Distribution Date, and except as expressly provided in this Agreement, Abbott hereby retains (or assumes) and agrees to pay, perform, fulfill, and discharge all Liabilities to the extent relating to, arising out of, or resulting from:

 

(i)            the employment (or termination of employment) of each Abbott Retained Employee by the Abbott Group prior to, on, or after the Distribution Date (including all Liabilities to the extent relating to, arising out of, or resulting from Employment Taxes or any Abbott Benefit Plan);

 

(ii)           the employment (or termination of employment) of each Abbott Former Employee (including all Liabilities to the extent relating to, arising out of, or resulting from Employment Taxes or any Abbott Benefit Plan); and

 

(iii)          obligations, Liabilities, and responsibilities expressly retained or assumed by Abbott pursuant to this Agreement.

 

(c)           Other Liabilities.  To the extent that this Agreement does not cover particular obligations, Liabilities or responsibilities that relate to, arise out of, or result from employment (or termination of employment), Employment Taxes or any Benefit Plan and the Parties later determine that they should be allocated in connection with the Separation, such obligations, Liabilities or responsibilities shall be handled in a manner similar to the manner in

 

11



 

which this Agreement handles comparable obligations, Liabilities or responsibilities, subject to the mutual agreement of the Parties.

 

Section 2.02.  Employment with AbbVie.

 

(a)           Employment Transfers.  The Parties intend for AbbVie Employees to transfer to the AbbVie Group and shall use their respective best efforts and cooperate with each other to effectuate this intent.

 

(i)            Except as otherwise mutually agreed upon by the Parties, as of each AbbVie Employee’s Transfer Date, the AbbVie Group shall:  (A) continue to employ (on a basis consistent with Section 2.02(b)) each AbbVie Employee employed in a jurisdiction where employment continues automatically by operation of Law (and such individual does not object, where such right exists under applicable Law); and (B) offer to employ (on a basis consistent with Section 2.02(b)) each AbbVie Employee employed in a jurisdiction where employment does not continue automatically by operation of Law.  Each AbbVie Employee who accepts an offer of employment with the AbbVie Group, or who continues employment with the AbbVie Group following his or her Transfer Date automatically by operation of Law (and does not object where such right exists under applicable Law), as the case may be, including each Post-Distribution AbbVie Employee who so accepts an offer or so continues employment, will be referred to in this Agreement as a “Transferred Employee.”

 

(ii)           The Abbott Group may terminate the employment of any AbbVie Employee who does not become a Transferred Employee as of his or her intended Transfer Date. AbbVie will be responsible for, and will indemnify the Abbott Group from and against, any Liabilities incurred (including any severance payments made): (A) in connection with the termination of an AbbVie Employee pursuant to this Section 2.02(a)(ii); and (B) arising from or in connection with a refusal by any AbbVie Employee to become a Transferred Employee.

 

(b)           Compensation and Benefits.

 

(i)            Abbott shall use commercially reasonable efforts to provide that, except as otherwise mutually agreed upon by the Parties, no transfer of employment of an AbbVie Employee to the AbbVie Group prior to the Distribution Date will cause such AbbVie Employee to lose coverage under any Abbott Benefit Plan prior to the Distribution Date.  Except as expressly provided in this Agreement or in local Conveyance and Assumption Instruments, no Transferred Employee shall participate in any Abbott Benefit Plan following his or her Transfer Date.

 

(ii)           Except as expressly provided in this Agreement, the AbbVie Group shall provide to each Transferred Employee as of his or her Transfer Date (A) base salary at the same rate as provided to that Transferred Employee immediately prior to the Transfer Date, (B) cash incentive compensation opportunities that are substantially similar to those offered under the corresponding Abbott Benefit Plan(s) immediately prior to the Transfer Date, and (C) benefits under the other AbbVie Benefit Plans that are substantially similar to benefits provided under the corresponding Abbott Benefit Plans immediately

 

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prior to the Transfer Date.  Nothing in the preceding sentence shall prevent the AbbVie Group from modifying the compensation and benefits of a Transferred Employee after such Transferred Employee’s Transfer Date.  Notwithstanding the preceding sentence, neither Abbott nor AbbVie shall, prior to December 31, 2013, materially modify the benefit programs provided to their respective Employees working primarily in the United States and Puerto Rico except in the ordinary course of business or as required by Law.

 

(c)           Service Credit.  Except as expressly provided in this Agreement or to the extent it would result in a duplication of benefits, AbbVie and each AbbVie Benefit Plan shall give each Transferred Employee and each AbbVie LTD Participant credit for all service with the Abbott Group and shall calculate such service as it would be calculated by Abbott or under the corresponding Abbott Benefit Plan as of the applicable Transfer Date.

 

Section 2.03.  Establishment of AbbVie Plans.

 

(a)           Generally.

 

(i)            U.S (Not Including Puerto Rico).  Prior to the Distribution Date, AbbVie shall adopt Benefit Plans (and related trusts, if applicable, as determined by the Parties) with terms substantially similar to those of the corresponding Abbott Benefit Plans, including in particular those listed in Schedule 2.03(a); provided, however, that AbbVie may limit participation in any AbbVie Benefit Plan to Transferred Employees and, to the extent applicable, AbbVie LTD Participants who participated in the corresponding Abbott Benefit Plan immediately prior to the applicable Transfer Date.

 

(ii)           Non-U.S (Not Including Puerto Rico).  Prior to the Distribution Date, the AbbVie Group shall, except as otherwise mutually agreed upon by the Parties, adopt Non-U.S. AbbVie Benefit Plans, with terms substantially similar to those of the corresponding Non-U.S. Abbott Benefit Plans; provided, however, that AbbVie may limit participation in any Non-U.S. AbbVie Benefit Plan to Transferred Non-U.S. Employees and, to the extent applicable, AbbVie LTD Participants who participated in the corresponding Non-U.S. Abbott Benefit Plan immediately prior to the applicable Transfer Date.  As described in Article IV, or as otherwise mutually agreed upon by the Parties from time to time, the Abbott Group shall, or shall cause the applicable Non-U.S. Abbott Benefit Plan’s related trust to, transfer to the AbbVie Group or the relevant Non-U.S. AbbVie Benefit Plan’s related trust, an amount equal to the trust Assets, insurance reserves, and other Assets of each Non-U.S. Abbott Benefit Plan relating to the Liabilities of such Non-U.S. Abbott Benefit Plan assumed by AbbVie or such Non-U.S. AbbVie Benefit Plan.  As described in Article IV, or as otherwise mutually agreed upon by the Parties from time to time, the AbbVie Group shall, or shall cause the relevant Non-U.S. AbbVie Benefit Plan to, assume the Liabilities of the corresponding Non-U.S. Abbott Benefit Plan with respect to all benefits accrued under that Non-U.S. Abbott Benefit Plan by Transferred Non-U.S. Employees and, to the extent applicable, AbbVie LTD Participants.

 

(iii)          Puerto Rico. The establishment of Benefit Plans and the allocation of Assets and Liabilities relating to Employees and Former Employees in Puerto Rico are set forth in Article VII.

 

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(b)                                 Plan Information and Operation.  Abbott shall provide AbbVie with information describing each Abbott Benefit Plan election made by a Transferred Employee or by an AbbVie LTD Participant that may have application following the applicable Transfer Date.  AbbVie shall determine, in its sole discretion, whether to administer the AbbVie Benefit Plans using those elections or to require Transferred Employees or AbbVie LTD Participants to submit new elections with respect to the AbbVie Benefit Plans.  Except as provided in this Agreement, the Distribution and the transfer of any Employee’s employment to the AbbVie Group shall not cause a distribution from or payment of benefits under any Abbott Benefit Plan.  Each Party shall, upon reasonable request, provide the other Party and the other Party’s respective Affiliates, agents, and vendors all information reasonably necessary to the other Party’s operation or administration of its Benefit Plans.

 

Section 2.04.  Post-Distribution Employment Transfers.

 

(a)                                  No-Hire.  The Parties agree that, during the Transition Period, neither Party nor any of such Party’s Affiliates shall hire an Employee of the other Party and its Affiliates without the express written consent of each Party’s head of human resources (or such individual’s delegate). This Section 2.04(a) shall not be construed as a limitation on the transfer to the AbbVie Group of any Post-Distribution AbbVie Employee, on transfers in accordance with Section 2.04(b), or on the ability of a Party to hire an individual who is no longer employed by the other Party.

 

(b)                                 Transition Period Transfers by Mutual Agreement.  The Parties recognize that, during the Transition Period, they may determine it to be in their mutual best interests to transfer an individual classified as an Abbott Retained Employee to the AbbVie Group or to transfer an individual classified as a Transferred Employee to the Abbott Group.  With the express written consent of each Party’s head of human resources (or such individual’s delegate), such Abbott Retained Employee’s or Transferred Employee’s, as applicable, employment will be terminated by the Abbott Group or the AbbVie Group, as applicable, and such Employee will be immediately hired by the other Party (such terminations and hires are referred to in this Section 2.04(b) as “transfers”).  Abbott Retained Employees (with such status being determined as of immediately following the Distribution Date) who are subsequently transferred to the AbbVie Group pursuant to this Section 2.04(b) shall be treated as Abbott Retained Employees for all purposes hereof during their time as Employees of the Abbott Group until their actual transfer to the AbbVie Group, upon and following which the Parties shall make commercially reasonable efforts to provide that they are treated as Transferred Employees for all purposes hereof.  Transferred Employees (with such status being determined as of immediately following the applicable Transfer Date) who are subsequently transferred to the Abbott Group pursuant to this Section 2.04(b) shall be treated as Transferred Employees for all purposes hereof during their time as Employees of the AbbVie Group until their actual transfer to the Abbott Group, upon and following which the Parties shall make commercially reasonable efforts to provide that they are treated as Abbott Retained Employees for all purposes hereof.   Without limiting the generality of the foregoing, except as provided in Section 2.02(c), each Rehired Employee whose employment is transferred pursuant to this Section 2.04(b) shall be deemed for all purposes to have been continuously employed by the applicable entity hiring such Employee for all prior periods of time that such Employee was employed by either the Abbott Group or the AbbVie Group.  Nothing in this paragraph requires (i) the hiring Party to make whole any Rehired

 

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Employee if such Employee leaves behind unvested equity awards that were granted after the Distribution Date, or (ii) the former employer to waive vesting requirements with respect to any unvested equity awards held by any Rehired Employee that were granted after the Distribution Date.

 

(c)                                  Rehired Employees.  Except as provided in Section 3.01(b)(ii), each Rehired Employee whose rehire does not occur in connection with a transfer pursuant to Section 2.04(b) shall be subject to the hiring Party’s general rules and Benefit Plan terms applicable to rehires.  Such Rehired Employee shall be deemed, for purposes of applying such rules, including break-in-service and service crediting rules, except as provided in Section 2.02(c), to have been employed by the applicable entity hiring him or her for all prior periods of time that he or she was employed by either the Abbott Group or the AbbVie Group.

 

(d)                                 Certain Pension Liabilities Associated With Rehired Employees. The Parties shall make commercially reasonable efforts to provide that the Assets and Liabilities associated with the participation of any Rehired Employee (whether or not transferred in accordance with Section 2.04(b)) in the qualified defined benefit pension plans of the AbbVie Group and the Abbott Group shall be transferred to the qualified defined benefit pension plan sponsored by the entity (or by its applicable Affiliate) that rehires such Employee during the Transition Period.

 

(e)                                  Post-Distribution Employment in Deferred AbbVie Local Businesses. The following provisions shall apply to the Deferred AbbVie Local Businesses:

 

(i)                                     During the period commencing on the Distribution Date and ending on the consummation of the applicable Local Closing Transaction, Abbott or its appropriate Affiliate shall:

 

(A)                              provide AbbVie or its appropriate Affiliate with at least 30 days’ advance written notice prior to (1) terminating the employment of an AbbVie Employee, unless such termination of employment is the result of a violation of the Abbott Code of Business Conduct or other misconduct or is pursuant to Section 2.02(a)(ii); (2) making any material amendment to the Abbott Code of Business Conduct or other policies applicable to the employment of an AbbVie Employee; (3) making any substantive change to the employment contract of an AbbVie Employee unless such change is required by applicable Law; (4) making any change to the base salary of an AbbVie Employee, other than an increase within the budget approved by AbbVie based on the Employee’s performance rating; (5) giving a performance rating other than Achieved Expectations (AE) to an AbbVie Employee grade 18 or higher; (6) changing the job grade of an AbbVie Employee; (7) making any substantive change in the plan design of an Abbott Benefit Plan in which an AbbVie Employee participates; or (8) making any other modification to an Abbott Benefit Plan in which an AbbVie Employee participates if such modification would result in a significant change in the cost of such plan to the employer or the participant; and

 

(B)                                obtain the approval of AbbVie or its appropriate Affiliate prior to (1) hiring any individual who will be classified as an AbbVie Employee

 

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unless such headcount was authorized prior to the Distribution Date; (2) promoting any AbbVie Employee to a position in job grade 18 or higher unless such promotion was authorized prior to the Distribution Date; or (3) making any substantive change to annual goals or cash incentive compensation opportunities for an AbbVie Employee.

 

(ii)                                  Except as otherwise mutually agreed upon by the Parties (such as in a Conveyance and Assumption Instrument or other agreement), if an AbbVie Employee’s transfer of employment to the AbbVie Group upon the consummation of a Local Closing Transaction causes, at the time of such transfer, a forfeiture of awards granted under an Abbott Stock Program (or successor thereto) after the Distribution Date, Abbott shall not have any obligation, Liability or responsibility to such AbbVie Employee with respect to such forfeited awards, and AbbVie shall equitably compensate the affected AbbVie Employee for such forfeited awards in a manner determined by AbbVie in its sole discretion.  The foregoing sentence shall not preclude the Parties from making arrangements, if allowed by the Abbott Stock Program (or successor thereto) and applicable Law, to permit affected AbbVie Employees to continue to hold, after the Local Closing Transaction, awards granted under an Abbott Stock Program (or successor thereto) after the Distribution Date.

 

Section 2.05.  Collective Bargaining.  AbbVie shall cause the appropriate member of the AbbVie Group to assume all Liabilities arising under any collective bargaining agreement (including but not limited to any national, sector or local collective bargaining agreement) with respect to any Transferred Non-U.S. Employee.  To the extent necessary, AbbVie shall cause the appropriate member of the AbbVie Group to join any industrial, employer or similar association or federation if membership is required for the relevant collective bargaining agreement to continue to apply.

 

Section 2.06.  Distributorship Model.  In the event that AbbVie operates any Deferred AbbVie Local Business through a local distributor rather than through an Affiliate, AbbVie agrees to use its best efforts to cause such local distributor to employ the AbbVie Employees on similar terms and conditions of employment.

 

ARTICLE III

 

U.S. QUALIFIED AND NON-QUALIFIED RETIREMENT PLANS

 

Section 3.01.  AbbVie Pension Plan.

 

(a)                                  Establishment of AbbVie Pension Plan.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie Pension Plan, which shall be substantially similar to, and shall include a benefit formula that is the same as the benefit formula in effect under, the Abbott ARP as of the Distribution Date. As soon as practicable after the Distribution Date and upon receipt by Abbott of (i) a copy of the AbbVie Pension Plan; (ii) copies of certified resolutions of the AbbVie Board (or its authorized committee or other delegate) evidencing adoption of the AbbVie Pension Plan and any related trust(s) and the assumption by the AbbVie Pension Plan of the Liabilities described in Section 3.01(b); and (iii) either (A) a favorable

 

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determination letter issued by the Internal Revenue Service with respect to the AbbVie Pension Plan and any related trust, or (B) an opinion of counsel, which counsel and opinion are reasonably satisfactory to Abbott, with respect to the qualified status of the AbbVie Pension Plan under Code Section 401(a) and the tax-exempt status of any related trust under Code Section 501(a), Abbott shall direct the trustee of the Abbott Trust to transfer from the portion of the Abbott Trust that holds assets of the Abbott ARP to the portion of the Abbott Trust that holds assets of the AbbVie Pension Plan the amounts described in Section 3.01(b).

 

(b)                                 ERISA Section 4044 Transfer.

 

(i)                                     As of the Distribution Date, AbbVie shall cause the AbbVie Pension Plan to accept Assets and assume all Liabilities under the Abbott ARP for Transferred Employees (other than Post-Distribution AbbVie Employees) and AbbVie LTD Participants (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the Abbott ARP shall transfer all such Assets and be relieved of such Liabilities.  The amount of Assets to be transferred from the Abbott ARP to the AbbVie Pension Plan in such transfer (or transfers) shall be determined as of the Distribution Date in accordance with, and shall comply with, Code Section 414(l) and, to the extent deemed applicable by the Parties, ERISA Section 4044, and shall take into account the transfer (or transfers) of Assets described in Section 3.02(b).  Assumptions used to determine the value (or amount) of the Assets to be transferred shall be the safe harbor assumptions specified for valuing benefits in trusteed plans under Department of Labor Regulations Section 4044.51-57 and, to the extent not so specified, shall be based on the assumptions used in the annual valuation report most recently prepared prior to the transfer by the actuary for the Abbott ARP.  The transfer amount described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between the Distribution Date and an assessment date set by Abbott that is as close as practicable, taking into account the timing and reporting of valuation of assets in the Abbott Trust, to the date upon which Assets equal in value to the transfer amount are actually transferred from the Abbott ARP to the AbbVie Pension Plan. During the time prior to such transfer, benefits for Transferred Employees who terminate employment with the AbbVie Group and for AbbVie LTD Participants shall be paid from the Abbott ARP.  The ultimate transfer amount shall be reduced by the amount of these benefits and credited or debited by the actual investment earnings or losses from the payment date to the assessment date set by Abbott above.  In addition, during this period, AbbVie will be responsible for a pro rata share of trustee and administration fees attributable to the AbbVie Pension Plan assets that remain in the Abbott ARP.  The entries in the Abbott ARP funding standard account shall be divided among the Abbott ARP, the AbbVie Pension Plan, and the Abbott-AbbVie MEPP based on the guidance provided in Revenue Ruling 81-212 and 86-47.

 

(ii)                                  Periodically, at such times as agreed upon by the Parties after the transfer(s) described in Section 3.01(b)(i), (A) AbbVie shall cause the AbbVie Pension Plan to receive Assets and assume all Liabilities under the Abbott ARP for Post-Distribution AbbVie Employees and other Employees who cease to be employed by Abbott after the Distribution Date and become employed by AbbVie during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or

 

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alternate payees) and the Abbott ARP shall transfer all such Assets and be relieved of such Liabilities, and (B) Abbott shall cause the Abbott ARP to receive Assets and assume all Liabilities under the AbbVie Pension Plan for Employees who cease to be employed by AbbVie after the Distribution Date and become employed by Abbott during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the AbbVie Pension Plan shall transfer all such Assets and be relieved of such Liabilities.  The amount of such Assets to be transferred shall be determined as provided in Section 3.01(b)(i) and shall be subject to the applicable provisions of Section 3.01(b)(i).

 

(c)                                  AbbVie Pension Plan Provisions.  The AbbVie Pension Plan shall provide that:

 

(i)                                     Transferred Employees and AbbVie LTD Participants shall (A) be eligible to participate in the AbbVie Pension Plan as of the applicable Transfer Date to the extent they were eligible to participate in the Abbott ARP as of the applicable Transfer Date, and (B) receive credit for vesting, eligibility and benefit service for all service credited for those purposes under the Abbott ARP as of the applicable Transfer Date as if that service had been rendered to AbbVie;

 

(ii)                                  the compensation paid by the Abbott Group to a Transferred Employee or an AbbVie LTD Participant that is recognized under the Abbott ARP as of the applicable Transfer Date shall be credited and recognized for all applicable purposes under the AbbVie Pension Plan as though it were compensation from the AbbVie Group;

 

(iii)                               the accrued benefit of each Transferred Employee and each AbbVie LTD Participant under the Abbott ARP as of the applicable Transfer Date shall be payable under the AbbVie Pension Plan at the time and in a form that would have been permitted under the Abbott ARP as in effect as of the applicable Transfer Date, with employment by the Abbott Group prior to the applicable Transfer Date treated as employment by the AbbVie Group under the AbbVie Pension Plan for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms;

 

(iv)                              the AbbVie Pension Plan shall assume and honor the terms of all QDROs in effect under the Abbott ARP as of the Transfer Date with respect to Transferred Employees and AbbVie LTD Participants; and

 

(v)                                 no Assets shall be transferred from the Code Section 401(h) account in the Abbott ARP to the AbbVie Pension Plan.

 

(d)                                 Determination Letter Request.  AbbVie shall submit an application to the Internal Revenue Service as soon as practicable after the Distribution Date (but no later than the last day of the remedial amendment period as defined in applicable Code provisions) for a determination letter regarding the qualification of the AbbVie Pension Plan and the tax status of its related trust as of the Distribution Date and shall make any amendments reasonably requested by the Internal Revenue Service to receive a favorable determination letter regarding the AbbVie Pension Plan.

 

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(e)                                  Abbott ARP after Distribution Date.  From and after the Distribution Date, (i) the Abbott ARP shall continue to be responsible for Liabilities in respect of Abbott Retained Employees and Abbott LTD Participants, and (ii) no Employees of the AbbVie Group (other than Post-Distribution AbbVie Employees) shall accrue any benefits under the Abbott ARP.  Without limiting the generality of the foregoing, Transferred Employees and AbbVie LTD Participants shall cease to be active participants in the Abbott ARP effective as of the applicable Transfer Date.

 

(f)                                    Plan Fiduciaries.  For all periods after the Distribution Date, the Parties agree that the applicable fiduciaries of each of the Abbott ARP and the AbbVie Pension Plan, respectively, shall have the authority with respect to the Abbott ARP and the AbbVie Pension Plan, respectively, to determine the plan investments and such other matters as are within the scope of their duties under ERISA Section 404.  Unless and until the applicable fiduciaries of the AbbVie Pension Plan determine that it is desired to invest the Assets of the AbbVie Pension Plan in a separate trust, the Assets of the AbbVie Pension Plan shall be invested through the Abbott Trust.  At such time as the applicable fiduciaries of the AbbVie Pension Plan determine that it is desired to invest the Assets of the AbbVie Pension Plan in a separate trust, Abbott shall direct the trustee of the Abbott Trust to transfer from the Abbott Trust to the trust(s) which forms a part of the AbbVie Pension Plan Assets equal in value to the Assets of AbbVie Pension Plan, with the composition of such assets to be mutually determined by the applicable fiduciaries of the AbbVie Pension Plan, the Abbott-AbbVie MEPP and the Abbott Trust.

 

(g)                                 No Loss of Unvested Benefits; No Distributions.  The transfer of any Transferred Employee’s employment to the AbbVie Group will not result in loss of that Transferred Employee’s unvested benefits under the Abbott ARP or the AbbVie Pension Plan and no Transferred Employee shall be entitled to a distribution of his or her benefit under the Abbott ARP as a result of such transfer of employment.

 

Section 3.02.  Abbott-AbbVie Multiple Employer Pension Plan.

 

(a)                                  Establishment of Abbott-AbbVie MEPP.  Effective as of or before the Distribution Date, the Parties shall establish the Abbott-AbbVie MEPP, which shall provide benefits for Former Employees (other than LTD Participants) participating in the Abbott ARP immediately prior to the Distribution Date.  The benefits provided by the Abbott-AbbVie MEPP to a Former Employee shall be the same as those the Former Employee would have received or is receiving under the Abbott ARP as of the Distribution Date.  As soon as practicable after the Distribution Date and upon (i) receipt by (A) AbbVie of copies of certified resolutions of the Abbott Board (or its authorized committee or other delegate) evidencing adoption of the Abbott-AbbVie MEPP and any related trust(s), and (B) Abbott of copies of certified resolutions of the AbbVie Board (or its authorized committee or other delegate) evidencing adoption of the Abbott-AbbVie MEPP and any related trust(s); and (ii) issuance of either (A) a favorable determination letter by the Internal Revenue Service with respect to the Abbott-AbbVie MEPP and any related trust, or (B) an opinion of counsel, which counsel and opinion are reasonably satisfactory to the other of Abbott or AbbVie, with respect to the qualified status of the Abbott-AbbVie MEPP under Code Section 401(a) and the tax-exempt status of any related trust under Code Section 501(a), Abbott shall direct the trustee of the Abbott Trust to transfer from the portion of the Abbott Trust that holds assets of the Abbott ARP to the portion of the Abbott Trust that holds assets of the Abbott-AbbVie MEPP the amounts described in Section 3.02(b).

 

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(b)                                 ERISA Section 4044 Transfer.

 

(i)                                     As of the Distribution Date, the Parties shall cause the Abbott-AbbVie MEPP to accept Assets and assume all Liabilities under the Abbott ARP for Former Employees (other than LTD Participants) who were participating in the Abbott ARP as of immediately prior to the Distribution Date (including Assets and Liabilities in respect of beneficiaries and/or alternate payees established in relation to such Former Employees) and the Abbott ARP shall transfer all such Assets and be relieved of such Liabilities.  The amount of Assets to be transferred from the Abbott ARP to the Abbott-AbbVie MEPP in such transfer (or transfers) shall be determined as of the Distribution Date in accordance with, and shall comply with, Code Section 414(l) and, to the extent deemed applicable by the Parties, ERISA Section 4044, and shall take into account the transfer (or transfers) of Assets described in Section 3.01(b).  Assumptions used to determine the value of the Assets to be transferred shall be the safe harbor assumptions specified for valuing benefits in trusteed plans under Department of Labor Regulations Section 4044.51-57 and, to the extent not so specified, shall be based on the assumptions used in the annual valuation report most recently prepared prior to the transfer by the actuary for the Abbott ARP.  The transfer amount described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between the Distribution Date and an assessment date set by Abbott that is as close as practicable, taking into account the timing and reporting of valuation of assets in the Abbott Trust, to the date upon which Assets are equal in value to the transfer amount actually transferred from the Abbott ARP to the Abbott-AbbVie MEPP.  During the time prior to such transfer, benefits for Former Employees shall be paid from the Abbott ARP.  The ultimate transfer amount shall be reduced by the amount of these benefits payable to Former Employees who are not LTD Participants and credited or debited by the actual investment earnings or losses from the payment date to the assessment date set by Abbott above.  In addition, during this period, each Party will be responsible for a pro rata share of trustee and administration fees attributable to the Abbott-AbbVie MEPP assets that remain in the Abbott ARP.  The entries in the Abbott ARP funding standard account shall be divided among the Abbott ARP, the AbbVie Pension Plan, and the Abbott-AbbVie MEPP based on the guidance provided in Revenue Rulings 81-212 and 86-47.

 

(ii)                                  Periodically, at such times as agreed upon by the Parties after the transfer(s) described in subparagraph (i) above, (A) AbbVie shall cause the AbbVie Pension Plan to receive Assets and assume all Liabilities under the Abbott-AbbVie MEPP for participants in the Abbott-AbbVie MEPP who become employed by AbbVie during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the Abbott-AbbVie MEPP shall transfer all such Assets and be relieved of such Liabilities, and (B) Abbott shall cause the Abbott ARP to receive Assets and assume all Liabilities under the Abbott-AbbVie MEPP for participants in the Abbott-AbbVie MEPP who become employed by Abbott during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the Abbott-AbbVie MEPP shall transfer all such Assets and be relieved of such Liabilities.  The amount of such Assets to be transferred shall be determined as provided

 

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in Section 3.02(b)(i) and shall be subject to the applicable provisions of Section 3.02(b)(i).

 

(c)                                  Abbott-AbbVie MEPP Provisions. The Abbott-AbbVie MEPP shall provide that:

 

(i)                                     the benefit of each Former Employee participating in the Abbott-AbbVie MEPP shall be such Former Employee’s accrued benefit under the Abbott ARP immediately prior to the Distribution Date;

 

(ii)                                  the accrued benefit of each Former Employee participating in the Abbott ARP as of the Distribution Date shall be paid under the Abbott-AbbVie MEPP at the time and in a form that would have been permitted under the Abbott ARP as in effect as of the Distribution Date;

 

(iii)                               the Abbott-AbbVie MEPP shall assume and honor the terms of all QDROs in effect under the Abbott ARP as of the Distribution Date with respect to participating Former Employees;

 

(iv)                              certain individuals who were previously employed by TAP Pharmaceutical Products Inc. who are participating in the Abbott ARP as of immediately prior to the Distribution Date shall continue to earn vesting and seniority service for purposes of the Abbott-AbbVie MEPP in accordance with Supplement E of the Abbott ARP as in effect on the Distribution Date; and

 

(v)                                 no assets shall be transferred from the Code Section 401(h) Account in the Abbott ARP to the Abbott-AbbVie MEPP.

 

(d)                                 Determination Letter Request.  The Parties shall cooperate and submit an application to the Internal Revenue Service as soon as practicable after the Distribution Date (but no later than the last day of the remedial amendment period as defined in applicable Code provisions) for a determination letter regarding the qualification of the Abbott-AbbVie MEPP and the tax-exempt status of its related trust as of the Distribution Date and shall make any amendments reasonably requested by the Internal Revenue Service to receive a favorable determination letter regarding the Abbott-AbbVie MEPP.

 

(e)                                  Plan Fiduciaries.  The fiduciaries of the Abbott-AbbVie MEPP shall be appointed, and shall have such rights, duties, and responsibilities, as shall be determined by mutual agreement of the Parties as set forth in the applicable plan and trust documents for the Abbott-AbbVie MEPP. Unless and until the applicable fiduciaries of the Abbott-AbbVie MEPP determine that it is desired to invest the Assets of the Abbott-AbbVie MEPP in a separate trust, the Assets of the Abbott-AbbVie MEPP shall be invested through the Abbott Trust.  At such time as the applicable fiduciaries of the Abbott-AbbVie MEPP determine that it is desired to invest the Assets of the Abbott-AbbVie MEPP in a separate trust, Abbott shall direct the trustee of the Abbott Trust to transfer from the Abbott Trust to the trust(s) which forms a part of the Abbott-AbbVie MEPP Assets equal in value to the Assets of the Abbott-AbbVie MEPP, with the composition of such assets to be mutually determined by the applicable fiduciaries of the Abbott-AbbVie MEPP and the Abbott Trust.

 

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(f)                                    Abbott-AbbVie MEPP after Distribution Date.  From and after the Distribution Date, no individual shall accrue any benefits under the Abbott-AbbVie MEPP.  If a participant in the Abbott-AbbVie MEPP becomes employed by the Abbott Group or the AbbVie Group on or after the Distribution Date in a position that is eligible for pension plan participation, any additional pension accruals shall occur under the Abbott ARP or the AbbVie Pension Plan, as applicable.

 

Section 3.03.  Stock Retirement/Savings Plan.

 

(a)                                  Establishment of AbbVie Savings Plan.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie Savings Plan.  As of the Distribution Date, the terms of the AbbVie Savings Plan shall be substantially similar to the terms of the Abbott SRP as of the Distribution Date (except as described in Section 3.03(f)).  On or prior to the Distribution Date, AbbVie shall provide Abbott with (i) a copy of the AbbVie Savings Plan; (ii) a copy of certified resolutions of the AbbVie Board (or its authorized committee or other delegate) evidencing adoption of the AbbVie Savings Plan and the related trust(s) and the assumption by the AbbVie Savings Plan of the Liabilities described in Section 3.03(b); and (iii) either (A) a favorable determination letter issued by the Internal Revenue Service with respect to the AbbVie Savings Plan and its related trust or (B) an opinion of counsel, which counsel and opinion are reasonably satisfactory to Abbott, with respect to the qualified status of the AbbVie Savings Plan under Code Section 401(a) and the tax-exempt status of its related trust under Code Section 501(a).

 

(b)                                 Transfer of Account Balances.  As soon as practicable after the Distribution Date, Abbott shall cause the trustee of the Abbott SRP to transfer from the trust(s) which forms a part of the Abbott SRP to the trust(s) which forms a part of the AbbVie Savings Plan amounts equal to the account balances of the Transferred Employees and the AbbVie LTD Participants (including account balances in respect of beneficiaries and alternate payees established in relation to such individuals) under the Abbott SRP, determined as of the date of the transfer.  Such transfers shall be made in cash, Abbott Common Shares, shares of AbbVie Common Stock, promissory notes evidencing outstanding loans and other Assets or any combination thereof in cash or in kind, as instructed by the Abbott SRP Investment Committee.  AbbVie shall cause the transferred amounts to be allocated among the Transferred Employees’ and AbbVie LTD Participants’ (and beneficiaries’ and/or alternate payees’, as applicable) AbbVie Savings Plan accounts and to such investment funds in the same manner in which those amounts were allocated under the Abbott SRP.  Any Asset and Liability transfers pursuant to this Section 3.03 shall comply in all respects with Code Sections 414(l) and 411(d)(6).

 

(c)                                  AbbVie Savings Plan Provisions. The AbbVie Savings Plan shall provide that:

 

(i)                                     Transferred Employees and AbbVie LTD Participants shall (A) be eligible to participate in the AbbVie Savings Plan as of the applicable Transfer Date to the extent they were eligible to participate in the Abbott SRP as of the applicable Transfer Date, and (B) receive credit for vesting purposes for all service credited for that purpose under the Abbott SRP as of the applicable Transfer Date as if that service had been rendered to AbbVie; and

 

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(ii)                                  the account balance of each Transferred Employee and AbbVie LTD Participant under the Abbott SRP as of the date of the transfer of Assets from the Abbott SRP (including any outstanding promissory notes) shall be credited to such individual’s account balance under the AbbVie Savings Plan.

 

(d)                                 Determination Letter Request.  AbbVie shall submit an application to the Internal Revenue Service as soon as practicable following the Distribution Date (but no later than the last day of the remedial amendment period as defined in applicable Code provisions) for a determination regarding the qualification of the AbbVie Savings Plan and the tax-exempt status of its related trust as of the Distribution Date and shall make any amendments reasonably requested by the Internal Revenue Service to receive a favorable determination letter regarding the AbbVie Savings Plan.

 

(e)                                  Abbott SRP after Distribution Date.  From and after the Distribution Date, (i) the Abbott SRP shall continue to be responsible for Liabilities in respect of Abbott Retained Employees and Former Employees (other than AbbVie LTD Participants), and (ii) no Employees of the AbbVie Group (other than Post-Distribution AbbVie Employees), shall accrue any benefits under the Abbott SRP.  Without limiting the generality of the foregoing, Transferred Employees and AbbVie LTD Participants shall cease to be active participants in the Abbott SRP effective as of the applicable Transfer Date.

 

(f)                                    Plan Fiduciaries and Stock Considerations. For all periods after the Distribution Date, the Parties agree that the applicable fiduciaries of each of the Abbott SRP and the AbbVie Savings Plan, respectively, shall have the authority with respect to the Abbott SRP and the AbbVie Savings Plan, respectively, to determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA Section 404.

 

(g)                                 No Loss of Unvested Benefits; No Distributions.  The transfer of any Transferred Employee’s employment to the AbbVie Group will not result in loss of that Transferred Employee’s unvested benefits under the Abbott SRP or the AbbVie Savings Plan and no Transferred Employee shall be entitled to a distribution of his or her benefit under the Abbott SRP as a result of such transfer of employment.

 

(h)                                 Subsequent Transfers.  If, after the Distribution Date, a participant in the Abbott SRP becomes employed by the AbbVie Group or a participant in the AbbVie Savings Plan becomes employed by the Abbott Group, any additional allocations shall occur under the Abbott SRP or the AbbVie Savings Plan, as applicable.  If such participant’s employment by the Abbott Group or the AbbVie Group commences during the Transition Period, the Abbott SRP or the AbbVie Savings Plan, as applicable, shall permit the applicable participant to roll over a distribution of such participant’s account (including any outstanding loans) from the AbbVie Savings Plan or the Abbott SRP, as applicable, all in accordance with the terms of the Abbott SRP and the AbbVie Savings Plan, as applicable.

 

Section 3.04.  Pension Plan for Former BASF and Former Solvay Employees.

 

(a)                                  Transfer of Plan Sponsorship to AbbVie.  As of the Distribution Date, AbbVie shall assume sponsorship of the Pension Plan for Former BASF and Former Solvay

 

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Employees.  The plan and the related trust agreement shall be amended, effective as of the Distribution Date, to reflect such sponsorship and to make other changes to effectuate the sponsorship change.  From and after the Distribution Date, the Pension Plan for Former BASF and Former Solvay Employees shall be responsible for Liabilities in respect of Transferred Employees and Former Employees (other than Abbott LTD Participants).

 

(b)                                 Abbott Retention of Assets and Liabilities for Benefits Due to Abbott Retained Employees and Abbott LTD Participants.

 

(i)                                     As described in Section 3.04(b)(ii), Abbott shall retain all Assets and Liabilities relating to, arising out of, or resulting from the Pension Plan for Former BASF and Former Solvay Employees with respect to Abbott Retained Employees and Abbott LTD Participants and their beneficiaries and/or alternate payees.  Effective as of or before the Distribution Date, Abbott shall amend the Abbott ARP to incorporate the provisions necessary to document and provide for such benefits due to the affected Abbott Retained Employees and Abbott LTD Participants.  From and after the Distribution Date (or, if later, the date on which the Assets and Liabilities attributable to benefits for the Abbott Retained Employees and Abbott LTD Participants are transferred to the Abbott ARP), no Employees of the Abbott Group shall participate in or accrue any benefits under the Pension Plan for Former BASF and Former Solvay Employees.

 

(ii)                                  As of the Distribution Date, Abbott shall cause the Abbott ARP to accept Assets and assume all Liabilities under the Pension Plan for Former BASF and Former Solvay Employees for Abbott Retained Employees and Abbott LTD Participants (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the Pension Plan for Former BASF and Former Solvay Employees shall transfer all such Assets and be relieved of such Liabilities.  The amount of Assets to be transferred from the Pension Plan for Former BASF and Former Solvay Employees to the Abbott ARP in such transfer (or transfers) shall be determined as of the Distribution Date in accordance with, and shall comply with, Code Section 414(l) and, to the extent deemed applicable by the Parties, ERISA Section 4044. Assumptions used to determine the value of the Assets to be transferred shall be the safe harbor assumptions specified for valuing benefits in trusteed plans under Department of Labor Regulations Section 4044.51-57 and, to the extent not so specified, shall be based on the assumptions used in the annual valuation report most recently prepared prior to the transfer by the actuary for the Pension Plan for Former BASF and Former Solvay Employees.  The transfer amount described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between the Distribution Date and an assessment date set by Abbott that is as close as practicable, taking into account the timing and valuation of assets in the Abbott Trust, to the date upon which Assets equal in value to the transfer amount are actually transferred from the Pension Plan for Former BASF and Former Solvay Employees to the Abbott ARP. During the time prior to such transfer, benefits for Abbott Retained Employees who terminate employment with the Abbott Group and for Abbott LTD Participants shall be paid from the Pension Plan for Former BASF and Former Solvay Employees. The ultimate transfer amount shall be reduced by the amount of these benefits and credited or debited by the actual investment earnings or losses from the payment date to the assessment date set by

 

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Abbott above.  In addition, during this period, Abbott will be responsible for a pro rata share of trustee and administration fees attributable to the Pension Plan for Former BASF and Former Solvay Employees assets that remain in the Abbott ARP.  The entries in the Abbott ARP funding standard account shall be divided among the Abbott ARP and the Pension Plan for Former BASF and Former Solvay Employees based on the guidance provided in Revenue Ruling 81-212 and 86-47.

 

(iii)                               Periodically, at such times as agreed upon by the Parties after the transfer(s) described in Section 3.04(b)(ii), (A) AbbVie shall cause the Pension Plan for Former BASF and Former Solvay Employees to receive Assets and assume all Liabilities under the Abbott ARP for any Abbott Retained Employees (and their beneficiaries and alternate payees) on whose behalf a transfer was made under Section 3.04(b)(ii) who cease to be employed by Abbott after the Distribution Date and become employed by AbbVie during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the Abbott ARP shall transfer all such Assets and be relieved of such Liabilities, and (B) Abbott shall cause the Abbott ARP to receive Assets and assume all Liabilities under the Pension Plan for Former BASF and Former Solvay Employees for any Employees who cease to be employed by AbbVie after the Distribution Date and become employed by Abbott during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the Pension Plan for Former BASF and Former Solvay Employees shall transfer all such Assets and be relieved of such Liabilities.  The amount of Assets to be transferred shall be determined as provided in Section 3.04(b)(ii) and shall be subject to the applicable provisions of Section 3.04(b)(ii).

 

(c)                                  Plan Fiduciaries.  For all periods after the Distribution Date, the Parties agree that the applicable fiduciaries of each of the Pension Plan for Former BASF and Former Solvay Employees and the Abbott ARP, respectively, shall have the authority with respect to the Pension Plan for Former BASF and Former Solvay Employees and the Abbott ARP, respectively, to determine the plan investments and such other matters as are within the scope of their duties under ERISA Section 404.  Unless and until the applicable fiduciaries of the Pension Plan for Former BASF and Former Solvay Employees determine that it is desired to invest the Assets of the Pension Plan for Former BASF and Former Solvay Employees in a separate trust, the Assets of the Pension Plan for Former BASF and Former Solvay Employees shall be invested through the Abbott Trust.  At such time as the applicable fiduciaries of the Pension Plan for Former BASF and Former Solvay Employees determine that it is desired to invest the Assets of the Pension Plan for Former BASF and Former Solvay Employees in a separate trust, Abbott shall direct the trustee of the Abbott Trust to transfer from the Abbott Trust to the trust(s) which forms a part of the Pension Plan for Former BASF and Former Solvay Employees Assets equal in value to the Assets of Pension Plan for Former BASF and Former Solvay Employees, with the composition of such assets to be mutually determined by the applicable fiduciaries of the Pension Plan for Former BASF and Former Solvay Employees and the Abbott Trust.

 

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Section 3.05.  Supplemental Pension Plan

 

(a)                                  Establishment of AbbVie SERP.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie SERP, with terms and funding arrangements substantially similar to those of the Abbott SERP as of the Distribution Date.

 

(b)                                 Assumption of SERP Liabilities and Transfer from Abbott SERP. Except as provided below, as of a Transferred Employee’s or an AbbVie LTD Participant’s Transfer Date, AbbVie shall, and shall cause the AbbVie SERP to, assume all Liabilities for all obligations under the Abbott SERP for the benefits of such individual (and any other individual on whose behalf Liabilities are transferred from the Abbott ARP to the AbbVie Pension Plan under Section 3.01(b)(ii)(A)) and his or her beneficiaries and/or alternate payees determined as of the applicable Transfer Date, and Abbott and the Abbott SERP shall be relieved of all Liabilities for those benefits.  Abbott shall retain the Liabilities for all obligations under the Abbott SERP for the benefits for Abbott Retained Employees and Former Employees (other than AbbVie LTD Participants) (and any other individual on whose behalf Liabilities are transferred from the AbbVie Pension Plan to the Abbott ARP under Section 3.01(b)(ii)(B)), but shall share with AbbVie the cost of benefits provided to Former Employees (other than LTD Participants) in accordance with procedures mutually agreed to by the Parties.

 

(c)                                  AbbVie SERP Provisions.  As of the Distribution Date, the AbbVie SERP shall provide that:

 

(i)                                     Transferred Employees and AbbVie LTD Participants shall (A) be eligible to participate in the AbbVie SERP to the extent they were eligible to participate in the Abbott SERP as of the applicable Transfer Date, and (B) receive credit for vesting, eligibility and benefit service for all service credited for those purposes under the Abbott SERP as of the Transfer Date as if that service had been rendered to AbbVie (provided that in the event that any such Transferred Employee or AbbVie LTD Participant receives a distribution from the Abbott SERP, the value of such distribution shall be offset against future benefits under the AbbVie SERP to the extent necessary to avoid a duplication of benefits, the terms of such offset to be set forth in the AbbVie SERP);

 

(ii)                                  the compensation paid by the Abbott Group to a Transferred Employee or to an AbbVie LTD Participant that was recognized under the Abbott SERP as of the Transfer Date shall be credited and recognized for all applicable purposes under the AbbVie SERP as though it were compensation from the AbbVie Group;

 

(iii)                               the accrued benefit of each Transferred Employee and each AbbVie LTD Participant under the Abbott SERP as of the applicable Transfer Date shall be payable under the AbbVie SERP at the time and in a form that would have been permitted under the Abbott SERP as in effect as of such Transfer Date, with employment by the Abbott Group prior to the Transfer Date treated as employment by the AbbVie Group under the AbbVie SERP for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms; and

 

(iv)                              the AbbVie SERP shall assume and honor the terms of all arrangements relating to beneficiaries and alternate payees in effect and honored under

 

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the Abbott SERP as of the applicable Transfer Date with respect to Transferred Employees and AbbVie LTD Participants.

 

(d)                                 Abbott SERP after Distribution Date.  From and after a Transferred Employee’s or AbbVie LTD Participant’s Transfer Date, such Transferred Employee or AbbVie LTD Participant shall not participate in or accrue any benefits under the Abbott SERP. Without limiting the generality of the foregoing, each Transferred Employee and AbbVie LTD Participant shall cease to participate in the Abbott SERP effective as of the applicable Transfer Date.  The Abbott SERP shall continue to be responsible for Liabilities in respect of Abbott Retained Employees and Former Employees (other than AbbVie LTD Participants) and their beneficiaries and/or alternate payees.

 

Section 3.06.  Deferred Compensation Plan.

 

(a)                                  Establishment of AbbVie DCP. Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie DCP, with terms substantially similar to those of the Abbott DCP as of the Distribution Date.

 

(b)                                 Assumption of DCP Liabilities and Transfer from Abbott DCP.

 

(i)                                     As of a Transferred Employee’s or an AbbVie LTD Participant’s Transfer Date, AbbVie shall, and shall cause the AbbVie DCP to, assume all Liabilities for all obligations under the Abbott DCP for the benefits of such individual and his or her beneficiaries and/or alternate payees, determined as of the applicable Transfer Date, and Abbott and the Abbott DCP shall be relieved of all Liabilities for those benefits.

 

(ii)                                  As of or as soon as practicable after the applicable Transfer Date, the Parties shall cooperate to cause the accounts of the applicable Transferred Employee or AbbVie LTD Participant participating in the Abbott DCP to be transferred to the AbbVie DCP.  AbbVie shall (A) credit each such Transferred Employee’s or AbbVie LTD Participant’s account with (1) the amount deferred by such individual into the Abbott DCP as of the applicable Transfer Date, plus (2) any employer contributions, whether vested or unvested, deemed to have been made in relation to the amount described in (1), including, in each case, any earnings thereon, and (B) recognize and honor all deferral and distribution elections made by such individual (including any deferral election applicable to any bonus earned but not yet paid as of the applicable Transfer Date).

 

(c)                                  Abbott DCP after Distribution Date.  From and after a Transferred Employee’s or an AbbVie LTD Participant’s Transfer Date, such individual shall not participate in or accrue any benefits under the Abbott DCP.  Without limiting the generality of the foregoing, each Transferred Employee or AbbVie LTD Participant shall cease to participate in the Abbott DCP effective as of his or her Transfer Date.  The Abbott DCP shall continue to be responsible for Liabilities in respect of Abbott Retained Employees and Former Employees (other than AbbVie LTD Participants) and their beneficiaries and/or alternate payees.

 

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Section 3.07.  Supplemental Savings Plan.

 

(a)                                  Establishment of AbbVie SSP.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie SSP, with terms and funding arrangements substantially similar to those of the Abbott KSP as of the Distribution Date.

 

(b)                                 Assumption of KSP Liabilities and Transfer from Abbott KSP.

 

(i)                                     As of a Transferred Employee’s or an AbbVie LTD Participant’s Transfer Date, AbbVie shall, and shall cause the AbbVie SSP to, assume all Liabilities for all obligations under the Abbott KSP for the benefits of such individual and his or her beneficiaries and/or alternate payees, determined as of such Transfer Date, and Abbott and the Abbott KSP shall be relieved of all Liabilities for those benefits.

 

(ii)                                  As of or as soon as practicable after the applicable Transfer Date, the Parties shall cooperate to cause the accounts of the applicable Transferred Employee or AbbVie LTD Participant participating in the Abbott KSP to be transferred to the AbbVie SSP.  AbbVie shall (A) credit each such Transferred Employee’s or AbbVie LTD Participant’s account with (1) the amount deferred by such individual into the Abbott KSP as of the applicable Transfer Date, plus (2) any employer contributions, whether vested or unvested, deemed to have been made in relation to the amount described in (1), including, in each case, any earnings thereon, and (B) recognize and honor all deferral and distribution elections made by such individual.

 

(c)                                  Abbott KSP after Distribution Date.  From and after a Transferred Employee’s or an AbbVie LTD Participant’s Transfer Date, such individual shall not participate in or accrue any benefits under the Abbott KSP.  Without limiting the generality of the foregoing, each Transferred Employee or AbbVie LTD Participant shall cease to participate in the Abbott KSP effective as of his or her Transfer Date.  The Abbott KSP shall continue to be responsible for Liabilities in respect of Abbott Retained Employees and Former Employees (other than AbbVie LTD Participants) and their beneficiaries and/or alternate payees, but shall share with AbbVie the cost of benefits provided to Former Employees (other than LTD Participants) in accordance with procedures mutually agreed to by the Parties.

 

Section 3.08.  Deferred Compensation Plan for Former Employees of Solvay and Supplemental Pension Plan for Former BASF and Former Solvay Employees.

 

(a)                                  Transfer of Plan Sponsorship to AbbVie.  Effective as of the Distribution Date, a member of the AbbVie Group shall assume or retain sponsorship of the Deferred Compensation Plan for Former Employees of Solvay and the Supplemental Pension Plan for Former BASF and Former Solvay Employees and, except as otherwise provided in Section 3.08(b), shall be responsible for all Liabilities thereunder.  Such plans shall be amended, effective as of the Distribution Date, to reflect such sponsorship and to make other changes reasonably necessary to effectuate the sponsorship change.

 

(b)                                 Abbott Retention of Liabilities for Benefits Due to Abbott Retained Employees and Abbott LTD Participants.  Abbott shall retain all Liabilities relating to, arising out of, or resulting from the Deferred Compensation Plan for Former Employees of Solvay and the

 

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Supplemental Pension Plan for Former BASF and Former Solvay Employees with respect to Abbott Retained Employees and Abbott LTD Participants and their beneficiaries and/or alternate payees (and, with respect to such Supplemental Pension Plan for Former BASF and Former Solvay Employees, any other individual on whose behalf Liabilities are transferred from the Pension Plan for Former BASF and Former Solvay Employees to the Abbott ARP under Section 3.04(b)(iii)).  Effective as of or before the Distribution Date, Abbott shall amend or adopt such plans as it deems necessary to incorporate the provisions necessary to document and provide for such benefits due to the affected Abbott Retained Employees and Abbott LTD Participants.  From and after the Distribution Date, no Employee of the Abbott Group shall participate in or accrue any benefits under the Deferred Compensation Plan for Former Employees of Solvay and the Supplemental Pension Plan for Former BASF and Former Solvay Employees.

 

ARTICLE IV

 

NON-U.S. RETIREMENT PLANS

 

Section 4.01.  Establishment of Non-U.S. Retirement Plans and Transfers of Assets and Liabilities.  Except as mutually agreed upon by the Parties or required under this Article IV or Article VII, AbbVie or its appropriate Affiliate will establish a pension plan (whether a defined contribution or defined benefit pension plan) with terms that are substantially similar to those of the corresponding Non-U.S. Abbott Benefit Plan.

 

(a)                                  Transfer of Non-U.S. Retirement Plan Assets and Liabilities.  After a Non-U.S. AbbVie Benefit Plan is established, then, except as otherwise provided in this Agreement, the Assets and Liabilities determined as of the Distribution Date under the corresponding Non-U.S. Abbott Benefit Plan attributable to Transferred Non-U.S. Employees (and, with respect to each of the countries or entities listed in Schedule 4.01(a), AbbVie Former Employees) who are participants in that plan, along with any other Assets and Liabilities that AbbVie agrees to assume with respect to such plan, shall be transferred to the applicable Non-U.S. AbbVie Benefit Plan.  The Non-U.S. Abbott Benefit Plan shall retain all Assets and Liabilities related to Abbott Retained Employees, Abbott Former Employees, and, with respect to each of the countries or entities not listed in Schedule 4.01(a), AbbVie Former Employees. Assets will be allocated between the plans based on the proportion of Liabilities borne by each plan.  Except as otherwise mutually agreed upon by the Parties, such Liabilities will be valued as of the Distribution Date using the projected benefit obligation based on plan provisions as in effect at the Distribution Date and applying demographic and other assumptions used in the most recently completed valuation of the applicable Non-U.S. Abbott Benefit Plan; provided, however, that all economic assumptions will be updated as of the Distribution Date.  The transfer amount described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between the Distribution Date and an assessment date set by Abbott that is as close as practicable, taking into account the timing and reporting of valuation of the applicable Non-U.S. Abbott Benefit Plan’s Assets, to the date upon which Assets equal in value to the transfer amount are actually transferred from the applicable Non-U.S. Abbott Benefit Plan to the applicable Non-U.S. AbbVie Benefit Plan.  During this period, with respect to countries or entities listed in Schedule 4.01(a), benefits for AbbVie Former Employees shall be paid from the Non-U.S. Abbott Benefit Plan. Except as otherwise mutually agreed upon by the Parties, the ultimate transfer amount shall be reduced by the amount

 

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of these benefits and credited or debited by the actual investment earnings or losses from the payment date to the assessment date set by Abbott above.  Any third party fees, costs or expenses incurred under the applicable Non-U.S. Abbott Benefit Plan during the period from the Distribution Date to the assessment date set by Abbott shall be shared by the Parties based on the proportion of Liabilities borne by the applicable Non-U.S. Abbott Benefit Plan and the applicable Non-U.S. AbbVie Benefit Plan.  The Parties agree to use commercially reasonable efforts to accomplish each transfer as soon as practicable following the Distribution Date and to cooperate with each other to make such filings and disclosures and obtain such approvals as may be deemed necessary or advisable in accordance with applicable Law.

 

(b)                                 Non-U.S. AbbVie Retirement Plan ProvisionsEach Non-U.S. AbbVie Benefit Plan shall provide, except as otherwise provided in this Agreement or local Conveyance and Assumption Instruments that:

 

(i)                                     Transferred Non-U.S. Employees (and, with respect to each of the countries or entities listed in Schedule 4.01(a), AbbVie Former Employees) shall (A) be eligible to participate in the Non-U.S. AbbVie Benefit Plan to the extent they were eligible to participate in the corresponding Non-U.S. Abbott Benefit Plan as of the Distribution Date, and (B) receive credit for vesting, eligibility and benefit service for all service credited for those purposes under the corresponding Non-U.S. Abbott Benefit Plan as if that service had been rendered to AbbVie;

 

(ii)                                  the compensation paid by the Abbott Group to a Transferred Non-U.S. Employee (or, with respect to each of the countries or entities listed in Schedule 4.01(a), an AbbVie Former Employee) that is recognized under the Non-U.S. Abbott Benefit Plan shall be credited and recognized for all applicable purposes under the corresponding Non-U.S. AbbVie Benefit Plan as though it were compensation from the AbbVie Group; and

 

(iii)                               the accrued benefit of each Transferred Non-U.S. Employee (or, with respect to each of the countries or entities listed in Schedule 4.01(a), each AbbVie Former Employee) under the Non-U.S. Abbott Benefit Plan that is transferred to the corresponding Non-U.S. AbbVie Benefit Plan pursuant to Section 4.01(a) shall be paid under such Non-U.S. AbbVie Benefit Plan in accordance with the terms of such Non-U.S. AbbVie Benefit Plan and applicable Law, with employment by the Abbott Group treated as employment by the AbbVie Group under the Non-U.S. AbbVie Benefit Plan for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms.

 

(c)                                  Subsequent Transfers.  Periodically, at such times as agreed upon by the Parties after the initial transfer described in Section 4.01(a), (i) AbbVie shall cause the applicable Non-U.S. AbbVie Benefit Plan to receive Assets and assume all Liabilities under the applicable Non-U.S. Abbott Benefit Plan for Post-Distribution AbbVie Employees and other Employees who cease to be employed by Abbott after the Distribution Date and become employed by AbbVie during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the applicable Non-U.S. Abbott Benefit Plan shall transfer all such Assets and be relieved of such Liabilities, and (ii) Abbott shall cause the applicable Non-U.S. Abbott Benefit Plan to receive Assets and assume all Liabilities under the applicable Non-U.S.

 

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AbbVie Benefit Plan for Employees who cease to be employed by AbbVie after the Distribution Date and become employed by Abbott during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the applicable Non-U.S. AbbVie Benefit Plan shall transfer all such Assets and be relieved of such Liabilities.  The amount of such Assets to be transferred shall be determined as provided in Section 4.01(a) and shall be subject to the applicable provisions of Section 4.01(a).

 

Section 4.02.  Shared Plan Model.

 

(a)                                  AbbVie Participation in Non-U.S. Abbott Retirement Plans.

 

(i)                                     In each of the countries or entities listed in Schedule 4.02(a), Abbott or its appropriate Affiliate will permit AbbVie or its appropriate Affiliate to continue to participate in the Non-U.S. Abbott Benefit Plan providing retirement benefits in that country after the Distribution.  Except as otherwise mutually agreed upon by the Parties, such continued participation is subject to the following requirements: (A) Abbott or its appropriate Affiliate will remain the principal employer under the plan; (B) Abbott and only Abbott or its appropriate Affiliate may amend the plan at any time; (C) any third party fees, costs or expenses shall be shared by the Parties on the basis of their proportionate share of the Liabilities under the Non-U.S. Abbott Benefit Plan;  (D) Abbott shall determine the benefit formula or structure under the plan (which shall apply uniformly to all similarly situated participants); and (E) such continued participation may not extend beyond two years after the Distribution Date, unless otherwise mutually agreed by each Party’s head of human resources (or such individual’s delegate).

 

(ii)                                  At or before the end of the shared plan period, in each of the countries or entities listed in Schedule 4.02(a), AbbVie or its appropriate Affiliate shall establish its own plan or arrangement to deliver the benefits due to AbbVie Employees (including both current and former AbbVie Employees) and AbbVie Former Employees under the applicable Non-U.S. Abbott Benefit Plan or otherwise shall be responsible for all costs incurred by the Parties in connection with winding up or terminating the participation of AbbVie or its appropriate Affiliate in the Non-U.S. Abbott Benefit Plan.  Following the establishment of the Non-U.S. AbbVie Benefit Plan, the Assets and Liabilities of the Non-U.S. Abbott Benefit Plan attributable to AbbVie Employees (including both current and former AbbVie Employees) and AbbVie Former Employees who are participants in that plan shall be transferred to the applicable Non-U.S. AbbVie Benefit Plan.  Assets will be allocated between the plans based on the proportion of Liabilities borne by each plan.  Except as otherwise mutually agreed upon by the Parties, such Liabilities will be valued as of the Distribution Date using the projected unit credit method based on plan provisions as in effect at the Distribution Date and applying the demographic and other assumptions used in the most recently completed valuation of the applicable Non-U.S. Abbott Benefit Plan; provided, however, that all economic assumptions will be updated as of the Distribution Date.  The transfer amount described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between the establishment of the Non-U.S. AbbVie Benefit Plan and an assessment date set by Abbott that is as close as practicable, taking into account the timing and reporting of valuation of

 

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the applicable Non-U.S. Abbott Benefit Plan’s Assets, to the date upon which Assets equal in value to the transfer amount are actually transferred from the applicable Non-U.S. Abbott Benefit Plan to the applicable Non-U.S. AbbVie Benefit Plan.  During this period, benefits for former AbbVie Employees and AbbVie Former Employees shall be paid from the Non-U.S. Abbott Benefit Plan. Except as otherwise mutually agreed upon by the Parties, the ultimate transfer amount shall be reduced by the amount of these benefits and credited or debited by the actual investment earnings or losses from the payment date to the assessment date set by Abbott above.  Any third party fees, costs or expenses incurred under the applicable Non-U.S. Abbott Benefit Plan during the period from the establishment of the Non-U.S. AbbVie Benefit Plan to the assessment date set by Abbott shall be shared by the Parties based on the proportion of Liabilities borne by the applicable Non-U.S. Abbott Benefit Plan and the applicable Non-U.S. AbbVie Benefit Plan.  The Parties agree to use commercially reasonable efforts to accomplish each transfer as soon as practicable following the establishment of the Non-U.S. AbbVie Benefit Plan and to cooperate with each other to make such filings and disclosures and obtain such approvals as may be deemed necessary or advisable in accordance with applicable Law.  Such transfers and any actuarial assumptions shall be subject to such minimum consents, approvals and other legal requirements as may apply under applicable Law, including, if required, the consent of any affected plan participant or any other third party.

 

(b)                                 Non-U.S. Abbott Retirement Plan Provisions.  Each Non-U.S. Abbott Benefit Plan described in Section 4.02(a) shall provide, except as otherwise provided in this Agreement that:

 

(i)                                     AbbVie Employees shall (A) be eligible to participate in the Non-U.S. Abbott Benefit Plan to the extent they were eligible to participate in such plan immediately prior to the Distribution Date, and (B) receive credit for vesting, eligibility and benefit service for all service with AbbVie during the shared plan period as if that service had been rendered to Abbott;

 

(ii)                                  the compensation paid by the AbbVie Group to an AbbVie Employee during the shared plan period shall be credited and recognized for all applicable purposes under the corresponding Non-U.S. Abbott Benefit Plan as though it were compensation from the Abbott Group; and

 

(iii)                               the accrued benefit of each AbbVie Employee under the Non-U.S. Abbott Benefit Plan shall be paid at the time and in a form provided under such plan, with employment by the AbbVie Group during the shared plan period treated as employment by the Abbott Group under the Non-U.S. Abbott Benefit Plan for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms.

 

(c)                                  Subsequent Transfers.  Periodically, at such times as agreed upon by the Parties after the initial transfer described in Section 4.02(a), (i) AbbVie shall cause the applicable Non-U.S. AbbVie Benefit Plan to receive Assets and assume all Liabilities under the applicable Non-U.S. Abbott Benefit Plan for Post-Distribution AbbVie Employees and other Employees who cease to be employed by Abbott after the Distribution Date and become employed by

 

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AbbVie during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the applicable Non-U.S. Abbott Benefit Plan shall transfer all such Assets and be relieved of such Liabilities, and (ii) Abbott shall cause the applicable Non-U.S. Abbott Benefit Plan to receive Assets and assume all Liabilities under the applicable Non-U.S. AbbVie Benefit Plan for Employees who cease to be employed by AbbVie after the Distribution Date and become employed by Abbott during the Transition Period (including Assets and Liabilities in respect of beneficiaries and/or alternate payees) and the applicable Non-U.S. AbbVie Benefit Plan shall transfer all such Assets and be relieved of such Liabilities.  The amount of such Assets to be transferred shall be determined as provided in Section 4.02(a) and shall be subject to the applicable provisions of Section 4.02(a).

 

Section 4.03.  Overseas Managers Pension Plan and Territorial Pension Plan.

 

(a)                                  Establishment of AbbVie OMPP and AbbVie TPP. Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie OMPP and the AbbVie TPP, with terms substantially similar to those of the Abbott OMPP or the Abbott TPP, as applicable, as of the Distribution Date.

 

(b)                                 OMPP and TPP Liabilities.  AbbVie shall, and shall cause the AbbVie OMPP and the AbbVie TPP to, assume all Liabilities for all obligations under the Abbott OMPP or the Abbott TPP, as applicable, for the benefits for Transferred Employees, and Abbott and the Abbott OMPP and the Abbott TPP shall be relieved of all Liabilities for those benefits.  Abbott shall retain the Liabilities for all obligations under the Abbott OMPP and the Abbott TPP for the benefits for Abbott Retained Employees and Former Employees, but shall share with AbbVie the cost of benefits provided to Former Employees in accordance with procedures mutually agreed to by the Parties.

 

(c)                                  AbbVie OMPP and AbbVie TPP as of the Distribution Date.  As of the Distribution Date, the AbbVie OMPP and the AbbVie TPP shall provide that:

 

(i)                                     Transferred Employees who are participants in the AbbVie OMPP or the AbbVie TPP, as applicable, shall receive credit for vesting, eligibility, and benefit service for all service credited for those purposes under the Abbott OMPP or the Abbott TPP, as applicable, as if that service had been rendered to AbbVie;

 

(ii)                                  the compensation paid by the Abbott Group to a Transferred Employee which was recognized under the Abbott OMPP or the Abbott TPP shall be credited and recognized for all applicable purposes under the AbbVie OMPP or the AbbVie TPP, as applicable, as though it were compensation from the AbbVie Group; and

 

(iii)                               following the Distribution Date, the AbbVie OMPP and the AbbVie TPP shall not be amended in any manner that would reduce the accrued benefit (including any early retirement subsidy) of any Transferred Employee.

 

(d)                                 Abbott OMPP and Abbott TPP after Distribution Date.  From and after the Distribution Date, no AbbVie Employees (other than Post-Distribution Transferred Employees) shall participate in or accrue any benefits under the Abbott OMPP or the Abbott TPP.

 

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ARTICLE V

 

WELFARE AND FRINGE BENEFIT PLANS

 

Section 5.01.  U.S. Health and Welfare Plans.

 

(a)                                  Establishment of AbbVie Health and Welfare Plans.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie Health and Welfare Plans, with terms substantially similar to those of the corresponding Abbott Health and Welfare Plans as of the Distribution Date unless otherwise provided in this Article V.

 

(b)                                 Waiver of Conditions; Benefit Maximums. AbbVie shall, to the extent commercially reasonable, cause the AbbVie Health and Welfare Plans to:

 

(i)                                     with respect to initial enrollment following the applicable Transfer Date, waive

 

(A)                              all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any Transferred Employee or AbbVie LTD Participant, other than limitations that were in effect with respect to the Transferred Employee or the AbbVie LTD Participant under the applicable Abbott Health and Welfare Plan as of immediately prior to such individual’s Transfer Date, and

 

(B)                                any waiting period limitation or evidence of insurability requirement applicable to a Transferred Employee or AbbVie LTD Participant other than limitations or requirements that were in effect with respect to such Transferred Employee or AbbVie LTD Participant under the applicable Abbott Health and Welfare Plan as of immediately prior to such individual’s Transfer Date; and

 

(ii)                                  take into account

 

(A)                              with respect to aggregate annual, lifetime, or similar maximum benefits available under the AbbVie Health and Welfare Plans, a Transferred Employee’s or AbbVie LTD Participant’s prior claim experience under the Abbott Health and Welfare Plans and any Benefit Plan that provides leave benefits; and

 

(B)                                any eligible expenses incurred by a Transferred Employee or AbbVie LTD Participant and his or her covered dependents during the portion of the plan year of the applicable Abbott Health and Welfare Plan ending on the applicable Transfer Date to be taken into account under such AbbVie Health and Welfare Plan for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such Transferred Employee or AbbVie LTD Participant and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such AbbVie Health and Welfare Plan.

 

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(c)                                  Spousal Transition Issues. The Abbott Group and the AbbVie Group will cooperate to develop uniform guidelines intended to ensure that, to the extent commercially practicable, from the Distribution Date through December 31, 2013, Employees who are married to each other or who are domestic partners as of the Distribution Date do not incur additional aggregate cost, or derive additional aggregate benefit, under the Health and Welfare Plans of the Parties solely because one such Employee is an Abbott Retained Employee and the other is a Transferred Employee.

 

(d)                                 Allocation of Health and Welfare Assets and Liabilities.

 

(i)                                     General Principles.  Except as otherwise specifically provided in this Agreement, Abbott shall retain all Liabilities relating to Incurred Claims under the Abbott Health and Welfare Plans, and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, and similar items) associated with such Incurred Claims. AbbVie shall be responsible for all Liabilities relating to Incurred Claims under any AbbVie Health and Welfare Plan and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, and similar items) associated with such Incurred Claims.

 

(ii)                                  Disability Benefits.   Notwithstanding any other provision hereof, Abbott shall be responsible for Incurred Claims (including ongoing benefit payments) of Abbott Retained Employees and Abbott Former Employees for short- and long-term disability benefits, regardless of when the applicable Incurred Claim was incurred, and AbbVie shall be responsible for Incurred Claims (including ongoing benefit payments) of AbbVie Employees and AbbVie Former Employees for short- and long-term disability benefits, regardless of when the applicable Incurred Claim was incurred.

 

(iii)                               Flexible Spending Accounts.  The Parties shall take all actions necessary to ensure that, effective as of the Distribution Date, (A) the health care and dependent care flexible spending accounts of Transferred Employees (whether positive or negative) (the “Transferred Flexible Spending Account Balances”) under the applicable Abbott Health and Welfare Plan shall be transferred to the corresponding AbbVie Health and Welfare Plan; (B) the elections, contribution levels and coverage of the applicable Transferred Employees shall apply under the AbbVie Health and Welfare Plan in the same manner as under the corresponding Abbott Health and Welfare Plan; and (C) the applicable Transferred Employees shall be eligible for reimbursement from the AbbVie Health and Welfare Plan on the same basis and the same terms and conditions as under the corresponding Abbott Health and Welfare Plan.  As soon as practicable after the Distribution Date, and in any event within 30 business days after the amount of the Transferred Flexible Spending Account Balances is determined, Abbott shall pay AbbVie the net aggregate amount of the Transferred Flexible Spending Account Balances, if such amount is positive, and AbbVie shall pay Abbott the net aggregate amount of the Transferred Flexible Spending Account Balances, if such amount is negative.  With respect to Transferred Employees whose Transfer Date occurs after the Distribution Date, the Parties shall cooperate in good faith to provide for transfers and/or reimbursement after the applicable Transfer Date with respect to the health care and dependent care flexible spending accounts of such Transferred Employees in accordance with procedures mutually agreed to by the Parties.

 

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(iv)                              Retiree Health Care Plan and Retiree Life Insurance Plan.  Notwithstanding any other provision hereof, Abbott shall retain the Liabilities and responsibility for all obligations under the Abbott Retiree Health Care Plan and the Abbott Retiree Life Insurance Plan for benefits due to Abbott Retained Employees and Former Employees (other than AbbVie LTD Participants), and shall also retain Assets, including, without limitation, Medicare reimbursements, pharmaceutical rebates, and similar items, associated with such benefits, but shall share with AbbVie the cost of benefits provided to Former Employees (other than LTD Participants) under the Abbott Retiree Health Care Plan and the Abbott Retiree Life Insurance Plan in accordance with procedures mutually agreed to by the Parties.

 

(e)                                  Abbott Health and Welfare Plans after Distribution Date.  Transferred Employees shall cease to participate in the Abbott Health and Welfare Plans effective as of their respective Transfer Dates.

 

(f)                                    401(h) Account.  Abbott shall retain all Assets associated with the 401(h) account associated with the Abbott ARP.

 

Section 5.02.  COBRA and HIPAA.  Abbott shall continue to be responsible for compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the Abbott Health and Welfare Plans with respect to any (a) Abbott Retained Employees and any Former Employees (and their covered dependents) who incur a qualifying event under COBRA on, prior to, or following the Distribution Date, (b) any AbbVie Employees who do not become Transferred Employees (and their covered dependents) who incur a qualifying event under COBRA on, prior to, or following the Distribution Date, and (c) any other AbbVie Employees (and their covered dependents), with respect to qualifying events under COBRA incurred prior to or on the applicable Transfer Date.  AbbVie shall assume responsibility for compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the AbbVie Health and Welfare Plans with respect to any Transferred Employees (and their covered dependents) who incur a qualifying event or loss of coverage under the Abbott Health and Welfare Plans and/or the AbbVie Health and Welfare Plans after their respective Transfer Dates.  The Parties agree that the consummation of the transactions contemplated by the Separation and Distribution Agreement shall not constitute a COBRA qualifying event for any purpose of COBRA.

 

Section 5.03.  U.S. Life Insurance Trust.  Effective as of the Distribution Date, AbbVie shall establish the AbbVie Life Insurance Trust and shall take all actions reasonably necessary to ensure that the AbbVie Life Insurance Trust satisfies the requirements of Code Section 501(c)(9) and is exempt from taxation under Code Section 501(a), including, but not limited to, filing any required determination letter filing with the Internal Revenue Service. Effective as of the Distribution Date, after making appropriate adjustment for any incurred but not reported claims payable from the Abbott Life Insurance Trust, Abbott shall cause the Abbott Life Insurance Trust to transfer to the AbbVie Life Insurance Trust any remaining Assets and reserves under the Abbott Life Insurance Trust which are attributable to contributions by Transferred Employees.  The Parties shall each take any and all actions as they deem necessary or appropriate to ensure that the transfer of Assets and reserves from the Abbott Life Insurance Trust to the AbbVie Life Insurance Trust does not result in any adverse tax consequences to the Abbott Life Insurance

 

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Trust or the AbbVie Life Insurance Trust, Abbott, AbbVie, or any participants or beneficiaries under the Abbott Life Insurance Trust or the AbbVie Life Insurance Trust.  The Parties shall cooperate with each other to carry out the provisions of this Section 5.03.

 

Section 5.04.  Vacation, Holidays and Leaves of Absence. Effective as of the applicable Transfer Date, AbbVie shall assume all Liabilities of the Abbott Group with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each AbbVie Employee.  Abbott shall retain all Liabilities with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each Abbott Retained Employee.

 

Section 5.05.  Severance and Unemployment Compensation. Effective as of the Distribution Date, AbbVie shall be responsible for any and all Liabilities to, or relating to, AbbVie Employees and AbbVie Former Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred prior to, on, or following the Distribution Date.  Abbott shall be responsible for any and all Liabilities to, or relating to, Abbott Retained Employees and Abbott Former Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred prior to, on, or following the Distribution Date.

 

Section 5.06.  Workers’ Compensation.  With respect to claims for workers compensation in the United States, (a) the AbbVie Group shall be responsible for claims in respect of AbbVie Employees and AbbVie Former Employees, whether occurring prior to, on or following the Distribution Date, and (b) the Abbott Group shall be responsible for all claims in respect of Abbott Retained Employees and Abbott Former Employees, whether occurring prior to, on or following the Distribution Date.

 

Section 5.07.  Non-U.S. Shared Health and Welfare Plans.

 

(a)                                  Shared Health and Welfare Plans.  To the extent that, following the Distribution Date, there is any Benefit Plan pursuant to which health and welfare benefits are provided to Employees of both the Abbott Group and the AbbVie Group who work primarily outside of the United States, the Parties or their appropriate Affiliates shall share the costs for such shared plan, except as otherwise mutually agreed upon by the Parties.  Any Abbott or AbbVie Affiliate may withdraw from or otherwise cease to participate in any such shared plan following the Distribution Date upon at least 90 days’ advance written notice to the other participating employer(s) of such withdrawal or cessation.

 

(b)                                 Multi-National Pooling Arrangements.  For purposes of this provision, the term “multi-national pooling arrangement” means a contract or arrangement that facilitates the purchase or provision of employee benefits.  Abbott shall retain all Assets (including, without limitation, rights to dividends and similar items) with respect to employee benefits-related pooling contracts to which Abbott is a party or under which Abbott pays the premiums.  From and after the Distribution Date, AbbVie shall retain all Assets (including, without limitation, rights to dividends and similar items) with respect to employee benefits-related pooling contracts to which AbbVie is a party or under which AbbVie pays the premiums.

 

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ARTICLE VI

 

 

EQUITY, INCENTIVE, AND EXECUTIVE COMPENSATION PROGRAMS

 

Section 6.01.  Equity Incentive Programs.

 

(a)                                  The Parties shall use commercially reasonable efforts to take all actions necessary or appropriate so that each outstanding Abbott Option, Abbott Restricted Stock Award, or Abbott RSU Award granted under an Abbott Stock Program shall be adjusted as set forth in this Section 6.01.

 

(i)                                     Abbott Options. As determined by the Abbott Compensation Committee pursuant to its authority under the applicable Abbott Stock Program, each Abbott Option, regardless of by whom held, whether vested or unvested, shall be converted on the Distribution Date into both an Adjusted Abbott Option and an AbbVie Option and shall, except as otherwise provided in this Section 6.01, be subject to the same terms and conditions (including with respect to vesting) after the Distribution Date as applicable to such Abbott Option immediately prior to the Distribution Date; provided, however, that from and after the Distribution Date:

 

(A)                              the number of Abbott Common Shares subject to such Adjusted Abbott Option, rounded down to the nearest whole share, shall be equal to the product obtained by multiplying (1) the number of Abbott Common Shares subject to such Abbott Option immediately prior to the Distribution Date times (2) the Abbott Value Factor and times (3) the Abbott Ratio;

 

(B)                                the number of shares of AbbVie Common Stock subject to such AbbVie Option, rounded down to the nearest whole share, shall be equal to the product obtained by multiplying (1) the number of Abbott Common Shares subject to the Abbott Option immediately prior to the Distribution Date times (2) the AbbVie Value Factor and times (3) the AbbVie Ratio;

 

(C)                                the per share exercise price of such Adjusted Abbott Option, rounded up to the nearest hundredth of a cent, shall be equal to the quotient obtained by dividing (1) the per share exercise price of such Abbott Option immediately prior to the Distribution Date by (2) the Abbott Ratio; and

 

(D)                               the per share exercise price of such AbbVie Option, rounded up to the nearest hundredth of a cent, shall be equal to the quotient obtained by dividing (1) the per share exercise price of the Abbott Option immediately prior to the Distribution Date by (2) the AbbVie Ratio;

 

provided, however, that the exercise price, the number of Abbott Common Shares and shares of AbbVie Common Stock subject to such options, and the terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Code Section 409A; provided, further, that, in the case of any Abbott Option to which Code Section 421 applies by reason of its qualification under Code Section 422 as of immediately prior to the Distribution Date, the exercise price, the number of Abbott

 

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Common Shares and shares of AbbVie Common Stock subject to such option, and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Code Section 424(a).

 

(ii)                                  Abbott Restricted Stock Awards. Each holder of an outstanding Abbott Restricted Stock Award immediately prior to the Distribution Date shall receive, as of the Distribution Date, an AbbVie Restricted Stock Award for such number of shares as determined by applying the Distribution Ratio in the same way as if the outstanding Abbott Restricted Stock Award were comprised of fully vested Abbott Common Shares as of the Distribution Date. Except as set forth in this Section 6.01(a)(ii), the Adjusted Abbott Restricted Stock Award and the AbbVie Restricted Stock Award issued in accordance with this Section 6.01(a)(ii) both shall be subject to substantially the same terms and conditions (including with respect to vesting, except to the extent that performance vesting requirements are adjusted as a result of the Distribution) immediately following the Distribution Date as applicable to the Abbott Restricted Stock Award immediately prior to the Distribution Date.

 

(iii)                               Abbott RSU Awards. Each holder of an outstanding Abbott RSU Award immediately prior to the Distribution Date shall receive, as of the Distribution Date, an AbbVie RSU Award in such number of units as determined by applying the Distribution Ratio in the same way as if the outstanding Abbott RSU Award were comprised of fully vested Abbott Common Shares as of the Distribution Date. Except as set forth in this Section 6.01(a)(iii), the Adjusted Abbott RSU Award and the AbbVie RSU Award issued in accordance with this Section 6.01(a)(iii) both shall be subject to substantially the same terms and conditions (including with respect to vesting, except to the extent that performance vesting requirements are adjusted as a result of the Distribution) immediately following the Distribution Date as applicable to the Abbott RSU Award immediately prior to the Distribution Date.

 

(b)                                 Miscellaneous Award Terms. After the Distribution Date, Adjusted Abbott Awards, regardless of by whom held, shall be settled by Abbott, and AbbVie Awards, regardless of by whom held, shall be settled by AbbVie; provided, however, that Abbott shall be responsible for any dividend equivalent payments with respect to Adjusted Abbott RSU Awards and AbbVie RSU Awards held by Abbott Retained Employees or Abbott Former Employees, and AbbVie shall be responsible for any dividend equivalent payments with respect to Adjusted Abbott RSU Awards and AbbVie RSU Awards held by AbbVie Employees or AbbVie Former Employees. Except as otherwise provided in this Agreement, with respect to grants adjusted pursuant to this Section 6.01, (i) employment with the Abbott Group shall be treated as employment with AbbVie with respect to AbbVie Awards held by Abbott Retained Employees, and (ii) employment with the AbbVie Group shall be treated as employment with Abbott with respect to Adjusted Abbott Awards held by AbbVie Employees.  In addition, none of the Separation, the Distribution, or any employment transfer described in Section 2.04(b) shall constitute a termination of employment for any Employee for purposes of any Adjusted Abbott Award or any AbbVie Award.  Following the Distribution Date, for any award adjusted under this Section 6.01, any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or Abbott Stock Program applicable to such award (A) with respect to Adjusted Abbott Awards, shall be deemed to refer to a “change in

 

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control,” “change of control” or similar definition as set forth in the applicable award agreement, employment agreement or Abbott Stock Program (an “Abbott Change of Control”), and (B) with respect to AbbVie Awards, shall be deemed to refer to a “Change in Control” as defined in the AbbVie ISP (an “AbbVie Change of Control”).  Without limiting the foregoing, with respect to provisions related to vesting of awards, an Abbott Change of Control shall be treated as an AbbVie Change of Control for purposes of AbbVie Awards held by Abbott Retained Employees, and an AbbVie Change of Control shall be treated as an Abbott Change of Control for purposes of Adjusted Abbott Awards held by AbbVie Employees.

 

(c)                                  Tax Reporting and Withholding.  Following the Distribution Date, and for the duration of the Transition Services Agreement provisions under which Abbott provides payroll services for AbbVie, it is expected that (i) Abbott will be responsible for all income, payroll and other tax remittance and reporting related to income of Abbott Retained Employees, Abbott Former Employees, and individuals who are or were Abbott non-employee directors in respect of Adjusted Abbott Awards and AbbVie Awards; and (ii) AbbVie will be responsible for all income, payroll and other tax remittance and reporting related to income of AbbVie Employees and AbbVie Former Employees in respect of Adjusted Abbott Awards and AbbVie Awards.  Abbott or AbbVie, as applicable, shall facilitate performance by the other Party of its obligations hereunder by promptly remitting amounts or shares withheld in conjunction with a transfer of shares or cash, either (as mutually agreed by the Parties) directly to the applicable taxing authority or to the other Party for remittance to such taxing authority. The Parties will cooperate and communicate with each other and with third-party providers to effectuate withholding and remittance of taxes, as well as required tax reporting, in a timely, efficient and appropriate manner.

 

(d)                                 Registration and Other Regulatory Requirements. As soon as possible following the Distribution Date, but in any case before the date of issuance of any shares of AbbVie Common Stock pursuant to the AbbVie ISP, AbbVie agrees to file a Form S-8 Registration Statement with respect to, and to cause to be registered pursuant to the Securities Act, the shares of AbbVie Common Stock authorized for issuance under the AbbVie ISP as required pursuant to the Securities Act.  The Parties shall take such additional actions as are deemed necessary or advisable to effectuate the foregoing provisions of this Section 6.01, including compliance with securities Laws and other legal requirements associated with equity compensation awards in affected non-U.S. jurisdictions.  Abbott agrees to facilitate the adoption and approval of the AbbVie ISP consistent with the requirements of Treasury Regulations Section 1.162-27(f)(4)(iii).

 

(e)                                  Abbott Equity-Based Awards in Certain Non-U.S. Jurisdictions.  Notwithstanding the foregoing provisions of this Section 6.01, the Parties may mutually agree, in their sole discretion, not to adjust certain outstanding Abbott equity-based awards pursuant to the foregoing provisions of this Section 6.01, where those actions would create or trigger adverse legal, accounting or tax consequences for Abbott, AbbVie, and/or the affected non-U.S. award holders. In such circumstances, Abbott and/or AbbVie may take any action necessary or advisable to prevent any such adverse legal, accounting or tax consequences, including, but not limited to, agreeing that the outstanding Abbott equity-based awards of the affected non-U.S. award holders shall terminate in accordance with the terms of the Abbott Stock Programs and the underlying award agreements, in which case AbbVie or Abbott, as applicable, shall equitably

 

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compensate the affected non-U.S. award holders in an alternate manner determined by AbbVie or Abbott, as applicable, in its sole discretion, or apply an alternate adjustment method.   Where and to the extent required by applicable Law or tax considerations outside the United States, the adjustments described in this Section 6.01 shall be deemed to have been effectuated immediately prior to the Distribution Date.

 

Section 6.02.  Employee Stock Purchase Plan.

 

(a)                                  Abbott ESPP.  The administrator of the Abbott ESPP shall take all actions necessary and appropriate to provide that: (i) the Purchase Cycle during which the Distribution Date is to occur shall end at a reasonable time before the Distribution Date to allow participants to purchase Abbott Common Shares under the Abbott ESPP prior to the Distribution Date; (ii) all participant payroll deductions and other contributions under the Abbott ESPP shall cease on or before the Purchase Date described in clause (i) of this paragraph; (iii) Transferred Non-U.S. Employees in the Abbott ESPP shall not be eligible to participate in any future Purchase Cycles that begin following the Distribution Date; (iv) any cash remaining in the Abbott ESPP account of any Transferred Non-U.S. Employee described in clause (iii) shall be refunded to such Transferred Non-U.S. Employee without interest as soon as administratively practicable; and (v) the next following Purchase Cycle shall be established by the administrator of the Abbott ESPP in its sole discretion. For purposes of this paragraph, the administrator of the Abbott ESPP may establish an alternate Purchase Cycle ending date for a sub-plan of the Abbott ESPP, as it determines to be necessary or advisable to accommodate the operation and administration of the sub-plan.

 

(b)                                 Establishment of AbbVie ESPP.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie ESPP, with terms substantially similar to those of the Abbott ESPP as of the Distribution Date; provided, however, that AbbVie may delay implementation of the AbbVie ESPP in one or more countries to the extent necessary to complete those actions and undertakings that AbbVie, in its sole discretion, determines to be necessary or advisable to comply with applicable Law.

 

Section 6.03.  Annual Incentive Plans.

 

(a)                                  Annual Bonuses Generally.  The AbbVie Group shall be responsible for all annual bonus payments to Transferred Employees in respect of any plan year, the payment date for which occurs on or after the applicable Transferred Employee’s Transfer Date.

 

(b)                                 U.S. Abbott Laboratories Cash Profit Sharing Plan.

 

(i)                                     Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie Cash Profit Sharing Plan, with terms substantially similar, subject to Section 6.03(b)(iii), to the Abbott Cash Profit Sharing Plan as in effect immediately prior to the Distribution Date.

 

(ii)                                  The AbbVie Cash Profit Sharing Plan shall provide that Transferred Employees shall be eligible to participate in the AbbVie Cash Profit Sharing Plan beginning on the applicable Transfer Date to the same extent that they were eligible

 

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to participate in the Abbott Cash Profit Sharing Plan immediately prior to such Transfer Date.

 

(iii)                               Each Transferred Employee who participated in the Abbott Cash Profit Sharing Plan prior to the Distribution Date with respect to the plan year commencing on October 1, 2012 and who is eligible to receive payment in respect of such plan year pursuant to the terms of the AbbVie Cash Profit Sharing Plan (treating service with the Abbott Group as if with the AbbVie Group) shall be entitled to receive from AbbVie a cash payment in accordance with the AbbVie Cash Profit Sharing Plan for such plan year (treating compensation paid by the Abbott Group as if paid by the AbbVie Group, for purposes of determining eligible compensation for the plan year).  AbbVie shall make all determinations of performance and all payment calculations under this Section 6.03(b) and shall be solely responsible for all payments to or with respect to Transferred Employees hereunder.

 

Section 6.04.  Performance Incentive Plan and Management Incentive Plan.

 

(a)                                  Establishment of AbbVie Performance Incentive Plan and Management Incentive Plan.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie 2013 Performance Incentive Plan and the AbbVie 2013 Management Incentive Plan, with terms and funding arrangements substantially similar to those of the Abbott Performance Incentive Plan and the Abbott Management Incentive Plan as of the Distribution Date.

 

(b)                                 Transfers from Abbott Performance Incentive Plan and Management Incentive Plan.  As of or as soon as practicable after the Distribution Date, the Parties shall cooperate to cause the accounts of AbbVie Employees and AbbVie LTD Participants participating in the Abbott Performance Incentive Plan or the Abbott Management Incentive Plan to be transferred to the corresponding AbbVie plan established under Section 6.04(a).  AbbVie shall (i) credit each such AbbVie Employee’s or AbbVie LTD Participant’s account with (A) the amount in such AbbVie Employee’s account deferred by such AbbVie Employee into the Abbott Performance Incentive Plan or the Abbott Management Incentive Plan as of the Distribution Date, plus (B) any employer contributions, whether vested or unvested, in relation to the amount described in (A), including, in each case, any earnings thereon, and (ii) recognize and honor all deferral and distribution elections made by such individual.  No AbbVie Employee shall participate in or accrue any benefits under the Abbott Performance Incentive Plan or the Abbott Management Incentive Plan on or after the Distribution Date.

 

(c)                                  Performance Incentive Plan and Management Incentive Plan Liabilities.  As of the Distribution Date, AbbVie shall, and shall cause the AbbVie Performance Incentive Plan or the AbbVie Management Incentive Plan, as applicable, to assume all Liabilities for all obligations under the Abbott Performance Incentive Plan or the Abbott Management Incentive Plan, as applicable, for the benefits of AbbVie Employees and AbbVie LTD Participants determined as of the Distribution Date, and Abbott and the Abbott Performance Incentive Plan or the Abbott Management Incentive Plan, as applicable, shall be relieved of all Liabilities for those benefits.  Abbott shall retain the Liabilities for all obligations under the Abbott Performance Incentive Plan or the Abbott Management Incentive Plan for the benefits for Abbott Retained Employees and Former Employees (other than AbbVie LTD Participants), but shall share with AbbVie the cost of benefits provided to Former Employees (other than LTD Participants) under

 

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the Abbott Performance Incentive Plan or the Abbott Management Incentive Plan in accordance with procedures mutually agreed to by the Parties.

 

Section 6.05.  Directors’ Fee Plan.  Effective as of or before the Distribution Date, AbbVie shall establish the AbbVie Directors’ Fee Plan, with terms and funding arrangements substantially similar to those of the Abbott Directors’ Fee Plan as of the Distribution Date.  Abbott shall retain the Liabilities for all obligations under the Abbott Directors’ Fee Plan, but shall share with AbbVie the cost of benefits provided thereunder to any individuals in respect of service prior to the Distribution Date in accordance with procedures mutually agreed to by the Parties.  Each participant in the Abbott Directors’ Fee Plan with an outstanding Stock Account (as defined in the Abbott Directors’ Fee Plan) balance as of the Distribution Date, shall, as of the Distribution Date, be credited under such plan with notional shares of AbbVie Common Stock in an amount determined by applying the Distribution Ratio in the same manner as if the Common Stock Units (as defined in the Abbott Directors’ Fee Plan) in such Stock Account were actual Abbott Common Shares.  The notional shares of AbbVie Common Stock so credited shall be subject to substantially the same terms and conditions that apply to the Common Stock Units, except that they shall relate to shares of AbbVie Common Stock rather than to Abbott Common Shares.

 

Section 6.06.  Grantor Trusts.  Certain Transferred Employees and AbbVie LTD Participants who are participating in the Abbott SERP, the Abbott KSP, the Abbott Performance Incentive Plan, and/or the Abbott Management Incentive Plan, as applicable, have established grantor trusts in connection with such plans.  Prior to the Distribution Date, the Parties shall use their commercially reasonable best efforts to cause each grantor trust under such plans to be amended to provide that (a) AbbVie is the administrator of such trust and (b) distribution of amounts under such trusts is made by reference to termination of employment with the AbbVie Group and not termination of employment with the Abbott Group.

 

ARTICLE VII

 

PUERTO RICO PLANS

 

Section 7.01.  Puerto Rico Retirement Plans.

 

(a)                                  Retention of Plan Sponsorship by AbbVie PR.  Effective as of the Distribution Date, AbbVie PR shall continue sponsorship of the AbbVie PR Pension Plan.  The plan and the related trust agreement shall be amended, effective as of or prior to the Distribution Date, to reflect the name change, and to make other changes to effectuate such sponsorship continuation.

 

(b)                                 Establishment of the Abbott PR Retirement Plan – New.  Effective as of or before the Distribution Date, Abbott PR shall establish the Abbott PR Retirement Plan New, which shall be substantially similar to, and shall include a benefit formula that is the same as the benefit formula in effect under, the AbbVie PR Pension Plan as of the Distribution Date. As soon as practicable after the Distribution Date and upon receipt by AbbVie PR of (i) a copy of the Abbott PR Retirement Plan - New; (ii) copies of certified resolutions of the Abbott PR board of directors (or its authorized committee or other delegate) evidencing adoption of the Abbott PR Retirement Plan New and any related trust(s) and the assumption by the Abbott PR Retirement

 

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Plan New of the Liabilities described in Section 7.01(c); and (iii) either (A) a favorable determination letter issued by the Secretary of Treasury of Puerto Rico with respect to the Abbott PR Retirement Plan - New and any related trust, or (B) an opinion of counsel, which counsel and opinion are reasonably satisfactory to AbbVie PR, with respect to the qualified status of the Abbott PR Retirement Plan New and the tax-exempt status of its related trust under Section 1081.01 (a) of the PR Code, AbbVie PR shall direct the trustee of the AbbVie PR Pension Plan trust to transfer from the trust(s) which forms a part of the AbbVie PR Pension Plan to the trust(s) which forms a part of the Abbott PR Retirement Plan New the amounts described in Section 7.01(c)(i).

 

(c)           Transfer of Assets.

 

(i)            As of the Distribution Date, Abbott PR shall cause the Abbott PR Retirement Plan - New to accept Assets and assume all Liabilities under the AbbVie PR Pension Plan for Abbott Retained Employees and Abbott LTD Participants (including Assets and Liabilities in respect of beneficiaries and/or alternate payees), and the AbbVie PR Pension Plan shall transfer all such Assets and be relieved of such Liabilities.  The amount of Assets to be transferred from the AbbVie PR Pension Plan to the Abbott PR Retirement Plan New in such transfer shall be determined as of the Distribution Date in accordance with, and shall comply with, ERISA Section 208 and, to the extent deemed applicable by Abbott PR and AbbVie PR, ERISA Section 4044.  Assumptions used to determine the value (or amount) of the Assets to be transferred shall be the safe harbor assumptions specified for valuing benefits in trusteed plans under Department of Labor Regulations Section 4044.51-57 and, to the extent not so specified, shall be based on the assumptions used in the annual valuation report most recently prepared prior to the transfer by the actuary for the AbbVie PR Pension Plan.  The transfer amount described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between the Distribution Date and an assessment date set by AbbVie PR that is as close as practicable, taking into account the timing and reporting of valuation of assets in the AbbVie PR Pension Plan trust to the date upon which Assets equal in value to the transfer amount are actually transferred from the AbbVie PR Pension Plan to the Abbott PR Retirement Plan New. During the time prior to such transfer, benefits for Abbott Retained Employees who terminate employment with the Abbott Group and for Abbott LTD Participants shall be paid from the AbbVie PR Pension Plan.  The ultimate transfer amount shall be reduced by the amount of these benefits and credited or debited by the actual investment earnings or losses from the payment date to the assessment date set by AbbVie PR above.  In addition, during this period, Abbott PR will be responsible for a pro rata share of trustee and administration fees attributable to the AbbVie PR Pension Plan.  The entries in the AbbVie PR Pension Plan funding standard account shall be divided among the AbbVie PR Pension Plan and the Abbott PR Retirement Plan New based on the guidance provided in Revenue Ruling 81-212 and 86-47.

 

(ii)           Periodically, at such times as agreed upon by Abbott PR and AbbVie PR after the initial transfer described in Section 7.01(c)(i), (A) Abbott PR shall cause the Abbott PR  Retirement Plan New to receive Assets and assume all Liabilities under the AbbVie PR Pension Plan for Employees who cease to be employed by AbbVie

 

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PR after the Distribution Date and become employed by Abbott PR during the Transition Period (including Assets and Liabilities in respect of beneficiaries or alternate payees) and the AbbVie PR Pension Plan shall transfer all such Assets and be relieved of such Liabilities, and (B) AbbVie PR shall cause the AbbVie PR  Pension Plan to receive Assets and assume all Liabilities under the Abbott PR Retirement Plan New for Employees who cease to be employed by Abbott PR after the Distribution Date and become employed by AbbVie PR during the Transition Period (including Assets and Liabilities in respect of beneficiaries or alternate payees) and the Abbott PR Retirement Plan New shall transfer all such Assets and be relieved of such Liabilities.  The amount of such Assets to be transferred shall be determined as provided in Section 7.01(c)(i) and shall be subject to the applicable provisions of Section 7.01(c)(i).

 

(d)           Abbott PR Retirement Plan - New Provisions.  The Abbott PR Retirement Plan - New shall provide that:

 

(i)            Abbott Retained Employees and Abbott LTD Participants shall (A) be eligible to participate in the Abbott PR Retirement Plan New as of the Distribution Date to the extent they were eligible to participate in the AbbVie PR Pension Plan immediately prior to the Distribution Date, and (B) receive credit for vesting, eligibility and benefit service for all service credited for those purposes under the AbbVie PR Pension Plan as of the Distribution Date as if that service had been rendered to Abbott PR;

 

(ii)           the compensation paid by the Abbott Group to an Abbott Retained Employee or to an Abbott LTD Participant that is recognized under the AbbVie PR Pension Plan as of the Distribution Date shall be credited and recognized for all applicable purposes under the Abbott PR Retirement Plan New;

 

(iii)          the accrued benefit of each Abbott Retained Employee and each Abbott LTD Participant under the AbbVie PR Pension Plan as of the Distribution Date shall be payable under the Abbott PR Retirement Plan New at the time and in a form that would have been permitted under the AbbVie PR Pension Plan as in effect as of the Distribution Date, with employment by the Abbott Group prior to the Distribution Date credited under the Abbott PR Retirement Plan New for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms; and

 

(iv)          the Abbott PR Retirement Plan New shall assume and honor the terms of all QDROs in effect under the AbbVie PR Pension Plan as of the Distribution Date with respect to Abbott Retained Employees and Abbott LTD Participants.

 

(e)           Determination Letter Request.  Abbott PR shall submit an application to the Puerto Rico Secretary of Treasury as soon as practicable after the Distribution Date (but no later than the last day of the required amendment period as provided in applicable PR Code provisions) for a determination letter regarding the qualification of the Abbott PR Retirement Plan New and the tax status of its related trust as of the Distribution Date and shall make any amendments reasonably requested by the Puerto Rico Secretary of Treasury to receive a favorable determination letter regarding the Abbott PR Retirement Plan New.

 

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(f)            AbbVie PR Pension Plan after Distribution Date.  From and after the Distribution Date, (i) the AbbVie PR Pension Plan shall continue to be responsible for Liabilities in respect of AbbVie Employees and Former Employees (other than Abbott LTD Participants), and (ii) no Employees of the Abbott Group, including Abbott Retained Employees and Abbott LTD Participants, shall accrue any benefits under the AbbVie PR Pension  Plan.  Without limiting the generality of the foregoing, Abbott Retained Employees and Abbott LTD Participants shall cease to be active participants in the AbbVie PR Pension Plan effective as of the Distribution Date.

 

(g)           Plan Fiduciaries.  For all periods after the Distribution Date, the Parties agree that the applicable fiduciaries of each of the AbbVie PR Pension Plan and the Abbott PR Retirement Plan - New, respectively, shall have the authority with respect to the AbbVie PR Pension Plan and the Abbott PR Retirement Plan - New, respectively, to determine the plan investments and such other matters as are within the scope of their duties under ERISA Section 404.

 

(h)           No Loss of Unvested Benefits; No Distributions.  The transfer of any Abbott Retained Employee’s employment to Abbott PR will not result in loss of that Employee’s unvested benefits under the AbbVie PR Pension Plan or the Abbott PR Retirement Plan - New and no Abbott Retained Employee shall be entitled to a distribution of his or her benefit under the AbbVie PR Pension Plan as a result of such transfer of employment.

 

Section 7.02.        Puerto Rico Stock Retirement/Savings Plans.

 

(a)           Retention of Plan Sponsorship by AbbVie PR.  Effective as of the Distribution Date, AbbVie PR shall continue sponsorship of the AbbVie PR Savings Plan.  The plan and the related trust agreement shall be amended, effective as of or before the Distribution Date, to reflect the name change, and to make other changes to effectuate such sponsorship continuation.

 

(b)           Establishment of the Abbott PR SRP - New.  Effective as of or before the Distribution Date, Abbott PR shall establish the Abbott PR SRP - New.  As of the Distribution Date, the terms of the Abbott PR SRP - New shall be substantially similar to the terms of the AbbVie PR Savings Plan as of the Distribution Date.  On or prior to the Distribution Date, Abbott PR shall provide AbbVie PR with (i) a copy of the Abbott PR SRP - New; (ii) a copy of certified resolutions of the Abbott PR Board of Directors (or its authorized committee or other delegate) evidencing adoption of the Abbott PR SRP - New and the related trust(s) and the assumption by the Abbott PR SRP - New of the Liabilities described in Section 7.02(c) hereof; and (iii) either (A) a favorable determination letter issued by the Puerto Rico Secretary of Treasury with respect to the Abbott PR SRP - New and its related trust or (B) an opinion of counsel, which counsel and opinion are reasonably satisfactory to AbbVie PR, with respect to the qualified status of the Abbott PR SRP - New and the tax-exempt status of its related trust under PR Code Section 1081.01(a).

 

(c)           Transfer of Account Balances.  As soon as practicable after the Distribution Date, AbbVie PR shall cause the trustee of the AbbVie PR Savings Plan to transfer from the trust(s) which forms a part of the AbbVie PR Savings Plan to the trust(s) which forms