Exhibit 10.3

 

EXECUTION VERSION

 

TAX SHARING AGREEMENT

 

Between

 

ABBOTT LABORATORIES

 

on behalf of itself

 

and the ABBOTT AFFILIATES

 

and

 

ABBVIE INC.

 

on behalf of itself

 

and the ABBVIE AFFILIATES

 

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This Tax Sharing Agreement (the “Agreement”) is entered into as of the 31st day
of December, 2012, between Abbott Laboratories (“Abbott”), an Illinois
corporation, and AbbVie Inc. (“AbbVie”), a Delaware corporation.

 

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 Abbott’s research-based pharmaceuticals business
(the “PPD business” or “Transferred Business”) from Abbott’s remaining
businesses (the “Separation”), which will include the transfer of the assets
(including interests in intangible assets and stock of subsidiaries) used in
connection with the PPD business to AbbVie (the “Contribution”); and
(ii) following the Separation, make a distribution, on a pro rata basis, to
holders of common shares, without par value, of Abbott of all of the outstanding
shares of common stock, par value $0.01 per share, of AbbVie owned by Abbott
(the “Distribution”) (the date of such Distribution, the “Distribution Date”);
and

 

WHEREAS, Abbott and AbbVie intend that the Contribution and Distribution and
certain other transactions effected as part of the Separation qualify as
Tax-free under Sections 355 and 361 of the Internal Revenue Code of 1986, as
amended (the “Code”);

 

WHEREAS, as of the date hereof, Abbott is the common parent of an affiliated
group of domestic corporations, including AbbVie, that has elected to file
consolidated U.S. federal income Tax Returns and, as a result of the
Distribution, neither AbbVie nor any of its Affiliates will be a member of such
group after the close of the Distribution Date;

 

WHEREAS, certain Tax liabilities will be incurred in connection with the
transactions involved in the Separation, Contribution and Distribution,
including transactions occurring after the Effective Date;

 

WHEREAS, Abbott and AbbVie desire to allocate the responsibilities for various
Taxes described in the fourth WHEREAS clause and to provide for certain
additional Tax matters;

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, Abbott and AbbVie (each on behalf of
itself, each of its Affiliates as of the Effective Time, and its future
Affiliates) hereby agree as follows:

 

ARTICLE I.    DEFINITIONS

 

Section 1.01         Definitions.  Reference is made to Section 5.14 of this
Agreement regarding the interpretation of certain words and phrases used in this
Agreement.

 

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Capitalized terms used in this Agreement and not defined in this Section 1.01
shall have the meanings assigned to them in the Distribution 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 Group” means Abbott and all Affiliates of Abbott other than any member
of the AbbVie Group.

 

“Abbott Park Lease” means the Abbott Park Lease Agreement regarding Abbott Park
entered into by and between Abbott and AbbVie in connection with the Separation
as the same may be amended.

 

“AbbVie” has the meaning set forth in the Preamble.

 

“AbbVie Group” means AbbVie and all Affiliates of AbbVie other than members of
the Abbott Group.

 

“Affiliate” has the meaning set forth in the Distribution Agreement.

 

“Accounts Payable U.S. Services BSP Transition Services Lead Sheet” means the
Accounts Payable U.S. Services BSP Transition Services Lead Sheet attached to
the U.S. Transition Services Agreement.

 

“After-Tax Amount” means, with respect to any payment under this Agreement, an
additional amount necessary to reflect the increase in Tax that would result
from the receipt or accrual of any payment, using the maximum statutory rate (or
rates, in the case of an item that affects more than one Tax) applicable to the
recipient of such payment for the relevant Tax periods, whether or not an actual
increase occurs, and reflecting any Tax savings available to the recipient.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Code” has the meaning ascribed to such term in the second WHEREAS clause
hereof.

 

“Contribution” has the meaning ascribed to such term in the first WHEREAS clause
hereof.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity, whether
through ownership of voting securities, by contract or otherwise.

 

“Corresponding Portion of the Tax Detriment” means the product of the Tax
Detriment and a fraction the numerator of which is the amount of the related Tax
Benefit for a taxable period and the denominator of which is the sum of the
related Tax Benefits for all of the relevant taxable periods.

 

“Covered Transaction Tax” has the meaning ascribed to such term in
Section 3.01(a).

 

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“Determination” means (i) with respect to U.S. federal income Tax, a
“determination” as defined in Section 1313(a) of the Code or execution of an
Internal Revenue Service Form 870AD and, with respect to a Tax other than U.S.
federal income Tax, any final determination of liability for such Tax that,
under applicable law, is not subject to further appeal, review, or modification
through proceedings or otherwise, (ii) the expiration of a statute of
limitations for making an assessment or filing a claim of refund, or (iii) the
payment of, or incurring liability for, Tax with respect to which the Party
paying or incurring such Tax determines that no action should be taken to recoup
such payment or contest such liability, provided that such Party is responsible
for such Tax under this Agreement.

 

“Distribution” has the meaning ascribed to such term in the first WHEREAS clause
hereof.

 

“Distribution Agreement” means the Separation and Distribution Agreement entered
into by and between Abbott and AbbVie as the same may be amended.

 

“Distribution Date” has the meaning ascribed to such term in the first WHEREAS
clause hereof.

 

“EMA” means the Employee Matters Agreement, as set forth in the Distribution
Agreement.

 

“Effective Time” has the meaning set forth in the Distribution Agreement.

 

“Employment Taxes” means withholding, payroll, social security, workers
compensation, unemployment, disability, and other similar taxes 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.

 

“Expense Reporting Position” has the meaning ascribed to such term in
Section 4.02(i).

 

“Foreign Tax Credit Reporting Position” has the meaning ascribed to such term in
Section 4.02(g)(ii).

 

“Governmental Authority” has the meaning set forth in the Distribution
Agreement.

 

“ICO Agreement” means any of the International Commercial Operations Agreements,
as set forth in the Distribution Agreement.

 

“Income Reporting Position has the meaning ascribed to such term in
Section 4.02(g)(ii).

 

“Indemnified Party” has the meaning ascribed to such term in Section 5.17(a).

 

“Indemnifying Party” has the meaning ascribed to such term in Section 5.17(a).

 

“Internal Distribution” has the meaning ascribed to such term in
Section 3.01(b).

 

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“IRS” means the United States Internal Revenue Service.

 

“Other Tax Ruling” means each ruling (other than the Private Letter Ruling)
issued by a Tax Authority pursuant to a ruling request filed on behalf of Abbott
and/or an Abbott Affiliate prior to the Effective Date with respect to a
transaction or transactions undertaken in connection with the Separation,
Contribution and Distribution, together with all supplemental filings and
exhibits thereto.

 

“Other Transaction” has the meaning ascribed to such term in Section 3.01(a).

 

“Parties” means the parties to this Agreement.

 

“Payment Reporting Position” has the meaning ascribed to such term in
Section 4.02(g)(ii).

 

“Person” has the meaning set forth in the Distribution Agreement.

 

“Plan Reporting Position” has the meaning ascribed to such term in
Section 4.02(j).

 

“Post-Distribution Period” means any taxable period or portion of a taxable
period beginning after the Distribution Date.

 

“Pre-Distribution Period” means any taxable period or portion of a taxable
period ending on or before the Distribution Date.

 

“Prime Rate” has the meaning set forth in the Distribution Agreement.

 

“Private Letter Ruling” means the private letter ruling issued by the IRS on
October 25, 2012, in connection with the Separation, Contribution, Distribution,
and related transactions, including the request for such rulings together with
all supplemental filings and exhibits thereto submitted to the IRS on behalf of
Abbott or its subsidiaries in connection therewith.

 

“Remitting Party” has the meaning ascribed to such term in Section 5.17(b).

 

“Responsible Party” has the meaning ascribed to such term in Section 5.17(b).

 

“Section 355(e) Event” has the meaning ascribed to such term in Section 3.01(b).

 

“Separation” has the meaning ascribed to such term in the first WHEREAS clause
hereof.

 

“Specified Action” has the meaning ascribed to such term in Section 4.02(b).

 

“Straddle Period” means any taxable period beginning on or before the
Distribution Date and ending after the Distribution Date.

 

“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

 

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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 entity or subdivision.

 

“Tax Benefit” means the reduction in Tax that should result from any item of
loss, deduction (including from depreciation or amortization), or credit (or any
other item), whether or not an actual reduction in Tax occurs, including any
interest with respect thereto or interest that would have been payable but for
such item, net of any Tax on such interest.  For purposes of calculating the
amount of any Tax Benefit, the maximum statutory rate (or rates, in the case of
an item that affects more than one Tax) applicable to each item of income, gain,
loss, deduction, or credit (or any other item) shall be used.

 

“Tax Contest” means an audit, review, examination, or any other administrative
or judicial proceeding with the purpose or effect of redetermining any Tax
(including any administrative or judicial review of any claim for refund).

 

“Tax Detriment” means the increase in Tax that should result from any item of
income or gain (or any other item), whether or not an actual increase in Tax
occurs, including any interest with respect thereto, net of any Tax savings
attributable to such interest.  For purposes of calculating the amount of any
Tax Detriment, the maximum statutory rate (or rates, in the case of an item that
affects more than one Tax) applicable to each item of income, gain, loss,
deduction, or credit (or any other item) shall be used.

 

“Tax Opinion” means the opinion on the United States federal income taxation of
certain matters involved in the Separation and the Distribution provided by
Baker McKenzie LLP to Abbott.

 

“Tax Package” means the information and documents in the possession of the
AbbVie Group that are reasonably necessary for the preparation of a Tax Return
of the Abbott Group with respect to a Pre-Distribution Period, assembled in all
material respects in accordance with the standards that Abbott has heretofore
applied to divisions and Affiliates.

 

“Tax Records” means all records relating to any Tax, including without
limitation Tax Returns, journal vouchers, cash vouchers, general ledgers,
material contracts, Tax Return workpapers and schedules, appraisal reports,
authorizations for expenditures, and documents relating to rulings or other
Determinations by any Tax Authority.

 

“Tax Return” means any report of Tax due, any claims for refund of Tax paid, any
information return with respect to Tax, any election made with respect to Tax,
or any other similar report, statement, declaration, or document required to be
filed under the Code or other law with respect to Tax, including any
attachments, exhibits, or other

 

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materials submitted with any of the foregoing, and including any amendments or
supplements to any of the foregoing for any taxpayer or consolidated, combined,
or unitary group of taxpayers.

 

“Third Party” has the meaning set forth in the Distribution Agreement.

 

“U.S. Payroll Processing & Services BSP Transition Services Lead Sheet” means
the U.S. Payroll Processing & Services BSP Transition Services Lead Sheet
attached to the U.S. Transition Services Agreement.

 

“U.S. Transferred Employee” has the meaning set forth in the EMA by and between
Abbott and AbbVie.

 

“U.S. Transition Services Agreement” means the U.S. Transition Services
Agreement set forth in the Distribution Agreement.

 

ARTICLE II.    RESPONSIBILITY FOR TAX

 

Section 2.01         Responsibility for Tax.

 

(a)        Except as specifically provided in any of the agreements contemplated
by the Distribution Agreement, including the EMA with respect to Employment
Taxes, Abbott shall be responsible for, and shall indemnify and hold harmless
the AbbVie Group from any liability for (i) any Tax imposed by any Tax Authority
on Abbott or an Abbott Affiliate, including AbbVie and all AbbVie Affiliates,
for any Pre-Distribution Period, except (x) any Covered Transaction Tax for
which AbbVie is responsible under Section 3.01(b) and (y) any non-income Tax
imposed on AbbVie or any AbbVie Affiliate for such period; (ii) notwithstanding
Section 2.01(a)(i)(y), any Tax (other than an income Tax)  imposed on Abbott or
any Abbott Affiliate arising from, or attributable to, any transfer of assets or
liabilities in the Separation and including such transfers contemplated to occur
after the Effective Time except to the extent recoupable by AbbVie or any AbbVie
Affiliate, (iii) notwithstanding Section 2.01(a)(i)(y), any Employment Taxes
imposed on Abbott or any Affiliate arising as a transferee of employees of
AbbVie or any AbbVie Affiliate in connection with the Separation, and (iv) any
Tax imposed by any Tax Authority on any member of the Abbott Group for any
Post-Distribution Period.

 

(b)        Except as specifically provided in any of the agreements contemplated
by the Distribution Agreement, including the EMA with respect to Employment
Taxes, AbbVie shall be responsible for, and shall indemnify and hold harmless
the Abbott Group from any liability for (i) any Tax imposed by any Tax Authority
on AbbVie or an AbbVie Affiliate for any Post-Distribution Period; (ii) any
Covered Transaction Tax for which AbbVie is responsible under Section 3.01(b);
(iii) any non-income Tax imposed on AbbVie or any AbbVie Affiliate for any
Pre-Distribution Period, including Employment

 

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Taxes imposed on AbbVie or any AbbVie Affiliate as a transferee of employees of
Abbott or any Abbott Affiliate in connection with the Separation, (iv) any Tax
(other than an income Tax) imposed on AbbVie or any AbbVie Affiliate arising
from, or attributable to, any transfer of assets or liabilities in the
Separation and including such transfers contemplated to occur after the
Effective Time except to the extent recoupable by Abbott or any Abbott
Affiliate, and (v) any Tax imposed on Abbott or an Abbott Affiliate as a result
of an action undertaken, or a failure to act, by AbbVie or an AbbVie Affiliate
after the Effective Time (other than described in Section 2.01(d)).

 

(c)        The responsibility for any Tax incurred in a Straddle Period by any
member of the AbbVie Group shall be allocated between the Pre-Distribution
Period and the Post-Distribution Period as if such member closed its financial
accounting records as of the Effective Time and determined the Tax attributable
to the Pre-Distribution Period by applying the method of tax accounting that has
historically been used for the business of such member.

 

(d)        With respect to a Deferred AbbVie Local Business:  (i) the U.S.
federal income Tax treatment of payments under any ICO Agreement is described in
Section 4.02(g)(i); (ii) the U.S. federal income Tax treatment of the income of
the Deferred AbbVie Local Business while it is held by Abbott or any Abbott
Affiliate following the Distribution Date is described in Section 4.20(g)(ii);
(iii) the responsibility for transfer Taxes arising or attributable to the
transfer of a Delayed AbbVie Local Business to AbbVie or an AbbVie Affiliate
following the Distribution Date is addressed in Section 2.01(a) and (b); and
(iv) the responsibility for, and allocation of, non-U.S. income Taxes arising
from the transfer of the assets and liabilities of a Delayed AbbVie Local
Business to AbbVie or an AbbVie Affiliate (or other disposition thereof) is set
forth in the ICO Agreements.

 

Section 2.02         Refunds, Tax Benefits, and Other Allocations

 

(a)        Refunds and Carrybacks.

 

(i)         Abbott Refunds.  Except as provided in Section 2.02(a)(iv) below,
Abbott shall be entitled to all refunds (including refunds paid by means of a
credit against other or future Tax liabilities) and credits with respect to any
Tax for which Abbott is responsible under Section 2.01.

 

(ii)        AbbVie Refunds.  AbbVie shall be entitled to all refunds (including
refunds paid by means of a credit against other or future Tax liabilities) and
credits with respect to any Tax for which AbbVie is responsible under
Section 2.01.

 

(iii)       Payment of Refunds.  Except as provided in Section 2.02(a)(iv),
AbbVie shall forward to Abbott, or reimburse Abbott for, any refunds due

 

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Abbott (pursuant to the terms of this Section 2.02(a)) after receipt thereof
(less any Tax Detriment attributable to such refunds), and Abbott shall forward
to AbbVie, or reimburse AbbVie for, any refunds due AbbVie (pursuant to the
terms of this Section 2.02(a)) after receipt thereof (less any Tax Detriment
attributable to such refunds).  In the case of a refund received in the form of
a credit against other or future Tax liabilities, reimbursement with respect to
such refund shall be due in each case on the due date for payment of the Tax
against which such refund has been credited.  Any payment required to be made
pursuant to this Section 2.02(a)(iii) shall be made within thirty (30) days of
the receipt of the refund.  If Abbott reasonably so requests, AbbVie, at
Abbott’s expense, shall file for and pursue any refund to which Abbott is
entitled under this Section 2.02(a).  If AbbVie reasonably so requests, Abbott,
at AbbVie’s expense, shall file for and pursue any refund to which AbbVie is
entitled under this Section 2.02(a).  The Party making a payment pursuant to
this Section 2.02(a)(iii) must deliver with the payment a statement describing
in reasonable detail the basis for the calculation of the amount being paid.

 

(iv)       Carrybacks.

 

1)         The AbbVie Group shall be entitled to any refund of Abbott’s Tax for
a Pre-Distribution Period resulting from carrying back any item of loss,
deduction or credit that arises in any Post-Distribution Period of AbbVie or
member of the AbbVie Group only to the extent that (A) Abbott or the relevant
Abbott Affiliate has no item of loss, deduction, or credit that can be carried
back to such taxable period and (B) such carryback does not have a material
adverse impact on Abbott, as reasonably determined by Abbott.  If Abbott
receives any such refund, it shall pay the portion thereof to which AbbVie is
entitled within thirty (30) days of the later of (C) a Determination with
respect to Abbott’s Tax for such Pre-Distribution Period or (D) a Determination
with respect to AbbVie’s Tax for the Post-Distribution Period that gave rise to
the refund received by Abbott; PROVIDED, HOWEVER, that if AbbVie provides Abbott
with a letter of credit in a form reasonably acceptable to Abbott and issued by
a major money center commercial bank reasonably acceptable to Abbott not
expiring before the later of clause (C) or (D) of this Section 2.02(a)(iv)(1),
then Abbott shall pay to AbbVie that portion of the refund covered by the letter
of credit no later than thirty (30) days after receipt of the refund or of the
letter of credit, whichever is later.

 

2)         If AbbVie has a loss or other Tax attribute for any Post-Distribution
Period that is to be carried back to any Pre-Distribution Period, AbbVie shall
notify Abbott that such item

 

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should be carried back.  Such notification shall include a description in
reasonable detail of the grounds for the refund and the amount thereof, and a
certification by an appropriate officer of AbbVie setting forth AbbVie’s belief,
based on a thorough examination of the facts and Tax law relating to the Tax
treatment of such item, that (A) the Tax treatment of such item is supported by
“substantial authority” within the meaning of Section 6662 of the Code (and the
Treasury Regulations thereunder) or, where applicable, any analogous provision
of state, local or foreign law and (B) the transaction has economic substance
for purposes of Section 7701 of the Code and any analogous provision of state,
local or foreign law.  Abbott, at AbbVie’s expense, shall cooperate with AbbVie
in connection with the filing and processing of any AbbVie carryback and shall
provide AbbVie with copies of all correspondence related thereto.

 

3)         If Abbott pays any amount to AbbVie under Section 2.02(a)(iv)(1) and,
as a result of a subsequent Determination, AbbVie is not entitled to all or any
part of such amount, Abbott shall notify AbbVie of the amount to be repaid to
Abbott and provide a description in reasonable detail of the manner in which
such amount was calculated.  AbbVie shall pay such amount to Abbott within
thirty (30) days of such notification.

 

4)         Any payment required to be made by Abbott pursuant to this
Section 2.02(a)(iv) shall bear interest at the Prime Rate plus two percent from
the date a refund is received by Abbott.  Any payment required to be made by
AbbVie pursuant to this Section 2.02(a)(iv) shall bear interest at the Prime
Rate plus two percent beginning thirty (30) days after Abbott notifies AbbVie of
the amount to be repaid.  Such interest shall be paid at the same time as the
payment to which it relates.

 

(b)        Effect of Audit Adjustments.

 

Notwithstanding Section 2.01 —

 

(i)         Payments by AbbVie to Abbott.  Except as provided in
Section 3.01(b), if as a result of a Determination, any adjustment shall be made
to any Tax Return relating, in whole or in part, to Tax for which any member of
the Abbott Group is responsible, and if such adjustment results in both (x) a
Tax Detriment to any member of the Abbott Group for any taxable period and (y) a
Tax Benefit to any member of the AbbVie Group for any Post-Distribution Period,
then AbbVie shall pay to Abbott an amount equal to the lesser of the Tax Benefit
for each taxable period and the Corresponding Portion of the Tax Detriment.  For
the

 

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avoidance of doubt, this Section 2.02(b)(i) shall apply to any adjustment under
Section 482 of the Code or any similar provisions by any Tax Authority
increasing the amount of payments received or deemed received by Abbott or any
Abbott Affiliate from AbbVie or any AbbVie Affiliate, including but not limited
to the Abbott Park Lease.  For purposes of determining the Tax Benefit:  (I) if
the Tax Detriment is less than $10 million using, if applicable, the exchange
rate on the date of the Determination, the Tax Benefit shall be calculated based
solely on the Tax Benefit realized by the relevant AbbVie Group member directly
affected by the Determination; (II) if the Tax Detriment is equal to or more
than $10 million using, if applicable, the exchange rate on the date of the
Determination, the Tax Benefit shall be calculated taking into account not only
the Tax Benefit described in (I) but also any Tax Benefits or Tax Detriments
realized by any other member of the AbbVie Group attributable to the
Determination.

 

(ii)        Payments by Abbott to AbbVie.  If as a result of a Determination,
any adjustment shall be made to any Tax Return relating, in whole or in part, to
Tax for which any member of the AbbVie Group is responsible, and if such
adjustment results in both (x) a Tax Detriment to any member of the AbbVie Group
for any Post-Distribution Period and (y) a Tax Benefit to any member of the
Abbott Group for any taxable period, then Abbott shall pay to AbbVie an amount
equal to the lesser of the Tax Benefit for such taxable period and the
Corresponding Portion of the Tax Detriment.  For the avoidance of doubt, this
Section 2.02(b)(ii) shall apply to any adjustment under Section 482 of the Code
or any similar provisions by any Tax Authority increasing the amount of payments
received or deemed received by AbbVie or any AbbVie Affiliate from Abbott or any
Abbott Affiliate.  For purposes of determining the Tax Benefit:  (I) if the Tax
Detriment is less than $10 million using, if applicable, the exchange rate on
the date of the Determination, the Tax Benefit shall be calculated based solely
on the Tax Benefit realized by the relevant Abbott Group member directly
affected by the Determination; and (II) if the Tax Detriment is equal to or more
than $10 million using, if applicable, the exchange rate on the date of the
Determination, the Tax Benefit shall be calculated taking into account not only
the Tax Benefit described in (I) but also any Tax Benefits or Tax Detriments
realized by any other member of the Abbott Group attributable to the
Determination.

 

(iii)       Timing of Payments.  Any payment required to be made pursuant to
this Section 2.02(b), shall be made the later of (x) thirty (30) days after the
Determination that results in such payment pursuant to this Section 2.02(b) and
(y) the earlier of (I) the due date of the Tax Return that includes the Tax
Benefit that gives rise to the requirement for such payment and (II) the date
the Tax Benefit is recognized in the financial statements of the Party making
the payment.

 

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(c)        Other Allocations

 

(i)         Research and Experimentation Credit Base Period.  Abbott shall
reasonably make the allocations to AbbVie required under Section 41(f)(3) of the
Code.  AbbVie agrees that it shall not file any Tax Return that is inconsistent
with the amount of qualified research expenditures and gross receipts allocated
to it by Abbott.

 

(ii)        Allocation of Earnings and Profits.  The allocation of earnings and
profits between Abbott and AbbVie and between their Affiliates in the case of
any Internal Distribution shall be reasonably determined by Abbott pursuant to
Section 312(h) of the Code and the relevant Treasury Regulations under the
Code.  A preliminary allocation of earnings and profits through December 31,
2012, shall be provided no later than forty-five (45) days after Abbott receives
the allocation from the public accounting firm that prepares such allocation.

 

(iii)       Treatment of Tax Attributes.  Abbott shall in good faith advise
AbbVie in writing of the portion, if any, of the Tax attributes, including
overall foreign loss or consolidated, combined or unitary attributes, which
Abbott determines shall be allocated or apportioned to the AbbVie Group under
applicable Law. AbbVie and all members of the AbbVie Group shall prepare all Tax
Returns in accordance with such written notice. In the event that any temporary
or final amendments to Treasury Regulations are promulgated after the date of
this Agreement that provide for any election to apply such regulations
retroactively, then any such election shall be made only to the extent that
Abbott and AbbVie collectively agree to make such election. As soon as
practicable after receipt of a written request from AbbVie, Abbott shall provide
copies of any studies, reports, and workpapers supporting the Tax attributes,
including earnings and profits, allocable to the AbbVie Group. For the absence
of doubt, Abbott shall not be liable to AbbVie or any member of the AbbVie Group
for any failure of any determination under this Section 2.02(c) to be accurate
under applicable Law.

 

(iv)       Certain Section 59(e) Elections.  Abbott, in its sole discretion, may
timely make or cause to be made an election pursuant to Section 59(e) of the
Code to capitalize and amortize over ten years all or a portion of the qualified
research and experimental expenditures of the Transferred Businesses reflected
on the original Abbott federal consolidated income Tax Return for the 2012 tax
year

 

(v)        Revised Allocations.  The allocations made under this Section 2.02(c)
shall be revised by Abbott to reflect each subsequent Determination that affects
such allocations for any Pre-Distribution Period.  Each revised calculation
shall be provided to AbbVie within 120 days of the Determination to which the
revision relates.

 

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(vi)       Review of Allocations.  AbbVie shall have the right to review the
accuracy, but not the methodology, of any allocation made under this Section
2.02(c).  AbbVie shall notify Abbott of any disagreement within forty-five (45)
days of being notified of any allocation.  Any dispute shall be resolved
pursuant to the procedures provided by this Agreement.

 

Section 2.03         Option Deductions.  Solely the member of the Abbott Group
or AbbVie Group for which the relevant individual is currently employed or, if
such individual is not currently employed by a member of either group, was most
recently employed, at the time of the vesting, exercise, disqualifying
disposition, payment or other relevant taxable event, as appropriate, in respect
of equity awards and other incentive compensation of such individual described
in Section 6.01(a) of the EMA, shall be entitled to claim any income Tax
deduction in respect of such equity awards and other incentive compensation on
its respective Tax Return associated with such event.  To the extent any Tax
deduction that is described in the first sentence of this Section 2.03 and
claimed by any member of the Abbott Group is disallowed to any and all members
of the Abbott Group and a Tax Authority makes a Determination that a member of
the AbbVie Group is entitled to such deduction, Abbott shall notify AbbVie of
the receipt of such Determination, promptly after receipt thereof, and AbbVie
shall pay to Abbott the lesser of the amount of its Tax Benefit and the amount
of the corresponding Tax Detriment in accordance with Section 2.02(b).  To the
extent any Tax deduction that is described in the first sentence of this Section
2.03 and claimed by any member of the AbbVie Group is disallowed to any and all
members of the AbbVie Group and a Tax Authority makes a Determination that a
member of the Abbott Group is entitled to such deduction, AbbVie shall notify
Abbott of the receipt of such Determination, promptly after receipt thereof, and
Abbott shall pay to AbbVie the lesser of the amount of its Tax Benefit and the
amount of the corresponding Tax Detriment in accordance with Section 2.02(b).

 

Section 2.04         Tax Returns.

 

(a)        Except as provided in Section 2.04(b), Abbott shall prepare and
timely file all Tax Returns for Pre-Distribution Periods for Abbott and all of
its Affiliates, including AbbVie and all of its Affiliates, and all Tax Returns
for Straddle Periods for all members of the Abbott Group.  In connection with
each federal, state, local, and foreign Tax Return that is required under this
Agreement to be filed by Abbott for taxable periods ending in 2012, AbbVie shall
timely furnish to Abbott Tax information and documents as Abbott may reasonably
request.  With respect to any information required to be provided by AbbVie
pursuant to this Section 2.04(a), (i) Abbott shall utilize such information in
the preparation of the appropriate Tax Returns as provided by AbbVie, except to
the extent (a) AbbVie provides its prior written consent to change any such
information, or (b) Abbott determines in good faith that such information is
inaccurate or incomplete in a material respect, and (ii) AbbVie agrees to
indemnify and hold harmless Abbott and its Affiliates from and against any cost,
fine, penalty, or other expense of any kind attributable to the misconduct or
negligence of AbbVie or any of its Affiliates in supplying

 

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Abbott with inaccurate or incomplete information.  An appropriate officer of
AbbVie shall provide a certification that, to such officer’s best knowledge and
belief, any and all information provided pursuant to this Section 2.04(a) is
accurate and complete.  If AbbVie fails to provide any information required by
this Section 2.04(a) within the time period specified, Abbott may file the
applicable Tax Returns based on the information available at the time such Tax
Returns are due and AbbVie shall indemnify and hold harmless Abbott and its
Affiliates from Taxes or other costs imposed on Abbott or any of its Affiliates
but only to the extent resulting from AbbVie’s failure to provide such
information in a timely manner.  In addition, AbbVie shall provide Abbott with
all documents and information, and make available employees and officers of
AbbVie and AbbVie Affiliates as Abbott reasonably requests to prepare and file
any Tax Return for any Pre-Distribution Period or Straddle Period (including any
claims for refunds described in Section 2.02(a)) or to conduct any Tax Contest
with respect to any such Tax Return.  If AbbVie is responsible under Section
2.01 for a portion of any Tax reported on a Tax Return prepared under this
Section 2.04(a) by Abbott, Abbott shall provide AbbVie with a copy of such Tax
Return at least thirty (30) days prior to its due date.  AbbVie shall notify
Abbott of any disagreement within 20 days of AbbVie’s receipt of such Tax
Return.  Any dispute shall be resolved pursuant to the procedures provided by
this Agreement.  AbbVie shall be solely responsible for preparing and timely
filing all Tax Returns relating to non-income taxes of AbbVie or any AbbVie
Affiliate for a Pre-Distribution Period and shall prepare and timely file all
Tax Returns for Straddle Periods for all members of the AbbVie Group.  If Abbott
is responsible under Section 2.01(a) for a portion of any Tax reported on a
Straddle Period Tax Return for any member of the AbbVie Group, AbbVie shall
provide Abbott with a copy of such Tax Return at least thirty (30) days prior to
its due date.  Abbott shall notify AbbVie of any disagreement within 20 days of
Abbott’s receipt of such Tax Return.  Any dispute shall be resolved pursuant to
the procedures provided by this Agreement.

 

(b)        AbbVie shall not file (or allow any member of the AbbVie Group to
file) any amended Tax Return for any Pre-Distribution Period other than a Tax
Return relating to non-income Taxes of the AbbVie or any AbbVie Affiliate but
only with the consent of Abbott, which consent shall not be unreasonably denied.

 

(c)        Abbott shall provide AbbVie with notice of any Tax election that
Abbott intends to file for any member of the AbbVie Group on any Tax Return for
any Pre-Distribution Period within forty-five (45) days before such Tax Return
will be filed.  AbbVie shall have the right to review such elections and
request, within 15 days of such notice, that an alternative election be made. 
If Abbott reasonably determines that such alternative election will not result
in any increased Tax liability or reduced Tax attribute of Abbott or any Abbott
Affiliate, Abbott shall comply with such request.

 

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Section 2.05         Cooperation, Exchange of Information, and Tax Records.

 

(a)        Cooperation and Exchange of Information.  Each Party shall provide to
the other such cooperation and information as reasonably may be requested in
connection with (i) filing any Tax Return, amended return or claim for refund,
(ii) determining a liability for Tax or a right to a refund of Tax, or (iii)
participating in or conducting any Tax Contest.  Such cooperation and
information shall include providing copies of relevant Tax Records.  Each Party
shall devote the personnel and resources necessary in order to carry out this
Section 2.05(a) and shall make its employees available on a mutually convenient
basis to provide explanations of any documents or information provided
hereunder.  Each Party shall carry out its responsibilities under this Section
2.05(a) charging to the other only the out-of-pocket costs actually incurred. 
Any information obtained under this Section 2.05(a) shall be kept 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, except as otherwise may be necessary in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other
proceeding.  AbbVie shall execute all necessary or appropriate forms, including
powers of attorney, reasonably requested by Abbott in connection with any action
taken by Abbott pursuant to this Agreement.

 

(b)        Record Retention.  Each of Abbott and AbbVie shall retain all Tax
Records in its possession as of the Effective Time relating to any
Pre-Distribution Period that are relevant to the other Party for purposes
described in Section 2.05(a) until such time as the other Party shall consent to
the disposition of such Tax Records, which consent shall not be withheld
unreasonably.

 

Section 2.06         Tax Contests.

 

(a)        Notice.  Each Party shall provide prompt notice to the other Party of
any pending or threatened Tax audit, assessment, or proceeding, or other Tax
Contest, of which it becomes aware, related to Tax for which it is indemnified
by the other Party hereunder.  Such notice shall contain factual information (to
the extent known) describing any asserted Tax liability in reasonable detail and
shall be accompanied by copies of any notice and other documents received from
any Tax Authority with respect to any such matters.  If an Indemnified Party has
knowledge of an asserted Tax liability with respect to a matter for which it is
to be indemnified hereunder and such Party fails to give the Indemnifying Party
prompt notice of such asserted Tax liability, then (i) if the Indemnifying Party
is precluded from contesting the asserted Tax liability in any forum as a result
of the failure to give prompt notice, the Indemnifying Party shall have no
obligation to indemnify the Indemnified Party for any Tax resulting from such
assertion of Tax liability, and (ii) if the Indemnifying Party is not precluded
from contesting the asserted Tax liability in any forum, but such failure to
give prompt notice

 

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results in a monetary detriment to the Indemnifying Party, then any amount that
the Indemnifying Party is otherwise required to pay the Indemnified Party
pursuant to this Agreement shall be reduced by the amount of such detriment.

 

(b)        Control of Tax Contests.

 

(i)         AbbVie.  AbbVie shall have full responsibility and discretion in
conducting, including settling, any Tax Contest involving a Tax for which it is
responsible under Section 2.01(b), except for any Tax Contest involving any
Covered Transaction Tax for which AbbVie is responsible under Section 3.01(b). 
AbbVie shall provide notice to Abbott and shall consult in good faith with
Abbott in connection with any Tax Contest in which Abbott is required to make a
payment to AbbVie under Section 2.02(b)(ii) or any Tax Contest in which the
outcome is relevant to Abbott for any Pre-Distribution Period.

 

(ii)        Abbott.  Abbott shall have full responsibility and discretion in
conducting, including settling, any Tax Contest involving (x) any Tax for which
it is responsible under Section 2.01(a) or Section 2.01(d), and (y) any Covered
Transaction Tax for which AbbVie is responsible under Section 3.01(b), except as
provided in paragraph (iii) below.  Abbott shall consult in good faith with
AbbVie in connection with any Tax Contest described in clause (y) of this
Section 2.06(b)(ii).  Abbott shall provide notice to AbbVie and shall consult in
good faith with AbbVie in connection with any Tax Contest in which AbbVie is
required to make a payment to Abbott under Section 2.02(b)(i) or any Tax Contest
in which the outcome is relevant to AbbVie for any Post-Distribution Period.

 

(iii)       Covered Transaction Taxes.  AbbVie shall have the right to
participate in the conduct of a Tax Contest related to Covered Transactions
Taxes as a result of the application of Section 355(e) of the Code if, and only
if, (x) AbbVie has acknowledged in writing its liability for such Covered
Transaction Tax, (y) AbbVie shall have provided Abbott with a letter of credit
in a form reasonably acceptable to Abbott and issued by a major money center
commercial bank reasonably acceptable to Abbott, not expiring before a
Determination has occurred with respect to Abbott’s Tax for the
Post-Distribution Period that gave rise to the Covered Transactions Tax at
issue, and in an amount equal to the maximum amount of Covered Transaction Tax
at issue in the Tax Contest and (z) no Tax Return of any member of the Abbott
Group with respect to which any member of the Abbott Group may reasonably be
viewed as having an actual or potential liability for any Tax not indemnified
against by AbbVie is held open as a result of such Tax Contest.  Abbott shall
not settle any Tax Contest described in this

 

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paragraph (iii) without the consent of AbbVie, which consent shall not be
unreasonably withheld.

 

(c)        Election.  If as a result of an adjustment to Abbott’s Tax Return
from a Tax Contest, an election is available under IRS Revenue Procedure 99-32,
1999-2 C.B. 296, (or successor guidance or regulations) that would allow an
AbbVie Affiliate to transfer cash to AbbVie (or other AbbVie Affiliate) tax-free
for U.S. federal income Tax purposes, such election shall be made by Abbott
unless Abbott determines, in its sole discretion, that making such election will
result in an adverse Tax consequence, including the loss of a Tax Benefit, for
it or any of its Affiliates.

 

ARTICLE III.    TRANSACTIONS TAX

 

Section 3.01         Transactions Tax.

 

(a)        General.  Except as otherwise provided in Section 3.01(b), Abbott
shall be responsible for, and shall indemnify and hold harmless the AbbVie Group
from any and all (i) liabilities sustained by Abbott or AbbVie as a result of
the Distribution failing to qualify as Tax-free to the Abbott shareholders
pursuant to Section 355(a) of the Code, and (ii) federal, state, local, and
foreign Tax imposed by any Tax Authority on Abbott or any Abbott Affiliate as a
result of (x) the failure of any of the transactions described in the Private
Letter Ruling or Tax Opinion (including each Internal Distribution) to be
treated as provided in such ruling or opinion; (y) the failure of any of the
transactions described in the Other Tax Rulings (each an “Other Transaction”) to
be treated as provided in such rulings; and (z) the inclusion, or taking into
account, of any income or gain by Abbott or its Affiliates (including any member
of the AbbVie Group) under Treasury Regulations Section 1.1502-13 or 1.1502-19
(or any corresponding provisions of other applicable Tax laws) as a result of
the Separation and Distribution (each of subclauses (i) through (ii), a “Covered
Transaction Tax”).

 

(b)        Inconsistent Acts and Events.  AbbVie shall be responsible for, and
shall indemnify and hold harmless the Abbott Group from and against any
liability for, any Covered Transaction Tax (including without limitation
reasonable attorney fees and other costs incurred in connection therewith) or
any other Tax resulting from (i) any breach by any member of the AbbVie Group of
any of the representations or covenants under Article IV hereof, (ii) any
Specified Action performed by any member of the AbbVie Group (whether or not
Section 4.02(e) is complied with), (iii) any Section 355(e) Event with respect
to AbbVie or an AbbVie Affiliate (whether or not such Section 355(e) Event is
caused by a Specified Action), and (iv) any gain recognized or recapture of
income (including under any gain recognition agreement entered into by Abbott or
any Abbott Affiliate in accordance with Treasury Regulations Section 1.367(a)-8)
in relation to an action, or failure to act, of a member of the AbbVie Group
arising under any Tax Law.

 

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A Section 355(e) Event with respect to AbbVie or a member of the AbbVie Group
means any event, involving the stock of AbbVie or an AbbVie Affiliate or assets
of any member of the AbbVie Group, that causes the Distribution or any
distribution described in the Private Letter Ruling or Tax Opinion of the stock
of foreign and U.S. subsidiaries for which rulings or opinions were requested
(each an “Internal Distribution”) to be a taxable event to any member of the
Abbott Group as the result of the application of Section 355(e) of the Code.

 

ARTICLE IV.    REPRESENTATIONS AND COVENANTS

 

Section 4.01         Representations.

 

(a)        Abbott represents that, as of the date of this Agreement, neither it
nor any of its Affiliates knows of any fact that would jeopardize the Tax
treatment of the transactions provided by the Private Letter Ruling, the Other
Tax Rulings or Tax Opinion or that otherwise would result in a Covered
Transaction Tax.

 

(b)        AbbVie represents that, as of the date of this Agreement, neither it
nor any of its Affiliates knows of any fact that would jeopardize the Tax
treatment of the transactions provided by the Private Letter Ruling, the Other
Tax Rulings or Tax Opinion, or that otherwise would result in a Covered
Transaction Tax.

 

(c)        Abbott represents that, as of the date of this Agreement, neither it
nor any of its Affiliates has any plan or intention to take any action that is
inconsistent with the Tax treatment of the transactions provided by the Private
Letter Ruling, the Other Tax Rulings or Tax Opinion, or that otherwise would
result in a Covered Transaction Tax.

 

(d)        AbbVie represents that, as of the date of this Agreement, neither it
nor any of its Affiliates has any plan or intention to take any action that is
inconsistent with the Tax treatment of the transactions provided by the Private
Letter Ruling, the Other Tax Rulings or Tax Opinion or that otherwise would
result in a Covered Transaction Tax.

 

(e)        AbbVie represents that, as of the date of this Agreement, neither it
nor any of its Affiliates has entered into any agreement, understanding,
arrangement, or substantial negotiation with respect to any transaction or event
(including stock issuances, option grants, capital contributions, acquisitions,
and changes in the voting power of any of its stock), that may cause Section
355(e) of the Code to apply to the Distribution or any Internal Distribution.

 

Section 4.02         Covenants.

 

(a)        Successor Employer.  Effective for all payments of wages and other
compensation starting on and after the date of the Distribution, Abbott and
AbbVie covenant and agree that Abbott will control the payments of wages and
other compensation to all of the U.S. Transferred Employees and

 

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independent contractors as of 2013 and through the duration of Abbott’s
obligations under the U.S. Payroll Processing & Services Lead Sheet and the
Accounts Payable U.S. Services BSP Transition Services Lead Sheet, each of which
are attached to the U.S. Transition Services Agreement, and Abbott shall assume
responsibilities for performing required withholdings of Federal, state and
local income Taxes and the employee share of FICA from all payments made by
Abbott on behalf of AbbVie pursuant to this Section 4.02, coordinating with
AbbVie’s designated brokers which handle exercises of stock options, vesting of
restricted stock and other payments of stock compensation so as to ensure
correct processing of withholdings and other payroll Taxes owed with respect to
such compensation, calculating the employer’s share of payroll Taxes owed with
respect to all such compensation, and depositing such Taxes under AbbVie’s
Employer Identification Number (“EIN”).  Abbott and AbbVie further agree that,
as part of its responsibilities for processing all such compensation, Abbott
will file all Forms W-2 and other payroll tax forms for the U.S. Transferred
Employees as of 2013 and for the duration of Abbott’s obligations under the U.S.
Payroll Processing & Services BSP Transition Services Lead Sheet and the
Accounts Payable U.S. Services BSP Transition Services Lead Sheet, will file all
Forms 1099, where required, reporting all other payments to persons contracting
with AbbVie, and will file all Forms 940, 941 and 945 and state or local
equivalents of such forms, as required, under AbbVie’s name, address, and EIN. 
AbbVie covenants and agrees to cooperate with the administration and
implementation of these compensation payments and Tax deposit and filing
procedures, and to reimburse Abbott both for all such payments of compensation
and payroll taxes described above, and for Abbott’s costs of processing this
compensation and filing these Tax Returns.  AbbVie further covenants and agrees
to indemnify and reimburse Abbott for the costs of responding to any notices
from any government authority, and for any additional Taxes, fines, interest
and/or penalties imposed on Abbott with respect to any deficiencies in any
deposits or filings made by Abbott in performing the compensation payment,
withholding, depositing and Tax form filing functions described above.

 

(b)        Conduct.  AbbVie covenants and agrees that it shall not take, and it
shall cause its Affiliates to refrain from taking, any action that reasonably
may be expected to result in any increased Tax liability or reduced Tax
attribute of any member of the Abbott Group.  This includes taking any action
that is inconsistent with the Tax treatment of the transactions provided by the
Private Letter Ruling, the Tax Opinion or the Other Tax Rulings (any such
action, including any action referred to in Section 4.02(b)(i) through (iv), is
referred to in this Agreement as a “Specified Action”).  Without limiting the
foregoing:

 

(i)         Specified Actions.  Any time before the second anniversary of the
Distribution Date, AbbVie shall not (and shall cause its Affiliates to not) (A)
liquidate, merge, or consolidate with or into any corporation that

 

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was not already wholly owned by AbbVie or by a wholly owned subsidiary of AbbVie
prior to such transaction; (B) issue any of its capital stock in one or more
transactions, other than (i) issuances to employees, directors, or independent
contractors in connection with the performance of services for AbbVie (that are
not excessive by reference to the services performed) which issuances either (x)
are with respect to the exercise of options of AbbVie that are substituted for
Abbott options or (y) satisfy Safe Harbor VIII of Treasury Regulations Section
1.355-7(d) to not be treated for purposes of Section 355(e) of the Code to be
part of a plan or series of related transactions that includes the Distribution
or the Internal Distributions or (ii) issuances of stock that satisfy Safe
Harbor IX of Treasury Regulations Section 1.355-7(d); (C) redeem, purchase, or
otherwise reacquire any of its capital stock in one or more transactions; (D)
change the voting rights of any of its stock; (E) issue any options to acquire
AbbVie Shares other than options that satisfy Safe Harbor VIII of Treasury
Regulations Section 1.355-7(e)(3)(ii); (F) sell, exchange, distribute, or
otherwise dispose of, other than in the ordinary course of business, all or a
substantial part of the assets of any of the trades or businesses relied on to
satisfy Section 355(b) of the Code; or (G) discontinue or cause to be
discontinued the active conduct of any of the trades or businesses relied on to
satisfy Section 355(b) of the Code.  Notwithstanding the foregoing, clauses (A)
through (E) of this Section 4.02(b)(i) shall not apply unless there are
transactions described in such clauses any time before the second anniversary of
the Distribution Date that result in one or more Persons acquiring directly or
indirectly stock representing, in the aggregate, 25 percent or greater interest
in AbbVie (as defined in Sections 355(d)(4) and 355(e) of the Code).  This
Section 4.02(b)(i) and the application thereof is intended to monitor compliance
with Section 355(e) of the Code and shall be interpreted accordingly. Any
clarification of, or change in, the statute or regulations promulgated under
Section 355(e) of the Code shall be incorporated in this definition and its
interpretation.

 

(ii)        No Inconsistent Actions.  Regardless of any change in circumstances,
AbbVie covenants and agrees that it shall not take any action (and it shall
cause its Affiliates to refrain from taking any action) that is inconsistent
with any factual statements or representations in the Private Letter Ruling or
the Other Tax Rulings on or before the second anniversary of the Distribution
Date other than as permitted in this Section 4.02.  For this purpose an action
is considered inconsistent with a representation if the representation states
that there is no plan or intention to take such action.

 

(iii)       Section 355(e).  Without in any manner limiting paragraph (i) or
(ii) of Section 4.02(b), AbbVie covenants and agrees that, through the second
anniversary of the Distribution Date, it shall refrain from entering into (and
it shall cause its Affiliates to refrain from entering into) any

 

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agreement, understanding, arrangement, or substantial negotiation with respect
to any transaction or event (including stock issuances, option grants, capital
contributions, acquisitions, or changes in the voting power of any of its
stock), that could reasonably be expected to cause Section 355(e) of the Code to
apply to the Distribution or any Internal Distribution.

 

(c)        Amended or Supplemental Rulings.  AbbVie covenants and agrees that it
shall refrain from filing, and it shall cause its Affiliates to refrain from
filing, a request for any amendment or supplement to the Private Letter Ruling
or the Other Tax Rulings subsequent to the Distribution Date without the consent
of Abbott, which consent shall not be withheld unreasonably.

 

(d)        Tax Returns.  Each of Abbott and AbbVie covenants and agrees that it
shall refrain from taking, and it shall cause its Affiliates to refrain from
taking, any position on a Tax Return that is inconsistent with (i) the Tax
treatment of the transactions provided by the Private Letter Ruling or Tax
Opinion, (ii) the External and Internal Contributions qualifying for Tax-free
treatment under Section 361, (iii) the Tax treatment of the transactions
provided by the Other Tax Rulings, (iv) the allocation of the benefits and
burdens of AbbVie assets and liabilities pursuant to Sections 2.03 and 2.04 of
the Distribution Agreement, (v) the reporting positions set forth in
Section 4.02(g) of this Agreement regarding the ICO Agreement, or (vi) the
documents effecting any transaction undertaken in connection with the Separation
that is not addressed by the Private Letter Ruling, any Other Tax Ruling or Tax
Opinion.

 

(e)        Exception.  Notwithstanding the foregoing, AbbVie shall be permitted
to take an action inconsistent with Section 4.02(b), if, prior to taking such
action, AbbVie provides notification to Abbott of its plans with respect to such
action and promptly responds to any inquiries by Abbott following such
notification, and (unless Abbott agrees otherwise in writing) either:

 

(i)         In the case of the Distribution or any Internal Distribution, AbbVie
obtains a supplemental ruling with respect to the action from the Internal
Revenue Service that is reasonably satisfactory to Abbott (except that AbbVie
shall not submit any supplemental ruling request if Abbott determines in good
faith that filing such request could have a materially adverse effect on
Abbott), on the basis of facts and representations consistent with the facts at
the time of such action, that such action will not affect the Tax treatment of
the transactions provided by the Private Letter Ruling,

 

(ii)        In case of the Distribution or any Internal Distribution, AbbVie
obtains an opinion, reasonably acceptable to Abbott, of an independent
nationally recognized Tax counsel, reasonably acceptable to Abbott, on the basis
of facts and representations consistent with the facts at the time

 

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of such action, that such action will not affect the Tax treatment of the
transactions provided by the Private Letter Ruling or the Internal
Distributions, or

 

(iii)       In case of the Other Transactions, AbbVie obtains:

 

(a)        a supplemental ruling with respect to the action from the relevant
Tax Authority that is reasonably satisfactory to Abbott (except that AbbVie
shall not submit any supplemental ruling request if Abbott determines in good
faith that filing such request could have a materially adverse effect on Abbott
or any of its Affiliates), or

 

(b)        an opinion, reasonably acceptable to Abbott, of an independent Tax
counsel, reasonably acceptable to Abbott, on the basis of facts and
representations consistent with the facts at the time of such action, that such
action will not affect the Tax treatment of the transactions provided by the
Other Tax Rulings.

 

Notwithstanding anything to the contrary in this Agreement, AbbVie shall be
responsible for, and shall indemnify Abbott and hold Abbott harmless from, any
Covered Transaction Tax resulting from a Specified Action of AbbVie or any of
AbbVie’s Affiliates, regardless of whether the exception of this
Section 4.02(e) is satisfied with respect to such act.

 

(f)         Duty to Mitigate Recognition or Recapture of Income. Prior to any
event that may result in recognition or recapture of income (including under any
gain recognition agreement entered into pursuant to Treasury Regulations
Section 1.367(a)-8), Abbott and AbbVie shall use (and shall cause the members of
the Abbott Group and AbbVie Group, respectively, to use) all commercially
reasonable efforts to eliminate such gain recognition or recapture of income or
otherwise avoid or minimize the impact thereof to the other party, including by
the execution of an appropriate gain recognition agreement pursuant to Treasury
Regulations Section 1.367(a)-8.

 

(g)        ICO Agreement

 

(i)         Deferred AbbVie Local Business.  A payment made under an ICO
Agreement in connection with the transfer and acquisition of a Deferred AbbVie
Local Business by AbbVie or an AbbVie Affiliate following the Distribution Date
and the corresponding payment by Abbott or an Abbott Affiliate to AbbVie or an
AbbVie Affiliate shall be characterized for U.S. income Tax purposes and on any
related Tax Return as the purchase by Abbott or the relevant Abbott Affiliate,
as the case may be, of the Deferred AbbVie Local Business of the Abbott
Affiliate operating such business following the Distribution Date in exchange
for such Abbott Affiliate transferring the Deferred AbbVie

 

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Local Business to the AbbVie Affiliate (the “Reporting Position”) occurring on
the Distribution Date.  The Parties agree that if a Tax Authority challenges the
Reporting Position, the Parties will jointly defend such position until a
Determination.  If the Determination with respect to such challenge does not
confirm the Reporting Position, the Party receiving a Tax Benefit as a result of
such Determination shall pay the amount of such Tax Benefit to the other Party
incurring a Tax Detriment as a result of such Determination, if any, under the
principles of Section 2.02(b) hereof but in no event exceeding the amount of
such Tax Detriment.

 

(ii)        Other Payments and Income.  The payment by Abbott or any Abbott
Affiliate or by AbbVie or any AbbVie Affiliate under Section 2.05 or
Section 2.06 of any ICO Agreement shall be characterized for U.S. income Tax
purposes, as paid by or received by Abbott or any Abbott Affiliate in its
capacity as agent of AbbVie or any AbbVie Affiliate with respect to the Deferred
AbbVie Local Business (the “Payment Reporting Position”).  AbbVie or the
relevant AbbVie Affiliate shall account for the net income of the Deferred
AbbVie Local Business following the Distribution Date for U.S. federal income
Tax purposes and on the relevant U.S. federal income Tax Returns and Abbott or
the relevant Abbott Affiliate shall not report such income for purposes of
filing their U.S. federal income Tax Returns (the “Income Reporting Position”). 
Any foreign Taxes paid with respect to the income of the Deferred AbbVie Local
Business shall be, for all U.S. income Tax purposes, for the account of AbbVie
or the relevant AbbVie Affiliate and Abbott or the relevant AbbVie Affiliate
shall not claim such foreign income Taxes for U.S. income Tax purposes on any
Tax Return (the “Foreign Tax Credit Reporting Position”).  The Parties further
agree to defend the Payment Reporting Position, the Income Reporting Position
and the Foreign Tax Credit Reporting Position if challenged by the IRS until a
Determination.  If the Determination does not confirm the relevant position, and
such Determination results in a Tax Detriment to a Party and a Tax Benefit to
the other Party, the Party receiving the Tax Benefit shall pay the amount of
such Tax Benefit to the other Party incurring the Tax Detriment under the
principles of Section 2.01(b) hereof but in no event exceeding the amount of
such Tax Detriment.

 

(h)        Other Tax Liabilities.  If following the Separation, one Party (or
any of its Affiliates) incurs and pays a Tax liability that under this Agreement
is properly for the account of the other Party (or any of its Affiliates)
(including with respect to product sales attributable to the other Party under
such agreement but allocated to the first mentioned party under local Tax law),
the other Party shall pay the Tax Detriment incurred by the first mentioned
Party on account of such item under the principles set out in
Section 4.02(g) (including with respect to the treatment of related foreign tax
credits).

 

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(i)         Certain Expenses.  Notwithstanding any other provisions in this
Agreement, the other Ancillary Agreements and the Distribution Agreement, if one
Party is required under Section 9.09(b)(ii) of the Distribution Agreement to pay
an amount to the other Party, the Parties agree that such payment shall be
reported for Tax purposes as follows:  (i) the other Party shall take such
payment made by first mentioned Party into income on all relevant Tax Returns;
and (ii) the first mentioned Party shall deduct such payment on all relevant Tax
Returns (together, the “Expense Reporting Position”).  The Parties agree that if
a Tax Authority challenges the Expense Reporting Position, the Parties will
jointly defend such position until a Determination.  If the Determination with
respect to such challenge does not confirm the Expense Reporting Position, the
Party receiving a Tax Benefit as a result of such Determination shall pay the
amount of such Tax Benefit to the other Party incurring a Tax Detriment as a
result of such Determination, if any, under the principles of
Section 2.02(b) hereof but in no event exceeding the amount of such Tax
Detriment.

 

(j)         Pension Plans.  With respect to any amount paid by either Abbott or
AbbVie to, or in connection with, any defined benefit pension plan or any trust
or other funding arrangement with respect to a defined benefit pension plan
following the effective time of the Distribution, the paying Party shall be
treated for all federal and other Tax purposes as having made the payment on its
own behalf and the Parties shall file all Tax Returns consistent with such
treatment (the “Plan Reporting Position”).  The Parties agree that if a Tax
Authority challenges the Plan Reporting Position, the Parties will jointly
defend such position until a Determination.  If the Determination with respect
to such challenge does not confirm the Plan Reporting Position, the Party
receiving a Tax Benefit as a result of such Determination shall pay the amount
of such Tax Benefit to the other Party incurring a Tax Detriment as a result of
such Determination, if any, under the principles of Section 2.02(b) hereof but
in no event exceeding the amount of such Tax Detriment.

 

Section 4.03         No Continuing Liability for Former Members.

 

(a)        Abbott Affiliates.  If an Abbott Affiliate ceases to be a member of
the Abbott Group as a result of a sale or exchange of all of the stock of such
member, other than an exchange for which the consideration received by Abbott is
the stock of Abbott or an Abbott Affiliate, the departing Abbott Affiliate shall
be released from its obligations under this Agreement upon its departure from
the Abbott Group.

 

(b)        AbbVie Affiliates.  If an AbbVie Affiliate ceases to be a member of
the AbbVie Group as a result of a sale or exchange of all of the stock of such
member, other than an exchange for which the consideration received by AbbVie is
the stock of AbbVie or an AbbVie Affiliate, the departing AbbVie Affiliate shall
be released from its obligations under this Agreement upon its departure from
the AbbVie Group; provided, however, that no member of the

 

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AbbVie Group shall be released from any obligations under
Section 2.01(b)(ii) hereof unless approved in writing by Abbott, which approval
shall not be unreasonably withheld.

 

ARTICLE V.    MISCELLANEOUS PROVISIONS

 

Section 5.01         Counterparts; Entire Agreement; Corporate Power; Facsimile
Signatures.

 

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

 

(b)        Entire Agreement.  Except to the extent provided in an ICO Agreement,
this Agreement and the Distribution Agreement 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.  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 Affiliate, AbbVie or any
AbbVie Affiliate from those contained in this Agreement.

 

(c)        Corporate Power.  Abbott represents on behalf of itself and, to the
extent applicable, each Abbott Affiliate and AbbVie represents on behalf of
itself and, to the extent applicable, each AbbVie Affiliate 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 to consummate the transactions
contemplated hereby and thereby; and

 

(ii)        this Agreement 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 by manual, stamp or mechanical signature,
and that delivery of an executed counterpart of a signature page to this
Agreement (whether executed by manual, stamp or mechanical signature) by
facsimile or

 

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by email in portable document format (PDF) shall be effective as delivery of
such executed counterpart of this 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 such 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 5.02         Governing Law.  This 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 5.03         Assignability.  This 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 may assign its rights or delegate its obligations under this
Agreement without the express prior written consent of the other Party hereto. 
Notwithstanding the foregoing, no such consent shall be required for the
assignment of a Party’s rights and obligations under this Agreement in whole in
connection with a Change of Control of a Party, 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 5.04         Third Party Beneficiaries.  The provisions of this
Agreement is 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 there are no other third-party beneficiaries of this Agreement
and this Agreement shall not 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.

 

Section 5.05         Notice.  All notices or other communications under this
Agreement must be in writing and shall be deemed to be duly given: (a) when
delivered in person; (b) upon transmission via confirmed facsimile transmission,
provided that such transmission is followed by delivery of a physical copy
thereof in person, via U.S. first class mail, or via a private express mail
courier; or (c) two days after deposit with a private express mail courier, in
any such case addressed as follows:

 

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If to Abbott:

Abbott Laboratories

100 Abbott Park Road

Building AP6D, Dept. 367

Abbott Park, IL 60064-6057

Facsimile: (847) 935-3346

Attention: Vice President, Taxes

 

With a copy to:

Abbott Laboratories

100 Abbott Park Road

Building AP6D, Dept. 364

Abbott Park, IL 60064-6020

Facsimile: (847) 937-3966

Attention: General Counsel

 

If to AbbVie:

AbbVie Inc.

1 North Waukegan Road

North Chicago, Illinois 60064

Facsimile: (847) 935-3353

Attention: Vice President, Taxes

 

With a copy to:

AbbVie Inc.

1 North Waukegan Road

North Chicago, Illinois 60064

Facsimile: (847) 935-3294

Attention: General Counsel

 

Any Party may, by notice to the other Party, change the address to which such
notices are to be given.

 

Section 5.06         Severability.  In the event that any one or more of the
terms or provisions of this 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 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 which, insofar as practicable, implement the
purposes and intent of the Parties.  Any term or provision of this 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

 

26

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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 5.07         Force Majeure.  Neither Party shall be deemed in default of
this 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 as soon as reasonably practicable.

 

Section 5.08         No Set Off.  Except 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 (b) any other amounts claimed to be owed
to the other Party or any of its Subsidiaries arising out of this Agreement.

 

Section 5.09         Headings.  The Article, Section and Paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

 

Section 5.10         Survival of Covenants.  Except as expressly set forth in
this Agreement, the covenants and other agreements contained in this 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 5.11         Affiliates.  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 Affiliate 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 Affiliate.

 

Section 5.12         Waivers of Default.  Waiver by either Party of any default
by the other Party of any provision of this 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 5.13         Amendments.  No provisions of this 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.  No provisions of this Agreement shall be deemed waived unless such
waiver is in writing and signed by the authorized representative of the Party
against whom it is sought to be enforced.

 

Section 5.14         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

 

27

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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 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 shall be deemed to refer to this
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 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 5.15         Advisors.  Abbott has selected Baker & McKenzie and
Wachtel, Lipton, Rosen & Katz as counsel in connection with the Distribution. 
AbbVie acknowledges, for itself and each AbbVie Affiliate, that Baker & McKenzie
and Wachtel, Lipton, Rosen & Katz are acting in the capacity as counsel to
Abbott and as counsel to AbbVie, in connection with this Agreement and the
provisions contemplated herein.

 

Section 5.16         Dispute Resolution.  Any and all disputes between Abbott
and AbbVie arising out of any provision of this Agreement shall be resolved
through the procedures provided in Section 7.01 of the Distribution Agreement.

 

Section 5.17         Payments.

 

(a)        Procedure for Requesting and Making Indemnification Payments.  On the
occurrence of an event for which a Party is entitled to receive indemnification
hereunder, such Party (the “Indemnified Party”) shall send the other Party (the
“Indemnifying Party”) an invoice requesting payment accompanied by a statement
describing in reasonable detail the amount owed and the particulars relating
thereto.  Unless a provision in this Agreement specifically provides a different
time for payment, the Indemnifying Party shall pay to the Indemnified Party any
payment it owes to the Indemnified Party under this Agreement within thirty (30)
days after the receipt of the invoice for such payment.

 

(b)        Procedure for Making Other Payments.  If a Party is responsible for
any Tax under Section 2.01 (the “Responsible Party”) and such Tax must be
remitted by the other Party (the “Remitting Party”), the Remitting Party shall
send the Responsible Party an invoice requesting payment accompanied by a
statement describing in reasonable detail the amount owed and the particulars
relating thereto.  Unless a provision in this Agreement specifically provides a
different time for payment, the Responsible Party shall pay to the Remitting

 

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Party any payment it owes to the Remitting Party under this Agreement no later
than thirty (30) days before the Remitting Party must remit the Tax to the
appropriate Tax Authority.

 

(c)        Character of Payments.  For Tax purposes, the Parties agree to treat
any payment pursuant to this Agreement in the same manner as a capital
contribution by Abbott to AbbVie or an adjustment to the Contribution made in
the last taxable period beginning before the Distribution (or corresponding
treatment with respect to any Internal Distribution) and, accordingly, as not
includible in the gross income of the recipient and not deductible by the payor
to the extent allowed under Law.  If pursuant to a Determination it is
determined that the receipt or accrual of any payment made under this Agreement
is subject to any Tax, the Party making such payment shall be responsible for
the After-Tax Amount with respect to such payment.  The failure of a Party to
include an After-Tax Amount in a demand for payment pursuant to this Agreement
shall not be deemed a waiver by the Party of its right to receive an After-Tax
Amount with respect to such payment.

 

(d)        Interest on Late Payments.  Unless a provision in this Agreement
specifically provides otherwise, any payment required to be made pursuant to
this Agreement that is not made on or before the due date for such payment shall
bear interest from the date after the due date to and including the date of
payment at the Prime Rate plus two percent.  Such interest shall be paid at the
same time as the payment to which it relates.  Any interest payable pursuant to
this paragraph that is not paid when due shall bear interest at the Prime Rate
plus two percent.

 

Section 5.18         No Duplication.  Any liability for indemnification under
this Agreement shall be determined without duplication of recovery under the
Distribution Agreement or any other Ancillary Agreement. Notwithstanding any
other provision of this Agreement, if under a Conveyance and Assumption
Instrument, (i) such agreement provides for indemnification of a Tax that is
also provided for in Section 2.01(a) or Section 2.01(b), such agreement shall
take precedence over this Agreement with respect to such indemnification and the
relevant Party under such agreement shall bear primary responsibility for such
indemnification and pay such indemnification to the other Party in accordance
with the terms of such agreement and (ii) such agreement provides for the
payment of a refund of Tax that is also provided for in Section 2.02(a), such
agreement shall take precedence over this Agreement with respect to such refund
and the relevant Party under such agreement shall pay such Tax refund to the
other Party in accordance with the terms of such agreement.

 

Section 5.19         Mutual Drafting.  This Agreement 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:

/s/ Thomas C. Freyman

 

By:

/s/ Richard A. Gonzalez

 

 

 

 

 

Name:

Thomas C. Freyman

 

Name:

Richard A. Gonzalez

Title:

Executive Vice President, Finance

 

Title:

Chairman of the Board and

 

and Chief Financial Officer

 

 

Chief Executive Officer

 

[Signature Page to Tax Sharing Agreement]

 

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