**Exhibit 2.1**

 

 

**SEPARATION AND DISTRIBUTION AGREEMENT**

 

**by and between**

 

**ABBOTT LABORATORIES**

 

**and**

 

**HOSPIRA, INC.**

 

 

**Dated as of April 12, 2004**

 

 

----

 

**THIS SEPARATION AND DISTRIBUTION AGREEMENT**,dated as of April 12, 2004, is by and between ABBOTT LABORATORIES, an Illinoiscorporation (“Abbott”) and HOSPIRA, INC., a Delaware corporation (“Hospira”).

 

**R E C I T A L S:**

 

**WHEREAS**, the boardof directors of Abbott has determined that it is appropriate and advisable to:(i) separate the Hospira Business (as defined herein) from the Abbott Business(as defined herein) (the “Separation”); and (ii) following theSeparation, make a distribution, on a pro rata basis, to holders of commonshares, without par value, of Abbott (the “Abbott Common Shares”) of allof the outstanding shares of common stock, par value $0.01 per share, ofHospira (together with the associated preferred stock purchase rights, the “HospiraCommon Stock”), owned by Abbott (the “Distribution”); and

 

**WHEREAS**, each ofAbbott and Hospira has determined that it is necessary and advisable to setforth the principal transactions required to effect the Separation and theDistribution and to describe other agreements that will govern certain othermatters prior to and following the Separation and the Distribution.

 

**NOW, THEREFORE**, inconsideration of the mutual agreements, provisions and covenants contained inthis Agreement (as defined herein), the Parties (as defined herein) herebyagree as follows:

 

ARTICLE IDEFINITIONS

 

SECTION1.01.  Definitions.  Reference is made to Section 9.14regarding the interpretation of certain words and phrases used in thisAgreement.  In addition, for the purposeof this Agreement, the following terms shall have the meanings set forth below.

 

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

 

“AbbottBusiness” means all businesses and operations (whether or not suchbusinesses or operations are or have been terminated, divested or discontinued)conducted prior to the Effective Time by Abbott, the Abbott Subsidiaries,Hospira and the Hospira Subsidiaries, in each case that are not included in theHospira Business.  For purposes of thisAgreement and the Ancillary Agreements only, the Abbott Business shall also bedeemed to include the businesses and operations (whether or not such businessesor operations are or have been terminated, divested or discontinued) conductedprior to the Effective Time by TAP Pharmaceutical Products Inc., TAP FinanceInc. and TAP Pharmaceuticals Inc.

 

“AbbottCommon Shares” has the meaning set forth in the Recitals.

 

“AbbottEntry Point Companies” means Abbott, Abbott Laboratories International Co.,an Illinois corporation and Abbott Subsidiary, AIL and Tobal ProductsIncorporated, an Illinois corporation and Abbott Subsidiary.

 

----

 

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

 

“AbbottIndemnity Obligations” means all Liabilities (other than HospiraLiabilities) to the extent such Liabilities relate to, arise out of or resultfrom any of the following items:

 

(i)  any failure of Abbott orany Abbott Subsidiary to pay, perform or otherwise promptly discharge anyAbbott Liabilities in accordance with their terms;

 

(ii)  any breach by Abbott orany Abbott Subsidiary of this Agreement or any of the Ancillary Agreements; and

 

(iii)  any untrue statement oralleged untrue statement of a material fact made explicitly in Abbott’s name inthe Registration Statement or the Information Statement as the same may beamended prior to the Effective Time, or any omission or alleged omission tostate a material fact necessary to make any such statement made explicitly inAbbott’s name not misleading.

 

“AbbottLiabilities” means the Liabilities relating to, arising out of or resultingfrom actions, inactions, events, omissions, conditions, facts or circumstancesoccurring or existing prior to the Effective Time (whether or not suchLiabilities cease being contingent, mature, become known, are asserted orforeseen, or accrue, in each case before, at or after the Effective Time) ofAbbott and the Abbott Subsidiaries and, prior to the Effective Time, Hospiraand the Hospira Subsidiaries, in each case that are not Hospira Liabilities orHospira Indemnity Obligations.

 

“AbbottMarketing Affiliate” means the entities set forth on Schedule 1.01(a).

 

“AbbottOther Liabilities” has the meaning set forth on Schedule 1.01(n).

 

“AbbottSubsidiary” means any Subsidiary of Abbott other than Hospira and anyHospira Subsidiary.

 

“ActualDeferred Taxes” means the Tax effect of the sum of all temporary differencesrelating to Taxes and all other differences relating to the basis of propertyor liabilities properly classified under GAAP as temporary items of Hospira andits Subsidiaries, adjusted for the effect of Abbott’s filing its 2003 and 2004U.S. federal income Tax returns.

 

“ADR”has the meaning set forth in Section 7.01.

 

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

 

“Agent”means EquiServe Trust Company, N.A., or such other trust company or bankappointed by Abbott that shall act as distribution agent, transfer agent andregistrar for the Hospira Common Stock in connection with the Distribution.

 

2

----

 

“Agreement”means this Separation and Distribution Agreement and each of the Scheduleshereto.

 

“AIL”means Abbott International Ltd., a Delaware corporation and an AbbottSubsidiary that will become a limited liability company in connection with theSeparation.

 

“ALI”means Abbott Laboratories Inc., a Delaware corporation and an Abbott Subsidiary.

 

“AncillaryAgreements” means all written agreements, instruments, understandings,assignments or other arrangements (other than this Agreement) entered into bythe Parties or any of their respective Subsidiaries in connection with theSeparation, the Distribution and the other transactions contemplated by thisAgreement, including the following:  (i)the Conveyance and Assumption Instruments; (ii) the Employee BenefitsAgreement; (iii) the Information Technology Agreement; (iv) the IntellectualProperty Assignment Agreement; (v) the Intellectual Property LicenseAgreements; (vi) the International Commercial Operations Agreement;(vii) the Inventory Trademark License Agreement; (viii) the Leases; (ix)the Manufacture and Supply Agreements; (x) the Tax Sharing Agreement; (xi) theTransition Marketing and Distribution Services Agreements; (xii) the TransitionServices Agreements; and (xiii) any other agreements which the Partiesdetermine are necessary or advisable in connection with the Separation, the Distributionand the other transactions contemplated by this Agreement and the AncillaryAgreements.

 

“AssetTransfer Date” means April 26, 2004 or such other date not later than theDistribution Date as may be determined by Abbott.

 

“Assets”means assets, rights, claims and properties of all kinds, real and personal,tangible, intangible and contingent, including rights and benefits pursuant toany contract, license, permit, indenture, note, bond, mortgage, agreement,concession, franchise, instrument, undertaking, commitment, understanding orother arrangement and any rights or benefits pursuant to any Proceeding.

 

“BusinessEntity” means any corporation, general or limited partnership, trust, jointventure, unincorporated organization, limited liability entity or other entity.

 

“Bylaws”means the Amended and Restated Bylaws of Hospira, substantially in the form of ExhibitA.

 

“Certificateof Incorporation” means the Restated Certificate of Incorporation ofHospira, substantially in the form of Exhibit B.

 

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

 

“Commission”means the Securities and Exchange Commission.

 

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

 

3

----

 

“Conveyanceand Assumption Instruments” means, collectively, such deeds, bills of sale,Asset transfer agreements, endorsements, assignments, assumptions (includingLiability assumption agreements), leases, subleases, affidavits and otherinstruments of sale, conveyance, contribution, distribution, lease, transferand assignment between Abbott or, where applicable, any Abbott Subsidiary, onthe one hand, and Hospira or, where applicable, any Hospira Subsidiary ordesignee of Hospira, on the other hand, as may be necessary or advisable underthe laws of the relevant jurisdictions to effect the Separation.

 

“DelayedEx-U.S. Commercial Assets” means: (i) the Hospira Assets (other than Delayed Ex-U.S. Manufacturing Assets)that are held as of the Effective Time by: (A) any Abbott Marketing Affiliate;or (B) any Abbott Subsidiary organized under the laws of any jurisdictionoutside the United States; and (ii) the Hospira Assets that are held by Abbottor any Abbott Subsidiary of the type described in subsection (v) of thedefinition of Hospira Assets.

 

“DelayedEx-U.S. Commercial Liabilities” means: (i) the Hospira Liabilities (other than Delayed Ex-U.S. ManufacturingLiabilities) of any: (A) Abbott Marketing Affiliate; or (B) Abbott Subsidiaryorganized under the laws of any jurisdiction outside the United States, in eachcase that remain outstanding as of the Effective Time; and (ii) the HospiraLiabilities of Abbott or any Abbott Subsidiary of the type described insubsection (vi) of the definition of Hospira Liabilities.

 

“DelayedEx-U.S. Manufacturing Assets” means the Hospira Assets held by the Ex-U.S.Manufacturing Subsidiaries that are used in manufacturing operations at theHospira Ex-U.S. Manufacturing Facilities, legal title to which is notcontributed, assigned, transferred, conveyed or delivered to Hospira or aHospira Subsidiary prior to the Effective Time because such action wouldrequire a Consent which has not been obtained as of that date.

 

“DelayedEx-U.S. Manufacturing Liabilities” means the Hospira Liabilities of theEx-U.S. Manufacturing Subsidiaries that are incurred in the manufacturingoperations at the Hospira Ex-U.S. Manufacturing Facilities and are not assignedto and accepted and assumed by Hospira or a Hospira Subsidiary prior to theEffective Time because such action would require a Consent which has not beenobtained as of that date.

 

“DelayedTransfer Assets” means the Delayed U.S. Assets, the Delayed Ex-U.S.Manufacturing Assets and the Delayed Ex-U.S. Commercial Assets.

 

“DelayedTransfer Liabilities” means the Delayed U.S. Liabilities, the DelayedEx-U.S. Manufacturing Liabilities and the Delayed Ex-U.S. CommercialLiabilities.

 

“DelayedU.S. Assets” means the Hospira Assets held by Abbott or any Abbott Subsidiaryincorporated under U.S. state law, legal title to which is not contributed,assigned, transferred, conveyed and delivered to Hospira or a HospiraSubsidiary prior to the Effective Time because such action would require aConsent which had not been obtained as of that date.

 

“DelayedU.S. Liabilities” means the Hospira Liabilities of Abbott or any AbbottSubsidiary incorporated under U.S. state law which are not assigned to andaccepted and assumed by Hospira or a Hospira Subsidiary prior to the EffectiveTime because such action would require a Consent which has not been obtained asof that date.

 

4

----

 

“DelayedU.S./Ex-U.S. Manufacturing Assets” means Delayed U.S. Assets and DelayedEx-U.S. Manufacturing Assets.

 

“DelayedU.S./Ex-U.S. Manufacturing Liabilities” means Delayed U.S. Liabilities andDelayed Ex-U.S. Manufacturing Liabilities.

 

“DiscontinuedProducts” means the products (regardless of whether or not such productswere:  (i) abandoned or discontinued inclinical study phase; or (ii) ever marketed or sold to Third Parties)****that were terminated, divested ordiscontinued by Abbott’s hospital products division or Abbott’s internationaldivision prior to the Effective Time; provided that such products are ofa nature or type that would have resulted in such products’ being included asHospira Products if such products had not been terminated, divested ordiscontinued prior to the Effective Time. By way of example, Schedule 1.01(o) sets forth whether or notcertain products shall be Discontinued Products.

 

“Distribution”has the meaning set forth in the Recitals.

 

“DistributionDate” means the date determined by the board of directors of Abbott, in itssole discretion, for the consummation of the Distribution.

 

“EffectiveTime” means 11:59 p.m. Eastern Time on the Distribution Date.

 

“EmployeeBenefits Agreement” means the Employee Benefits Agreement entered intoprior to the Effective Time by and between Abbott and Hospira.

 

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

 

“EnvironmentalLaw” means any supranational, international, national, federal, state, orlocal statute, ordinance, rule, regulation, code, license, permit,authorization, approval, Consent, common law (including tort and environmentalnuisance law), legal doctrine, order, judgment, decree, injunction, requirementor agreement with any Governmental Authority, now or hereafter in effectrelating to employee health and safety, pollution or the environment (includingambient air, surface water, groundwater, land surface or subsurface strata orwildlife or other natural resources) or to emissions, discharges, releases orthreatened releases of any substance currently or at any time hereafter listed,defined, designated or classified as hazardous, toxic, waste, radioactive ordangerous, or otherwise regulated, under any of the foregoing, or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage,disposal, transport or handling of any such substances, including theComprehensive Environmental Response, Compensation and Liability Act, theSuperfund Amendments and Reauthorization Act and the Resource Conservation andRecovery Act and comparable provisions in any other applicable law.

 

“EnvironmentalLiabilities” means all Liabilities relating to, arising out of or resultingfrom any Environmental Law or contract or agreement relating to employee healthand safety, pollution or environmental matters (including ambient air, surfacewater, groundwater, land

 

5

----

 

surface or subsurface strata orwildlife or other natural resources) or to emissions, discharges, releases orthreatened releases of any substance currently or at any time hereafter listed,defined, designated or classified as hazardous, toxic, waste, radioactive ordangerous, or otherwise regulated under any Environmental Law, or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage,disposal, transport or handling of any such substances (including all removal,remediation or cleanup costs, investigatory costs, governmental response costs,natural resources damages, property damages, personal injury damages, costs ofcompliance with any product take back requirements or with any settlement,judgment or other determination of Liability and indemnity, contribution orsimilar obligations).

 

“EstimatedDeferred Taxes” means the Tax effect of the estimated sum of all temporarydifferences relating to Taxes and all other differences relating to the basisof property or liabilities properly classified under GAAP as temporary items,as reflected on the pro forma balance sheet accounts of Hospira and itsSubsidiaries as of the Distribution Date as determined by the Parties within 60days after the Distribution Date.

 

“Ex-U.S.Manufacturing Subsidiaries” means: (i) the following Abbott Subsidiaries: Abbott Laboratories Limited, a Canadian company; Abbott HospitalsLimited, a Bahamas company; Abbott Ireland, a Bermuda company; Abbott IrelandHoldings Ltd., a Bermuda limited liability company; and Knoll-RavizzaFarmaceutici SpA, an Italian company; and (ii) the following TransferredEntities:  Abbott Laboratories de CostaRica Ltd., a Bahamas company; and Abbott Hospital de Costa Rica Ltd., a Bahamascompany.

 

“ExchangeAct” means the Securities Exchange Act of 1934, as amended, together withthe rules and regulations promulgated thereunder.

 

“ExcludedAssets” means:  (i) all Assets ofthe Parties or their respective Subsidiaries to the extent such Assets relateto, arise out of or result from the Abbott Business, it being understood thatnone of the Assets on Schedule 1.01(k) shall be Excluded Assets; (ii)all cash and cash equivalents as of the Effective Time of Abbott, each AbbottSubsidiary, Hospira and each Hospira Subsidiary, except as set forth on Schedule1.01(d); (iii) all Assets that are expressly contemplated by this Agreementor any Principal Ancillary Agreement to be Assets retained by Abbott or anyAbbott Subsidiary; (iv) all Assets of TAP Pharmaceutical Products Inc., TAPFinance Inc. or TAP Pharmaceuticals Inc.; and (v) all other Assets setforth on Schedule 1.01(b).

 

“ExcludedLiabilities” means all of the following Liabilities of the Parties or theirrespective Subsidiaries:

 

(i)  all Liabilities to theextent such Liabilities relate to, arise out of, or result from any ExcludedAssets (it being understood that Liabilities relating to, arising out of orresulting from Hospira Assets or Hospira Products shall not be ExcludedLiabilities);

 

(ii)  all Abbott OtherLiabilities;

 

(iii)  all Liabilities that areexpressly contemplated by this Agreement or any Principal Ancillary Agreementto be Liabilities not transferred to or assumed by Hospira or any HospiraSubsidiary; and

 

6

----

 

(iv)  all other Liabilities setforth on Schedule 1.01(c).

 

“FinalAdjustment” has the meaning set forth in Section 2.15.

 

“FinancingAgreements” means the financing agreements to be entered into prior to theEffective Time by and among Abbott, Hospira and an agent or co-agents selectedby Abbott and Hospira for a principal amount of approximately Seven HundredMillion U.S. Dollars (US$700,000,000).

 

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

 

“GovernmentalAuthority” means any supranational, international, national, federal,state, 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 applicablesecurities laws or regulations.

 

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

 

“HospiraAssets” means only the following Assets of the Parties or their respectiveSubsidiaries, but excluding any Excluded Assets:

 

(i)  the outstanding capitalstock of the Transferred Entities;

 

(ii)  the Assets included on theHospira Pro Forma Balance Sheet or any subledger thereto that are owned byeither Party or any of their respective Subsidiaries as of the Effective Time;

 

(iii)  the Assets of eitherParty or any of their respective Subsidiaries as of the Effective Time that areof a nature or type that would have resulted in such Assets’ being included asAssets on a pro forma combined balance sheet of Hospira and the notes orsubledgers thereto as of the Effective Time (were such balance sheet, notes andsubledgers to be prepared) on a basis consistent with the determination of theAssets included on the Hospira Pro Forma Balance Sheet or any subledgerthereto;

 

(iv)  the Assets expresslyallocated to Hospira or any Hospira Subsidiary under this Agreement or any ofthe Principal Ancillary Agreements;

 

(v)  the trade receivables,inventory, service equipment and other Assets (including Assets expresslyallocated to Hospira or any Hospira Subsidiary under this Agreement or anyPrincipal Ancillary Agreement) that will be held during the InternationalTransition Period on behalf of Hospira by Abbott or any Abbott Subsidiary inconnection with the International Transition Period Business; providedsuch Assets 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 Hospira andthe notes or subledgers thereto as of the Effective Time (were such balancesheet, notes or subledgers to be prepared) on a basis consistent with thedetermination of the Assets included on the Hospira Pro Forma Balance Sheet orany subledger thereto;

 

7

----

 

(vi)  the Hospira Products andthe rights to Hospira Products;

 

(vii)  the contract rights,licenses, trade secrets, know-how, clinical study data, product registrations,any other rights or intellectual property and any other rights, claims orproperties, in each case:  (A) as of theEffective Time; (B) to the extent related to the Hospira Products or theHospira Business; and (C) that are of a nature or type that would not typicallyappear on a balance sheet and the notes or any subledger thereto and are nototherwise specifically addressed under any other subsection of this definition;and

 

(viii)  the Assets identified onSchedule 1.01(d).

 

All Delayed Transfer Assetsshall be Hospira Assets for purposes of this Agreement and the AncillaryAgreements regardless of when legal title to such Delayed Transfer Assets istransferred to Hospira or any Hospira Subsidiary or designee.

 

“HospiraBahamas” means Hospira Limited, a Bahamas company and a Hospira Subsidiary.

 

“HospiraBusiness” means:

 

(i)  the business and operationsconducted prior to the Effective Time by Abbott, the Abbott Subsidiaries,Hospira and the Hospira Subsidiaries to the extent such business and operationsrelate to, arise out of or result from the Hospira Products (including themarketing, distribution and sale of such Hospira Products, but excluding theresearch, development and manufacture of such Hospira Products for the purposesof this clause (i));

 

(ii)  the business and operationsconducted prior to the Effective Time by Abbott, the Abbott Subsidiaries,Hospira and the Hospira Subsidiaries of manufacturing: (A) HospiraProducts; (B) other products manufactured as part of the One 2 OneTMcontract manufacturing business; and (C) products that will be manufactured forAbbott or any Abbott Subsidiary by Hospira or its Subsidiaries after theEffective Time pursuant to the Manufacture and Supply Agreements, in each caseas conducted at the manufacturing facilities set forth on Schedule 1.01(k);

 

(iii)  the research anddevelopment projects undertaken by Abbott’s hospital products division prior tothe Effective Time:  (A) to the extentrelated to Hospira Products; (B) to the extent related to the intellectualproperty being transferred or assigned to Hospira pursuant to this Agreement orany Principal Ancillary Agreement; or (C) described on Schedule 1.01(l);and

 

(iv)  the business andoperations conducted prior to the Effective Time by Abbott, the AbbottSubsidiaries, Hospira and the Hospira Subsidiaries with respect to theDiscontinued Products, but only to the extent of and expressly limited to theAssets and Liabilities described in Item 4 of Schedule 1.01(d) andItem 1 of Schedule 1.01(f).

 

“HospiraCommon Stock” has the meaning set forth in the Recitals.

 

8

----

 

“HospiraEx-U.S. Manufacturing Facilities” means the manufacturing facilitiesoperated prior to the Effective Time by Abbott, Abbott Subsidiaries, Hospira orHospira Subsidiaries at the following locations: Finisklin, Ireland; La Aurora,Costa Rica; Liscate, Italy; Lurganbuoy, Donegal, Ireland; Montreal, Quebec,Canada; and San Cristobal, Dominican Republic.

 

“HospiraIndemnitees” means:  (i) Hospira andeach Hospira Subsidiary; (ii) each of the respective past, present andfuture directors, officers, employees or agents of the entities described in(i) above, in each case in their respective capacities as such; and (iii) eachof the heirs, executors, successors and assigns of any of the foregoing.

 

“HospiraIndemnity Obligations” means all Liabilities to the extent such Liabilitiesrelate to, arise out of or result from any of the following items:

 

(i)  any failure of Hospira orany Hospira Subsidiary to pay, perform or otherwise promptly discharge anyHospira Liabilities in accordance with their terms;

 

(ii)  any breach by Hospira orany Hospira Subsidiary of this Agreement or any of the Ancillary Agreements;and

 

(iii)  any untrue statement or alleged untrue statement of a material factor omission or alleged omission to state a material fact required to be statedtherein or necessary to make the statements therein not misleading, withrespect to all information contained in the Registration Statement or theInformation Statement (other than the matters described in subparagraph (iii)of the definition of Abbott Indemnity Obligations).

 

“HospiraLiabilities” means all of the following Liabilities of the Parties or theirrespective Subsidiaries, but excluding any Excluded Liabilities:

 

(i)  all Liabilities included onthe Hospira Pro Forma Balance Sheet or any subledger thereto that remainoutstanding as of the Effective Time;

 

(ii)  all other Liabilities thatare incurred or accrued by either Party or any of their respective Subsidiariesfrom the date of the Hospira Pro Forma Balance Sheet to the Effective Time thatare of a nature or type that would have resulted in such Liabilities’ beingincluded as Liabilities on a pro forma combined balance sheet of Hospira andthe notes or subledgers thereto as of the Effective Time (were such balancesheet, notes or subledgers to be prepared) on a basis consistent with thedetermination of the Liabilities included on the Hospira Pro Forma BalanceSheet or any subledger thereto

 

(iii)  all Liabilities expresslyallocated to Hospira or any Hospira Subsidiary pursuant to this Agreement orany Principal Ancillary Agreement;

 

(iv)  all Liabilities to theextent relating to, arising out of or resulting from actions, inactions,events, omissions, conditions, facts or circumstances occurring or existingprior to the Effective Time (whether or not such Liabilities cease beingcontingent, mature, become known, are asserted or foreseen, or accrue, in eachcase before, at or after the

 

9

----

 

EffectiveTime) in each case to the extent such Liabilities relate to, arise out of orresult from any Hospira Asset or the Hospira Business;

 

(v)  all Liabilities relatingto, arising out of or resulting from the Financing Agreements;

 

(vi)  all Liabilities (includingLiabilities expressly allocated to Hospira or any Hospira Subsidiary under thisAgreement or any Principal Ancillary Agreement) relating to, arising out of orresulting from any actions, inactions, omissions, conditions, facts orcircumstances occurring or existing during the International Transition Periodto the extent such Liabilities relate to, arise out of or result from theInternational Transition Period Business or a Hospira Asset used in theInternational Transition Period Business (except any indemnity or paymentobligations of Abbott or any Abbott Subsidiary under any Transition Marketingand Distribution Services Agreement or the International Commercial OperationsAgreement); and

 

(vii)  all other Liabilities setforth on Schedule 1.01(f).

 

All Delayed TransferLiabilities shall be Hospira Liabilities for purposes of this Agreement and theAncillary Agreements regardless of when legal title to such Delayed TransferLiabilities is transferred to Hospira or any Hospira Subsidiary or designee.

 

“HospiraPro Forma Balance Sheet” means the pro forma combined balance sheet ofHospira, including the notes thereto, as of December 31, 2003, as presented inthe Information Statement mailed to the Record Holders prior to the EffectiveTime.

 

“HospiraProceeding Liabilities” means any Proceeding Liabilities that are HospiraLiabilities, including the Proceeding Liabilities relating to, arising out ofor resulting from the Proceedings identified on Schedule 1.01(i).

 

“HospiraProducts” means the products set forth on Schedule 1.01(e).

 

“HospiraSpA” means Hospira SpA, an Italian company and a Hospira Subsidiary.

 

“HospiraSubsidiary” means any Subsidiary of Hospira.  For greater clarity, the Transferred Entities shall be deemed tohave been Hospira Subsidiaries at all times prior to the Effective Time.

 

“HWI”means Hospira Worldwide, Inc., a Delaware corporation and a Hospira Subsidiary.

 

“IndemnifyingParty” has the meaning set forth in Section 4.04(a).

 

“Indemnitee”means any Hospira Indemnitee or any Abbott Indemnitee, as appropriate.

 

“IndemnityPayment” has the meaning set forth in Section 4.04(a).

 

“Information”means information, whether or not patentable or copyrightable, in written,oral, electronic or other tangible or intangible forms, including studies,reports, records, books,

 

10

----

 

contracts, instruments,surveys, discoveries, ideas, concepts, know-how, techniques, designs,specifications, drawings, blueprints, diagrams, models, prototypes, samples,flow charts, data, computer data, disks, diskettes, tapes, computer programs orother software, marketing plans, customer names, communications by or toattorneys (including attorney-client privileged communications), memos andother materials prepared by attorneys or under their direction (includingattorney work product), and other technical, financial, employee or businessinformation or data.

 

“InformationStatement” means the information statement forming a part of theRegistration Statement as the same may be amended or supplemented from time totime.

 

“InformationTechnology Agreement” means the Information Technology Agreement enteredinto prior to the Effective Time by and between Abbott and Hospira or theirrespective Subsidiaries.

 

“InsuranceProceeds” means, with respect to any insured party, those monies, net ofany applicable premium adjustments (including reserves and retrospectivelyrated premium adjustments) and net of any costs or expenses incurred in the collectionthereof, which are either:  (i) receivedby an insured from an insurance carrier or its estate; or (ii) paid by aninsurance carrier or its estate on behalf of the insured.

 

“IntellectualProperty Assignment Agreement” means the Intellectual Property AssignmentAgreement entered into prior to the Effective Time by and between Abbott andHospira.

 

“IntellectualProperty License Agreements” means the Intellectual Property LicenseAgreements entered into prior to the Effective Time by and between Abbott andHospira and set forth on Schedule 1.01(g).

 

“InternationalCommercial Operations Agreement” means the International CommercialOperations Agreement entered into prior to the Effective Time by and betweenAbbott and Hospira.

 

“InternationalTransition Period” means the period from the Effective Time to the FinalClosing Date (as defined in the International Commercial Operations Agreement).

 

“InternationalTransition Period Business” means the business and operations conductedduring the International Transition Period to the extent such business andoperations relate to, arise out of or result from the activities to beperformed by Abbott, any Abbott Subsidiary, Hospira or any Hospira Subsidiarypursuant to any Transition Marketing and Distribution Services Agreement or theInternational Commercial Operations Agreement.

 

“InventoryTrademark License Agreement” means the Inventory Trademark LicenseAgreement entered into prior to the Effective Time by and between Abbott andHospira.

 

“Leases”means the real property leases entered into prior to the Effective Time by andbetween Abbott and Hospira or their respective Subsidiaries and set forth on Schedule1.01(h).

 

11

----

 

“Liabilities”means all debts, liabilities, obligations, responsibilities, response actions,losses, damages (whether compensatory, punitive, consequential, treble orother), fines, penalties and sanctions, absolute or contingent, matured orunmatured, liquidated or unliquidated, foreseen or unforeseen, joint, severalor individual, asserted or unasserted, accrued or unaccrued, known or unknown,whenever arising, including those arising under or in connection with any law,statute, ordinance, regulation, rule or other pronouncements of GovernmentalAuthorities having the effect of law (including any Environmental Law),Proceeding, threatened Proceeding, order or consent decree of any GovernmentalAuthority or any award of any arbitration tribunal, and those arising under anycontract, guarantee, commitment or undertaking, whether sought to be imposed bya 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 expense of counsel, expert and consulting fees and costsrelated thereto or to the investigation or defense thereof.

 

“LocalClosings” means the local closings contemplated by the Transition Marketingand Distribution Services Agreements.

 

“Manufactureand Supply Agreements” means the Manufacture and Supply Agreements enteredinto prior to the Effective Time by and between Abbott and Hospira and setforth in Schedule 1.01(m).

 

“MixedAccounts” has the meaning set forth in Section 2.11(b).

 

“MixedContract” has the meaning set forth in Section 2.11(a).

 

“Month EndRate” means for any currency other than United States dollars, the officialaverage monthly rates used by Abbott for conversion of its monthly financialstatements, known as the average B.2.0 rate.  The month end B.2.0 rate isdetermined by taking the numbers from the 9:00 a.m. (Central Time) Reutersscreen at the second to last Abbott Park, Illinois business day of eachcalendar month (with the exception of November, when the rate is taken on thelast such business day).  For the Euro, British Pound, Australian Dollarand New Zealand Dollar, the bid rate is used. For all other currencies, the ask price is used.  An average monthly rate is determined bytaking the simple average of the prior month book rate and the current monthbook rate.  If the exchange rates available locally are not reflected onthe Reuters screen, Abbott may choose to approve a deviation allowing thecountry to report rates directly; provided such deviations are signedand in place in accordance with the B.2.0 policy.

 

“Notice”has the meaning set forth in Section 4.05(a).

 

“NYSE”means The New York Stock Exchange, Inc.

 

“Parties”means the parties to this Agreement.

 

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

 

“Prime Rate”means the rate which Citibank N.A. (or its successor or another major moneycenter commercial bank agreed to by the Parties) announces as its prime lendingrate, as in effect from time to time.

 

12

----

 

“PrincipalAncillary Agreements” means:  (i)the Employee Benefits Agreement; (ii) the Information Technology Agreement;(iii) the Intellectual Property Assignment Agreement; (iv) theIntellectual Property License Agreements; (v) the International CommercialOperations Agreement; (vi) the Inventory Trademark License Agreement; (vii) theLeases; (viii) the Manufacture and Supply Agreements; (ix) the Tax Sharing Agreement;(x) the Transition Marketing and Distribution Services Agreements; and (xi) theTransition Services Agreements.

 

“Proceeding”means:  (i) any past, present or futuresuit, countersuit, action, arbitration, mediation, alternative disputeresolution process, claim, counterclaim, demand, proceeding; (ii) anyinquiry or investigation by or before any Governmental Authority; or (iii) anyarbitration or mediation tribunal, in each case involving Abbott, any AbbottSubsidiary, any Abbott Indemnitee (but only if in a capacity entitling suchPerson to the rights of an Abbott Indemnitee), Hospira, any Hospira Subsidiary,or any Hospira Indemnitee (but only if in a capacity entitling such Person tothe rights of a Hospira Indemnitee).

 

“ProceedingLiabilities” means all Abbott Liabilities and Hospira Liabilities relatingto, arising out of or resulting from any Proceeding.

 

“RecordDate” means the close of business on the date to be determined by theAbbott board of directors as the record date for determining holders of AbbottCommon Shares entitled to participate in the Distribution.

 

“RecordHolders” means the holders of record of Abbott Common Shares as of theclose of business on the Record Date.

 

“RegistrationStatement” means the registration statement on Form 10 filed under theExchange Act on December 22, 2003, pursuant to which the Hospira Common Stockto be distributed in the Distribution has been registered, together with allamendments and supplements thereto.

 

“RightsPlan” means the Rights Agreement to be entered into between Hospira andEquiServe Trust Company, N.A., as rights agent, substantially in the form of ExhibitC.

 

“SecuritiesAct” means the Securities Act of 1933, as amended, together with the rulesand regulations promulgated thereunder.

 

“SecurityInterest” 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 otherencumbrance of any nature whatsoever.

 

“Separation”has the meaning set forth in the Recitals.

 

“Subsidiary”of any Party means another Business Entity that is directly or indirectlycontrolled by such Party.  As usedherein, “control” means the possession, directly or indirectly, of the power todirect or cause the direction of the management and policies of such BusinessEntity, whether through ownership of voting securities or other interests, bycontract or otherwise.  For the avoidanceof doubt, TAP Pharmaceutical Products Inc., TAP Finance Inc.

 

13

----

 

and TAP Pharmaceuticals Inc.are not Subsidiaries of Abbott as that term is used in this Agreement.

 

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

 

“TaxAuthority” means, with respect to any Tax, the governmental entity orpolitical subdivision thereof that imposes such Tax, and the agency (if any)charged with the collection of such Tax for such entity or subdivision.

 

“TaxSharing Agreement” means the Tax Sharing Agreement entered into prior tothe Effective Time by and between Abbott and Hospira.

 

“ThirdParty” means any Person other than Abbott, any Abbott Subsidiary, Hospiraand any Hospira Subsidiary.

 

“ThirdParty Claim” has the meaning set forth in Section 4.05(a).

 

“TransferredEntities” means the entities set forth on Schedule 1.01(j).

 

“TransitionMarketing and Distribution Services Agreements” means the TransitionMarketing and Distribution Services Agreements entered into prior to theEffective Time by and between Hospira or any Hospira Subsidiary and each AbbottMarketing Affiliate.

 

“TransitionServices Agreements” means the U.S. Transition Services Agreement and theEx-U.S. Transition Services Agreement entered into prior to the Effective Timeby and between Abbott and Hospira or their respective Subsidiaries.

 

“U.S.”or “United States” means the United States of America, including each ofthe 50 states thereof, the District of Columbia and Puerto Rico, but excludingall other territories and possessions.

 

14

----

 

ARTICLE IITHE SEPARATION

 

SECTION2.01.  Formation of Hospira.

 

(a)  Incorporation of Hospira.  The Parties acknowledge that: (i) Abbottcaused Hospira to be incorporated in Delaware on September 16, 2003 under thename ABC 2003 Newco, Inc.; (ii) as of December 12, 2003, ABC 2003 Newco, Inc.changed its name to Hospira, Inc.; and (iii) immediately prior to the EffectiveTime, Abbott will be the sole stockholder of Hospira.

 

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

 

(c)  Adoption of Hospira’s Rights Plan.  On or prior to the Distribution Date, Abbottand Hospira shall take all necessary actions so that, as of the Effective Time,the Rights Plan shall be adopted by Hospira.

 

(d)  Hospira’s Directors and Officers.  On or prior to the Distribution Date, Abbottand Hospira shall take all necessary actions so that as of the Effective Time:(i) the directors and executive officers of Hospira shall be those set forth inthe Information Statement mailed to the Record Holders prior to the EffectiveTime, unless otherwise agreed by the Parties; and (ii) Hospira shall havesuch other officers as Hospira shall desire.

 

(e)  NYSE Listing.  Hospira shall prepare and file, and shalluse commercially reasonable efforts to have approved prior to the EffectiveTime, an application for the listing on the NYSE of the Hospira Common Stock tobe distributed in the Distribution and shares of Hospira Common Stock to bereserved for issuance pursuant to any director or employee benefit plan orarrangement, subject to official notice of distribution.

 

SECTION2.02.  The Separation Transactions.  The Parties acknowledge that the Separationis intended to result in Hospira’s directly or indirectly operating the HospiraBusiness, owning the Hospira Assets and assuming the Hospira Liabilities as setforth below in this Article II.

 

(a)  Separation of Ex-U.S. ManufacturingOperations.  Abbott and Hospirashall, and shall cause each of their respective Subsidiaries to, take allnecessary actions to cause, effect and consummate the transactions set forth inSchedule 2.02(a) on the dates specified therein or on such other datesprior to the Effective Time as may be determined by Abbott in order to transferthe Hospira Ex-U.S. Manufacturing Facilities to the Hospira Subsidiaries.

 

(b)  Contribution of Certain ALI Assets andLiabilities to HWI.  On the AssetTransfer Date, Abbott shall cause ALI to contribute, assign, transfer, conveyand deliver to HWI, and Abbott shall cause HWI to accept from ALI, all of ALI’srights, title and interest in and to all Hospira Assets owned by ALI (otherthan Delayed Transfer Assets and outstanding shares of

 

15

----

 

capital stock of HWI), andAbbott shall cause HWI to accept, assume and agree faithfully to perform,discharge and fulfill all of the Hospira Liabilities (other than DelayedTransfer Liabilities) of ALI, in accordance with their respective terms.

 

(c)  Distribution of HWI Shares by ALI toAbbott.  On the Asset Transfer Dateand with effect as of immediately after the transactions described insubsection (b) above, Abbott shall cause ALI to distribute as a dividend toAbbott all of the outstanding shares of capital stock of HWI and all of themembership interests in Hospira Fleet Services, LLC.

 

(d)  AIL’s Conversion to an LLC andDistribution of Certain Assets and Liabilities.  Prior to the Asset Transfer Date, Abbott shall cause AIL toconvert to a limited liability company under section 266 of the DelawareGeneral Corporation Law.  On the AssetTransfer Date:

 

(i)  Abbott shall cause AIL todistribute all of the Hospira Assets owned by AIL, other than the DelayedTransfer Assets, to Abbott as AIL’s sole member; and

 

(ii)  Abbott shall accept andassume all of the Hospira Liabilities of AIL, other than the Delayed TransferLiabilities, in accordance with their respective terms.

 

(e)  Contribution of Hospira Assets andLiabilities.  On the Asset TransferDate, and with effect as of immediately after the transactions described insubsections (b), (c) and (d)(i) and (ii) above:

 

(i)  Abbott shall contribute,assign, transfer, convey and deliver to Hospira, and Hospira shall accept fromAbbott, all of Abbott’s rights, title and interest in and to all of the HospiraAssets, including all of the outstanding shares of capital stock or otherownership interests in HWI, Hospira Bahamas, Hospira Puerto Rico, LLC, HospiraSpA, Oximetrix, Inc., Sorenson Research Co., Inc. and Hospira Fleet Services,LLC, but excluding any Delayed Transfer Assets, which will result in Hospiraowning directly or indirectly all of the Transferred Entities;****and

 

(ii)  Hospira shall accept,assume and agree faithfully to perform, discharge and fulfill all of theHospira Liabilities (other than Delayed Transfer Liabilities) in accordancewith their respective terms.

 

SECTION2.03.  Delayed U.S./Ex-U.S.Manufacturing Assets and Liabilities.

 

(a)  Administration of the Assets andLiabilities.  Except as otherwiseprovided herein or in any Principal Ancillary Agreement, from and after theEffective Time, Abbott shall, and shall cause the Abbott Subsidiaries to, holdon behalf of and for the benefit of Hospira all Delayed U.S./Ex-U.S.Manufacturing Assets, and to pay, perform and discharge fully all DelayedU.S./Ex-U.S. Manufacturing Liabilities. Hospira and the Hospira Subsidiaries shall promptly reimburse Abbott orits designated Subsidiaries for all payments made in connection with theperformance and discharge of such Delayed U.S./Ex-U.S. ManufacturingLiabilities.  Each such DelayedU.S./Ex-U.S. Manufacturing Asset or Delayed U.S./Ex-U.S. ManufacturingLiability shall be held by Abbott or, where applicable, an Abbott Subsidiaryfor, insofar as reasonably practical, the benefit and detriment of Hospira or adesignated Hospira Subsidiary.

 

16

----

 

Abbott and Hospira shall, andshall cause their respective Subsidiaries to, take such other actions as may bereasonably requested by the other in accordance with the provisions of thisAgreement in order to place Abbott and Hospira, insofar as reasonablypractical, in the same position as if such Delayed U.S./Ex-U.S. ManufacturingAsset or Delayed U.S./Ex-U.S. Manufacturing Liability had been fullycontributed, assigned, transferred, conveyed, and delivered to, and acceptedand assumed by, Hospira as of the Effective Time so that all the benefits andburdens relating to such Delayed U.S./Ex-U.S. Manufacturing Asset and DelayedU.S./Ex-U.S. Manufacturing Liability, including risk of loss, potential forgain, and control of such Delayed U.S./Ex-U.S. Manufacturing Asset and DelayedU.S./Ex-U.S. Manufacturing Liability, shall inure from and after the EffectiveTime to Hospira or its designated Subsidiaries.

 

(b)  Transfer of the Assets and Liabilities.  When and as the necessary Consents for eachDelayed U.S./Ex-U.S. Manufacturing Asset or Delayed U.S./Ex-U.S. ManufacturingLiability are obtained:

 

(i)  Abbott shall, and shallcause each Abbott Subsidiary to, contribute, assign, transfer, convey anddeliver to Hospira or such Hospira Subsidiaries as Hospira may determine, andHospira shall, and shall cause such Hospira Subsidiaries to, accept from Abbottand the Abbott Subsidiaries all of Abbott’s and the Abbott Subsidiaries’respective rights, title and interest in and to such Delayed U.S./Ex-U.S.Manufacturing Asset; and

 

(ii)  Hospira shall, and shallcause such Hospira Subsidiaries as Hospira may determine to, accept, assume andagree faithfully to perform, discharge and fulfill such Delayed U.S./Ex-U.S.Manufacturing Liability, in accordance with its terms.

 

(c)  Hospira Proceeding Liabilities.  Hospira Proceeding Liabilities shall not betreated as Delayed U.S./Ex-U.S. Manufacturing Liabilities, notwithstanding thefact that a Consent might be required to substitute parties to any suchProceeding.

 

SECTION 2.04.  DelayedEx-U.S. Commercial Assets and Liabilities and Local Closings.  The Parties agree that the InternationalCommercial Operations Agreement and the Transition Marketing and DistributionServices Agreements shall govern certain matters between Abbott and the AbbottSubsidiaries, on the one hand, and Hospira and the Hospira Subsidiaries, on theother hand, regarding the Delayed Ex-U.S. Commercial Assets and Delayed Ex-U.S.Commercial Liabilities during the International Transition Period and the sale,transfer, conveyance, acceptance and assumption thereof at the Local Closingscontemplated by the Transition Marketing and Distribution Services Agreementsto and by Hospira, Hospira Subsidiaries or designees of Hospira.

 

SECTION2.05.  Ancillary Agreements.  Prior to the Effective Time, the Partiesshall execute and deliver, or where applicable shall cause their respectiveSubsidiaries to execute and deliver, each Ancillary Agreement to which they areintended to be a party; provided, however, that if this ArticleII calls for an Ancillary Agreement to be executed and delivered on or asof a later time, it shall be executed and delivered on or as of such latertime.

 

17

----

 

SECTION2.06.  Disclaimer of Representationsand Warranties.  EXCEPT AS SET FORTHIN SECTION 9.01(C), THE PARTIES UNDERSTAND AND AGREE THAT NEITHER PARTYNOR ANY PARTY TO ANY ANCILLARY AGREEMENT IS MAKING ANY REPRESENTATIONS ORWARRANTIES WHATSOEVER AS TO ANY HOSPIRA ASSETS OR HOSPIRA LIABILITIES OR THETRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY ANCILLARY AGREEMENT,INCLUDING ANY REPRESENTATIONS OR WARRANTIES AS TO:  (I) ANY CONSENTS REQUIRED IN CONNECTION THEREWITH; (II) THEVALUE OF OR FREEDOM FROM ANY SECURITY INTERESTS IN, OR ANY OTHER MATTERCONCERNING, ANY HOSPIRA ASSET; (III) THE ABSENCE OF ANY DEFENSES TO OR RIGHT OFSETOFF AGAINST OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM; (IV) THEMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY OF THE HOSPIRAASSETS; OR (V) THE LEGAL SUFFICIENCY OF ANY CONVEYANCE AND ASSUMPTIONINSTRUMENTS TO CONVEY TITLE TO ANY HOSPIRA ASSET OR THING OF VALUE UPON THEEXECUTION, DELIVERY AND FILING OF SUCH CONVEYANCE AND ASSUMPTIONINSTRUMENTS.  THE PARTIES FURTHERUNDERSTAND AND AGREE THAT ALL HOSPIRA ASSETS ARE BEING TRANSFERRED ON AN “ASIS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF AQUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE), AND HOSPIRA AND ITS SUBSIDIARIESSHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT: (A) ANY CONVEYANCE AND ASSUMPTIONINSTRUMENT MAY PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD ANDMARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST; AND (B) ANYNECESSARY CONSENTS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS,AGREEMENTS, SECURITY INTERESTS OR JUDGMENTS ARE NOT COMPLIED WITH.

 

SECTION2.07.  Financing Arrangements.  Prior to the Effective Time, Abbott andHospira shall enter into the Financing Agreements.  Abbott and Hospira agree to take all necessary actions to permitAbbott to borrow up to the full principal amount permitted by the FinancingAgreements prior to the Effective Time (without any obligation to pay suchamount to Hospira) and to assure the assignment to and the assumption byHospira of all obligations thereunder and the full release and discharge ofAbbott and each Abbott Subsidiary from all of Abbott’s and the AbbottSubsidiaries’ obligations thereunder as of immediately before the EffectiveTime in accordance with the terms of the Financing Agreements.  Prior to the Effective Time, Abbott andHospira shall participate in the preparation of all materials as may benecessary or advisable to secure funding pursuant to the Financing Agreements.

 

SECTION2.08.  Termination of Agreements.

 

(a)  Termination of Agreements between Abbottand Hospira.  Except as set forth insubsection (b) below, Hospira and each Hospira Subsidiary, on the one hand, andAbbott and each Abbott Subsidiary, on the other hand, hereby terminate andagree to cause to be terminated all agreements, arrangements, commitments orunderstandings, whether or not in writing, entered into prior to the EffectiveTime between or among Hospira or any Hospira Subsidiaries, on the one hand, andAbbott or any Abbott Subsidiaries, on the other hand, effective as ofimmediately prior to the Effective Time; provided that the provisions ofthis subsection (a) shall not terminate

 

18

----

 

any rights or obligationsbetween Abbott and any Abbott Subsidiary or between any Abbott Subsidiaries.

 

(b)  Exceptions.  The provisions of subsection (a) above shall not apply to any ofthe following agreements, arrangements, commitments or understandings (or toany of the provisions thereof):  (i)this Agreement and the Ancillary Agreements; (ii) any agreements, arrangements,commitments or understandings listed or described on Schedule 2.08(b);(iii) any agreements, arrangements, commitments or understandings to which anyThird Party is a party; and (iv) any agreements, arrangements, commitments orunderstandings to which any non-wholly owned Subsidiary of Abbott or Hospira,as the case may be, is a party (it being understood that directors’ qualifyingshares or similar interests shall be disregarded for purposes of determiningwhether a Subsidiary is wholly owned). To the extent that the rights and obligations of Abbott or any AbbottSubsidiaries under any agreements, arrangements, commitments or understandingsnot terminated under this Section 2.08 constitute Hospira Assets orHospira Liabilities, they shall be assigned or assumed pursuant to thisAgreement.

 

SECTION2.09.  Settlement of Accounts BetweenAbbott and Hospira.  Allintercompany receivables, payables and loans (other than intercompanyreceivables, payables and loans otherwise specifically provided for in thisAgreement or any Ancillary Agreement as described on Schedule 2.09),including in respect of any cash balances, any cash balances representingdeposited checks or drafts for which only a provisional credit has been allowedor any cash held in any centralized cash management system, between Abbott orany Abbott Subsidiary, on the one hand, and Hospira or any Hospira Subsidiary,on the other hand, and to which there are no Third Parties, shall, immediatelyprior to the Effective Time, be settled, capitalized, cancelled, assigned orassumed by Abbott or one or more Abbott Subsidiaries, in each case in themanner determined prior to the Effective Time by duly authorizedrepresentatives of Abbott and Hospira.

 

SECTION2.10.  Novation of HospiraLiabilities.  Each of Abbott andHospira, at the request of the other, shall use commercially reasonable effortsto: (a) obtain, or cause to be obtained, any Consent, substitution, oramendment required to novate or assign all Hospira Liabilities and obtain inwriting the unconditional release of Abbott and any Abbott Subsidiary that is aparty to any such arrangements, so that, in any such case, Hospira and itsdesignated Subsidiaries shall be solely responsible for such HospiraLiabilities; (b) unconditionally terminate and release any guarantees by Abbottor any Abbott Subsidiary of any Hospira Liabilities; and (c) unconditionallyterminate and release any guarantees by Hospira or any Hospira Subsidiary ofany Abbott Liabilities; provided, however, that neither Abbottnor Hospira (nor any of their respective Subsidiaries) shall be obligated topay any consideration, grant any concession or incur any additional Liabilityto any Third Party other than ordinary and customary fees to a GovernmentalAuthority from whom such Consents, substitutions, amendments, terminations orreleases are requested; and provided, further, that nothingherein shall require any attempt to substitute Hospira or any HospiraSubsidiary for Abbott or any Abbott Subsidiary as a party in any Proceeding.

 

19

----

 

SECTION 2.11.  Mixed Contracts; Mixed Accounts.

 

(a)  Mixed Contracts.  Unless the Parties agree otherwise, anyagreement to which Abbott or any of its Subsidiaries is a party prior to theEffective Time that inures to the benefit or burden of each of the Abbott Businessand the Hospira Business (a “Mixed Contract”) shall be assigned in partto Hospira or its Subsidiaries, if so assignable, prior to, on or after theEffective Time, so that each Party or their respective Subsidiaries shall beentitled to the rights and benefits and shall assume the related portion of anyobligations and Liabilities inuring to their respective businesses; provided,however, that in no event shall Abbott or any of its Subsidiaries berequired to assign any Mixed Contract in its entirety.  If any Mixed Contract cannot be so partiallyassigned, Abbott and Hospira shall, and shall cause each of their respectiveSubsidiaries to, take such other reasonable and permissible actions to cause:  (i) the Assets associated with thatportion of each Mixed Contract that relates to the Hospira Business to beenjoyed by Hospira or a Hospira Subsidiary; (ii) the Liabilities associatedwith that portion of each Mixed Contract that relates to the Hospira Businessto be borne by Hospira or a Hospira Subsidiary; (iii) the Assets associatedwith that portion of each Mixed Contract that relates to the Abbott Business tobe enjoyed by Abbott or an Abbott Subsidiary; and (iv) the Liabilitiesassociated with that portion of each Mixed Contract that relates to the AbbottBusiness to be borne by Abbott or an Abbott Subsidiary.

 

(b)  Mixed Accounts.  Except as may otherwise be agreed by theParties, the Parties shall not seek to assign any accounts receivable oraccounts payable relating to both the Abbott Business and the Hospira Business(“Mixed Accounts”).  Abbott andHospira shall, and shall cause each of their respective Subsidiaries to, takesuch other reasonable and permissible actions to cause:  (i) the Assets associated with that portionof each Mixed Account that relates to the Abbott Business to be enjoyed byAbbott or an Abbott Subsidiary; (ii) the Liabilities associated with thatportion of each Mixed Account that relates to the Abbott Business to be borneby Abbott or an Abbott Subsidiary; (iii) the Assets associated with thatportion of each Mixed Account that relates to the Hospira Business to beenjoyed by Hospira or a Hospira Subsidiary; and (iv) the Liabilities associatedwith that portion of each Mixed Account that relates to the Hospira Business tobe borne by Hospira or a Hospira Subsidiary.

 

(c)  No Payments.  Nothing in this Section shall requireAbbott, Hospira or any of their respective Subsidiaries to make any payment,incur any obligation or grant any concession to any Third Party, other than ordinaryand customary fees to Governmental Authorities, in order to effect anytransaction contemplated by this Section.

 

SECTION2.12.  Further Assurances.

 

(a)  Additional Actions.  Except as set forth in Section 3.04,in addition to the actions specifically provided for elsewhere in thisAgreement, each Party shall, and shall cause each of its respectiveSubsidiaries to, use commercially reasonable efforts, prior to, at and afterthe Effective Time to take, or cause to be taken, all actions, and to do, orcause to be done, all things, necessary or advisable under applicable laws,regulations and agreements to consummate the transactions contemplated by thisAgreement and the Ancillary Agreements; provided, however, thatneither Abbott nor Hospira (nor any of their respective Subsidiaries) shall beobligated under this Section to pay any consideration, grant any concession orincur any

 

20

----

 

additional Liability to anyThird Party other than ordinary and customary fees paid to a GovernmentalAuthority.

 

(b)  Cooperation.  Without limiting the foregoing, prior to, atand after the Effective Time, each Party shall, and shall cause each of itsSubsidiaries to, cooperate with the other Party without any further considerationto execute and deliver, or use commercially reasonable efforts to cause to beexecuted and delivered, all Conveyance and Assumption Instruments and to makeall filings with, and to obtain all Consents of, any Governmental Authority orany other Person under any permit, license, agreement, indenture or otherinstrument (including any Consents), and to take all such other actions as suchParty 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, inorder to effectuate the provisions and purposes of this Agreement and theAncillary Agreements and the transfers of the Hospira Assets and the assignmentand assumption of the Hospira Liabilities and the other transactionscontemplated hereby and thereby.

 

(c)  Misallocations.  In the event that at any time or from timeto time (whether prior to, at or after the Effective Time), one Party or any ofits Subsidiaries shall receive or otherwise possess any Asset that is allocatedto the other Party pursuant to this Agreement or any Ancillary Agreement, thefirst Party shall promptly transfer, or cause its Subsidiary to transfer, suchAsset to the Party so entitled thereto or such Party’s Subsidiary or designee.

 

SECTION2.13.  Clarification of Intent.  Notwithstanding anything in this Agreementto the contrary and for further clarity: (a) all Assets of Abbott, any AbbottSubsidiary, Hospira or any Hospira Subsidiary are intended to remain theproperty of Abbott or the Abbott Subsidiaries after the Effective Time untiltransferred, sold, consumed or otherwise disposed of by Abbott or the AbbottSubsidiaries, unless such Assets are Hospira Assets; and (b) to the extent thata Liability is a Hospira Liability it shall not be deemed to be an AbbottLiability.

 

SECTION2.14.  Transition Committee.  To facilitate an orderly separation andtransition of the Hospira Business from the Abbott Business, each Party shalldesignate, prior to the Effective Time, a key transition contact and such othercontacts in specific functional areas as the Parties may agree to beresponsible for communication and coordination between the Parties regardingthe matters contemplated by this Agreement and the Principal AncillaryAgreements.  The Parties shall causetheir respective key transition contacts to meet with their counterparts toestablish procedures for such cooperation within 35 days after the EffectiveTime.

 

SECTION2.15.  Accounting for Deferred Taxes.  No later than November 1, 2005, Abbott shalldetermine the difference, if any, between the Estimated Deferred Taxes and theActual Deferred Taxes (the “Adjustment”) and shall provide Hospira witha schedule that sets forth the Adjustment and how it was calculated.  Hospira shall notify Abbott of anydisagreement with the Adjustment within 20 days of receipt of the schedulesetting forth the Adjustment and its calculation.  Hospira and Abbott shall use commercially reasonable efforts toresolve any disagreement by December 15, 2005 and, if the Parties are unable toagree prior to such date, the Parties shall utilize the ADR procedures setforth in Section 7.01 to resolve such disagreement (suchAdjustment, as modified to reflect the disposition of any disagreement, the

 

21

----

 

“Final Adjustment”).  Abbott and Hospira shall, and shall causetheir respective Subsidiaries to, reflect the Final Adjustment to shareholders’equity on their respective books.

 

ARTICLE IIITHE DISTRIBUTION

 

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

 

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

 

(b)  Securities Law Matters.  Hospira shall file any amendments orsupplements to the Registration Statement as may be necessary or advisable inorder to cause the Registration Statement to become and remain effective asrequired by the Commission or federal, state or other applicable securitieslaws.  Abbott and Hospira shallcooperate in preparing, filing with the Commission and causing to becomeeffective registration statements or amendments thereof which are required toreflect the establishment of, or amendments to, any employee benefit and otherplans necessary or advisable in connection with the transactions contemplatedby this Agreement and the Ancillary Agreements.  Abbott and Hospira shall take all such action as may be necessaryor advisable under the securities or blue sky laws of the United States (andany comparable laws under any non-U.S. jurisdiction) in connection with theDistribution.

 

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

 

(d)  Satisfying Conditions to Distribution.  Abbott and Hospira shall cooperate and takeall actions necessary or advisable to cause the conditions to the Distributionset forth in this Article III to be satisfied and to effect theDistribution at the Effective Time.

 

SECTION3.02.  The Distribution.  Subject to the conditions contained herein,on or prior to the Distribution Date:

 

(a)  Delivery of Share Certificates.  Abbott shall deliver to the Agent the sharecertificates representing the Hospira Common Stock, endorsed by Abbott inblank, for the benefit of the Record Holders; and

 

(b)  Distribution of Shares and Cash.  Abbott shall instruct the Agent to distribute,as soon as practicable following the Distribution, to the Record Holders thefollowing:

 

(i)** **one-tenth of a share of Hospira Common Stock for each AbbottCommon Share outstanding as of the Record Date; and

 

22

----

 

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

 

SECTION3.03.  Fractional Shares; UnclaimedShares.

 

(a)  No Fractional Shares.  Notwithstanding anything herein to thecontrary, no fractional shares of Hospira Common Stock shall be issued inconnection with the Distribution, and any such fractional share interests towhich a Record Holder would otherwise be entitled shall not entitle such RecordHolder to vote or to any rights as a stockholder of Hospira.  In lieu of any such fractional shares, eachRecord Holder who, but for the provisions of this Section 3.03,would be entitled to receive a fractional share interest of Hospira CommonStock pursuant to the Distribution shall be paid cash, without any interestthereon, as hereinafter provided. Abbott shall instruct the Agent to determine the number of whole sharesand fractional shares of Hospira Common Stock allocable to each Record Holder,to aggregate all such fractional shares into whole shares, to sell the wholeshares obtained thereby in the open market at the then-prevailing prices onbehalf of each Record Holder who otherwise would be entitled to receivefractional share interests and to distribute to each such Record Holder his, heror its ratable share of the total proceeds of such sale, after makingappropriate deductions of the amounts required for U.S. federal income taxwithholding purposes and after deducting any applicable transfer Taxes and thecosts and expenses of such sale and distribution, including brokers fees andcommissions.

 

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

 

(c)  Unclaimed Stock or Cash.  Any Hospira Common Stock or cash in lieu offractional shares with respect to Hospira Common Stock that remain unclaimed byany Record Holder 180 days after the Distribution Date shall be delivered toHospira, Hospira shall hold such Hospira Common Stock for the account of suchRecord Holder and any such Record Holder shall look only to Hospira for suchHospira Common Stock and cash, if any, in lieu of fractional share interests,subject in each case to applicable escheat or other abandoned property laws.

 

SECTION3.04.  Sole Discretion of Abbott.  Until the Effective Time, Abbott shall havethe sole discretion to determine whether to proceed with the Distribution andany and all terms of the Distribution, including the form, structure and termsof any transaction(s) or offering(s) to effect the Distribution and the timingof and conditions to the consummation of the Distribution.  In addition, Abbott may, in its solediscretion, determine the Distribution Date and may, at any time and from timeto time until the Effective Time, modify or change the terms of theDistribution, including by accelerating or delaying the timing of the consummationof the Distribution.

 

23

----

 

SECTION3.05.  Conditions to the Separationand the Distribution.

 

(a)  The Conditions.  In addition to Abbott’s rights under Section3.04, the satisfaction or waiver by Abbott of the following shall beconditions to Abbott’s obligation to effect the Separation and theDistribution:

 

(i)  the Registration Statementshall have been declared effective by the Commission, and there shall be nostop-order in effect with respect thereto and no Proceeding for that purposeshall have been instituted by the Commission;

 

(ii)  Abbott shall have receivedthe proceeds of the borrowings under the Financing Agreements and shall besatisfied in its sole discretion that as of the Effective Time it will have nofurther liability or obligation whatsoever under the Financing Agreements;

 

(iii)  the actions and filingswith regard to state securities and blue sky laws of the United States (and anycomparable laws under any foreign jurisdictions) described in Section 3.01shall have been taken and, where applicable, shall have become effective orbeen accepted;

 

(iv)  the Hospira Common Stockto be distributed in the Distribution shall have been accepted for listing onthe NYSE, subject to official notice of distribution;

 

(v)  no order, injunction ordecree issued by any Governmental Authority or other legal restraint orprohibition preventing the consummation of the transactions contemplated bythis Agreement or any Ancillary Agreement shall have been threatened or ineffect;

 

(vi)  the private letter rulingfrom the Internal Revenue Service dated December 4, 2003 shall continue ineffect, to the effect that, among other things, the Distribution will qualifyas a tax-free distribution for U.S. federal income tax purposes under section355 of the Code and certain transactions related to the transfer to Hospira orcertain of its Subsidiaries of certain Hospira Assets and the assumption byHospira or certain of its Subsidiaries of certain of the Hospira Liabilities inconnection with the Separation will not result in the recognition of any gainor loss to Abbott, Hospira, certain Abbott Subsidiaries, certain HospiraSubsidiaries, Abbott’s shareholders or Hospira’s stockholders for U.S. federalincome tax purposes;

 

(vii)  any Consents necessary toconsummate the Distribution and the transactions contemplated by this Agreementto be consummated on or prior to the Effective Time shall have been obtainedand be in full force and effect;

 

(viii)  no events ordevelopments shall have occurred subsequent to the date hereof that Abbottbelieves, in its sole discretion, could result in an adverse effect on Abbottor on the shareholders of Abbott;

 

24

----

 

(ix)  the Parties shall haveperformed and complied with all of their respective covenants, obligations andagreements contained in this Agreement and required to be performed or compliedwith by them on or prior to the Effective Time;

 

(x)  the Parties shall have executedand delivered or, where applicable, shall have caused their respectiveSubsidiaries to execute and deliver, the Ancillary Agreements that arecontemplated by this Agreement to be executed and delivered on or prior to theEffective Time;

 

(xi)  Morgan Stanley & Co.,Incorporated, or another independent financial adviser acceptable to Abbott,shall have delivered its opinion to the board of directors of Abbott confirmingthe fairness from a financial point of view to the holders of Abbott Common Sharesof the Distribution, and such opinion shall be acceptable to Abbott in form andsubstance in Abbott’s sole discretion and such opinion shall not have beenwithdrawn or rescinded; and

 

(xii)  Houlihan Lokey Howard& Zukin Financial Advisors, Inc., or another independent appraisal firmacceptable to Abbott, shall have delivered one or more opinions to the board ofdirectors of Abbott confirming the solvency and financial viability of Abbottbefore the consummation of the Distribution and each of Abbott and Hospiraafter consummation of the Distribution, and such opinions shall be acceptableto Abbott in form and substance in Abbott’s sole discretion and such opinionsshall not have been withdrawn or rescinded.

 

(b)  Conditions for Benefit of Abbott.  The foregoing conditions are for the solebenefit of Abbott and shall not give rise to or create any duty on the part ofAbbott or Abbott’s board of directors to waive or not waive such conditions orin any way limit Abbott’s right to terminate this Agreement as set forth in ArticleVIII or alter the consequences of any such termination from those specifiedin such Article.  Any determination madeby Abbott prior to the Distribution concerning the satisfaction or waiver ofany or all of the conditions set forth in this Section shall beconclusive.  If Abbott waives anymaterial condition, it shall promptly issue a press release disclosing suchfact and file a report on Form 8-K with the Commission describing such waiver.

 

ARTICLE IVMUTUAL RELEASES; INDEMNIFICATION

 

SECTION4.01.  Releases.

 

(a)  Hospira Release of Abbott.  Except as provided in Section 4.01(c)and in the proviso to this subsection (a), effective as of the Effective Time,Hospira does hereby, for itself, each Hospira Subsidiary, and their respectivesuccessors and assigns, and, to the extent permitted by law, all Persons who atany time prior to the Effective Time have been directors, officers, agents oremployees of Hospira or any Hospira Subsidiary (in each case, in theirrespective 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

 

25

----

 

shareholders, directors, officers,agents, representatives, counsel or employees of Abbott or any AbbottSubsidiary (in each case, in their respective capacities as such), and theirrespective heirs, executors, administrators, successors and assigns; and (3)all Persons identified on Schedule 4.01, in each such case from:

 

(i)  all Hospira Liabilities;and

 

(ii)  all Liabilities existingor arising: (A) in connection with the implementation of the Separation and theDistribution; 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 theEffective Time), in each case relating to, arising out of or resulting from theHospira Business, the Hospira Assets or the Hospira Liabilities;

 

provided,however, that nothing in this subsection (a) shall relieve the Personsreleased in this subsection (a) from: (x) any Liability expressly allocated to Abbott or any Abbott Subsidiaryin this Agreement (including the indemnification obligations in Section 4.03and the contribution obligations in Section 4.07), any PrincipalAncillary Agreement or any other agreement, arrangement, commitment orunderstanding to the extent expressly preserved pursuant to Section 2.08(b);or (y) any Liability the release of which would result in the release of anyPerson other than the Persons released in this subsection (a), and, providedfurther, that nothing in this subsection (a) shall relieve any Personreleased in this subsection (a) who, after the Effective Time, is a director,officer or employee of Hospira or any of the Hospira Subsidiaries and is nolonger a director, officer or employee of Abbott or any of the AbbottSubsidiaries from Liabilities arising out of, relating to or resulting from hisor her service as a director, officer or employee of Hospira or any of theHospira Subsidiaries after the Effective Time.

 

(b)  Abbott Release of Hospira.  Except as provided in Section 4.01(c)and in the proviso to this subsection (b), effective as of the Effective Time,Abbott does hereby, for itself, each Abbott Subsidiary, and their respectivesuccessors and assigns, and, to the extent permitted by law, all Persons who atany time prior to the Effective Time have been directors, officers, agents oremployees of Abbott or any Abbott Subsidiary (in each case, in their respectivecapacities as such), remise, release and forever discharge Hospira, eachHospira Subsidiary and their respective successors and assigns from:

 

(i)  all Abbott Liabilities; and

 

(ii)  all Liabilities existingor arising in connection with the implementation of the Separation and theDistribution;

 

provided,however, that nothing in this subsection (b) shall release the Personsreleased in this subsection (b) from: (x) any Liability expressly allocated to Hospira or any HospiraSubsidiary in this Agreement (including the indemnification obligations in Section4.02 and the contribution obligations in Section 4.07), anyPrincipal Ancillary Agreement or any other agreement, arrangement, commitmentor understanding to the extent expressly preserved pursuant to Section 2.08(b);or (y) any Liability the release of which would result in the release of anyPerson other than the Persons released in this subsection (b).

 

26

----

 

(c)  Abbott Obligations Not Affected.  Nothing contained in this Article IVshall release Abbott or any Abbott Subsidiary from honoring their existingobligations:  (i) to indemnify anydirector, officer or employee of Hospira or any of its Subsidiaries who was adirector, officer or employee of Abbott or any Abbott Subsidiary on or prior tothe Effective Time, to the extent such director, officer or employee wasentitled to such indemnification pursuant to then existing obligations; or (ii)to provide any employment, post-employment or retirement benefits to anydirector, officer or employee of Hospira or any of its Subsidiaries who was adirector, officer or employee of Abbott or any Abbott Subsidiary on or prior tothe Effective Time, to the extent such director, officer or employee wasentitled to such benefits pursuant to then existing obligations, except asotherwise provided in the Employee Benefits Agreement.

 

(d)  No Hospira Claims.  Hospira shall not make, and shall not permitany Hospira Subsidiary to make, any claim or demand, or commence any Proceedingasserting any claim or demand, including any claim of contribution orindemnification, against Abbott or any Abbott Subsidiary or any other Personreleased pursuant to Section 4.01(a), with respect to any Liabilitiesreleased pursuant to Section 4.01(a).

 

(e)  No Abbott Claims.  Abbott shall not make, and shall not permitany Abbott Subsidiary to make, any claim or demand, or commence any Proceedingasserting any claim or demand, including any claim of contribution orindemnification, against Hospira or any Hospira Subsidiary or any other Personreleased pursuant to Section 4.01(b), with respect to any Liabilitiesreleased pursuant to Section 4.01(b).

 

(f)  Subsidiary Releases.  At any time, at the request of either Party,the other Party shall cause its Subsidiaries to execute and deliver releasesreflecting the provisions hereof.

 

SECTION4.02.  Indemnification By Hospira.  Except as otherwise specifically set forthin any provision of this Agreement or of any Principal Ancillary Agreement,Hospira shall, to the fullest extent permitted by law, indemnify, defend andhold harmless each of the Abbott Indemnitees from and against all HospiraIndemnity Obligations.

 

SECTION4.03.  Indemnification By Abbott.  Except as otherwise specifically set forthin any provision of this Agreement or of any Principal Ancillary Agreement,Abbott shall, to the fullest extent permitted by law, indemnify, defend andhold harmless each of the Hospira Indemnitees from and against all AbbottIndemnity Obligations; provided, however, that the indemnity inthis Section 4.03 for Abbott Liabilities shall not extend to aformer Abbott director, officer, employee or agent to the extent such Personwas grossly negligent or engaged in willful misconduct in connection with theAbbott Liabilities for which indemnification is sought.

 

SECTION4.04.  Indemnification ObligationsNet of Insurance Proceeds and Other Amounts.

 

(a)  Insurance Proceeds and Other Amounts.  The Parties intend that any Liabilitysubject to indemnification or contribution pursuant to this Agreement or anyAncillary Agreement:  (i) shall bereduced by any Insurance Proceeds or other amounts recovered (net of anyout-of-pocket costs or expenses incurred in the collection thereof) from anyPerson by or on

 

27

----

 

behalf of the Indemnitee inrespect of any indemnifiable Liability; (ii) shall not be increased to takeinto account any Tax costs incurred by the Indemnitee arising from anyIndemnity Payments received from the Indemnifying Party (as defined below); and(iii) shall not be reduced to take into account any Tax benefit receivedby the Indemnitee arising from the incurrence or payment of any IndemnityPayment.  Accordingly, the amount whichany Party against whom a claim is made for indemnification under this Agreement(an “Indemnifying Party”) is required to pay to any Indemnitee shall bereduced by any Insurance Proceeds or any other amounts theretofore 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 (an “IndemnityPayment”) required by this Agreement from an Indemnifying Party in respectof any Liability and subsequently receives Insurance Proceeds or any otheramounts in respect of the related Liability, then the Indemnitee shall pay tothe Indemnifying Party an amount equal to the excess of the Indemnity Paymentreceived over the amount of the Indemnity Payment that would have been due ifthe Insurance Proceeds or such other amounts (net of any out-of-pocket costs orexpenses incurred in the collection thereof) had been received, realized orrecovered before the Indemnity Payment was made.

 

(b)  Insurers and Other Third Parties NotRelieved.  An insurer or other ThirdParty that would otherwise be obligated to pay any amount shall not be relievedof the responsibility with respect thereto or have any subrogation rights withrespect thereto by virtue of any provision contained in this Agreement or anyAncillary Agreement; it being understood and agreed that no insurer or anyother Third Party shall be entitled to a “windfall” (e.g., a benefit they wouldnot be entitled to receive in the absence of the indemnification or releaseprovisions) by virtue of any provision contained in this Agreement or anyAncillary Agreement.  Each Party shall,and shall cause its Subsidiaries to, use commercially reasonable efforts tocollect or recover, or allow the Indemnifying Party to collect or recover, anyInsurance Proceeds that may be collectible or recoverable respecting theLiabilities for which indemnification may be available under this Article IV.  Notwithstanding the foregoing, anIndemnifying Party may not delay making any indemnification payment requiredunder the terms of this Agreement, or otherwise satisfying any indemnificationobligation, pending the outcome of any claim, suit, action, demand orproceeding to collect or recover Insurance Proceeds, and an Indemnitee need notattempt to collect any Insurance Proceeds prior to making a claim forindemnification under this Agreement.

 

SECTION4.05.  Procedures For Indemnificationof Third Party Claims.

 

(a)  Notice of Claims.  If, at or following the date of thisAgreement, an Indemnitee receives notice or otherwise learns of the assertionor commencement by a Third Party of any Proceeding against the Indemnitee withrespect to which the Indemnitee believes that Hospira (in the case of an AbbottIndemnitee) or Abbott (in the case of an Hospira Indemnitee) is obligated toprovide indemnification to such Indemnitee pursuant to this Agreement or anyAncillary Agreement (collectively, a “Third Party Claim”), suchIndemnitee shall give such Indemnifying Party written notice thereof (the “Notice”)within 20 days after becoming aware of such Third Party Claim.  The Notice must describe the Third PartyClaim in reasonable detail. Notwithstanding the foregoing, the failure of any Indemnitee to give theNotice as provided in this subsection (a) shall not relieve the relatedIndemnifying Party of its

 

28

----

 

obligations under this ArticleIV, except to the extent that such Indemnifying Party is actuallyprejudiced by such failure to give the Notice.

 

(b)  Control of Defense.  Abbott or an Abbott Subsidiary shall havethe right to conduct and control the defense of any Third Party Claim; provided,however, that:  (i) aHospira Indemnitee may conduct and control the defense of any Third Party Claimin which no Abbott Indemnitee is a named party and a Hospira Indemnitee is anamed party unless and until Hospira asserts that such Third Party Claim mayinvolve Abbott Indemnity Obligations; and (ii) in connection with any ThirdParty Claim with respect to which an Abbott Indemnitee is seekingindemnification under this Agreement, if within 20 days after receipt of theNotice Hospira irrevocably acknowledges and agrees in writing with Abbott andany Abbott Indemnitee that all Liabilities relating to, arising out of orresulting from the Third Party Claim are and shall remain solely HospiraLiabilities, then Hospira shall thereafter have the right to conduct andcontrol the defense of such Third Party Claim at Hospira’s sole cost andexpense.  If the Party otherwiseentitled to conduct and control the defense of any Third Party Claim hereundernevertheless fails to assume the defense of such Third Party Claim then theIndemnitee that is the subject of such Third Party Claim shall be entitled toconduct and control the defense of such Third Party Claim.  Notwithstanding anything to the contrary inthis Agreement, the defense of any Proceeding described on Schedule 1.01(n)or in Item 2 on Schedule 1.01(c) shall be conducted and controlled asset forth on such schedules.

 

(c)  Allocation of Defense Costs.  Except as otherwise provided herein(including Section 7.01) and regardless of which Party conducts andcontrols the defense of any Third Party Claim, the proportion of the costs andexpenses of the defense of any Third Party Claim equal to the proportion thatthe Hospira Proceeding Liabilities, if any, bears to the total ProceedingLiabilities with respect to such Third Party Claim shall be deemed toconstitute Hospira Liabilities, and the remainder, if any, of such costs andexpenses shall be deemed to constitute Abbott Liabilities; provided, however,unless the Parties agree otherwise, the Parties shall initially share equallythe costs and expenses of the defense of such Third Party Claim and adjust theburden of those costs and expenses pursuant to this subsection (c) immediatelyfollowing the disposition or settlement of the Third Party Claim and, providedfurther, that the costs and expenses of the Proceedings described on Schedule1.01(n) and in Item 2 on Schedule 1.01(c) shall be allocated as setforth on such schedules.

 

(d)  Right to Monitor and Participate.  An Indemnitee or Indemnifying Party that isnot entitled to conduct and control the defense of any Third Party Claimnevertheless shall have the right to employ separate counsel of its ownchoosing to monitor and participate in the defense of any Third Party Claim forwhich it is a potential Indemnitee or Indemnifying Party, but the fees andexpenses of such counsel shall be at the expense of such Indemnitee orIndemnifying Party, as the case may be, and shall not be subject to subsection(c) above; provided, however, that the Hospira Indemnitees shallhave no right to monitor and participate in the defense of any Proceedingsdescribed on Schedule 1.01(n), except to the extent provided on suchschedule.

 

(e)  No Settlement.  Neither Party may settle or compromise anyThird Party Claim for which either Party is seeking to be indemnified hereunderwithout the prior written consent of the other Party, which consent may not beunreasonably delayed or withheld;

 

29

----

 

provided,however, that the Proceedings described on Schedule 1.01(n)may be settled only as provided on such schedule.

 

(f)  Pending Third Party Claims.  The provisions of this Article IVshall apply to Third Party Claims that are already pending or asserted,including those set forth on Schedule 1.01(i), as well as ThirdParty Claims brought or asserted after the date of this Agreement.  There shall be no requirement to give aNotice with respect to pending Third Party Claims as such claims exist as ofthe Effective Time.

 

(g)  Allocation of Proceeding Liabilities.  The Parties acknowledge that ProceedingLiabilities (regardless of the parties to the applicable Proceeding) may bepartly Abbott Liabilities and partly Hospira Liabilities, except as otherwiseprovided for in Schedule 1.01(n) or in Item 2 on Schedule1.01(c).  If the Parties cannotagree on an allocation of any such Proceeding Liabilities, they shall resolvethe matter pursuant to the procedures set forth in Section 7.01.  Neither Party shall, nor shall either Partypermit its Subsidiaries to, file third party claims or cross-claims against theother Party or its Subsidiaries in a Proceeding in which a Third Party Claim isbeing resolved.

 

SECTION4.06.  Additional Matters.

 

(a)  Notice of Claims.  Any claim for indemnity under this Agreementor any Ancillary Agreement which does not result from a Third Party Claim mustbe asserted by written notice given by the Indemnitee to the applicableIndemnifying Party; provided, that the failure by an Indemnitee to soassert any such claim shall not prejudice the ability of the Indemnitee to doso at a later time except to the extent (if any) that the Indemnifying Party isprejudiced thereby.  Such IndemnifyingParty shall have a period of 30 days after the receipt of such notice withinwhich to respond thereto.  If suchIndemnifying Party does not respond within such 30-day period, suchIndemnifying Party shall be deemed to have refused to accept responsibility tomake payment.  If such IndemnifyingParty does not respond within such 30-day period or rejects such claim in wholeor in part, such Indemnitee shall be free to pursue such remedies as may beavailable to such Party as contemplated by this Agreement and the PrincipalAncillary Agreements, as applicable.

 

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

 

(c)  Pursuit of Claims Against Third Parties.  If: (i) a Party incurs any Liability arising out of any Principal AncillaryAgreement; (ii) an adequate legal or equitable remedy is not available for anyreason against the other Party to satisfy the Liability incurred by theincurring Party; and (iii) a legal or equitable remedy may be available to theother Party against a Third Party for such Liability, then the other Party willuse its commercially reasonable efforts to

 

30

----

 

cooperate with the incurringParty, at the incurring Party’s expense, to permit the incurring Party toobtain the benefits of such legal or equitable remedy against the Third Party.

 

(d)  Directors and Officers Insurance.  If, during the six-year period following theEffective Time, Abbott chooses to purchase directors and officers insurance (itbeing understood that the decision to do so and the terms and conditions ofsuch insurance shall be at Abbott’s sole discretion), Abbott will usecommercially reasonable efforts to cause that insurance to provide coverage toHospira directors, officers and employees who were formerly directors orofficers of Abbott or its Subsidiaries for their service as directors orofficers of Abbott or its Subsidiaries.

 

(e)  Currency Conversion.  In the event that any indemnificationpayment required to be made hereunder or under any Ancillary Agreement may bedenominated in a currency other than U.S. Dollars, the amount of such paymentshall be translated into U.S. Dollars using the foreign exchange rate for suchcurrency determined in accordance with the following rules:

 

(i)  with respect to anyindemnifiable Liability arising from the payment by a financial institutionunder a guarantee, comfort letter, letter of credit, foreign exchange contractor similar instrument, the foreign exchange rate for such currency shall be theMonth End Rate for the calendar month in which such financial institution isreimbursed; and

 

(ii)  with respect to anyindemnifiable Liability not covered by clause (i) above, the foreign exchangerate for such currency shall be the Month End Rate for the calendar month inwhich notice of the claim with respect to such indemnifiable Liability is givento the Indemnitee.

 

SECTION4.07.  Right of Contribution.

 

(a)  Contribution by Hospira.  If any right of indemnification contained inSection 4.02 is held unenforceable or is unavailable for anyreason, then Hospira, in lieu of indemnifying the Abbott Indemnitees, shallcontribute to the amounts paid or payable by the Abbott Indemnitees in suchproportion as is appropriate to reflect the relative fault of Hospira and theHospira Subsidiaries, on the one hand, and the Abbott Indemnitees entitled tocontribution, on the other hand.

 

(b)  Contribution by Abbott.  If any right of indemnification contained inSection 4.03 is held unenforceable or is unavailable for anyreason, then Abbott, in lieu of indemnifying the Hospira Indemnitees, shallcontribute to the amounts paid or payable by the Hospira Indemnitees in suchproportion as is appropriate to reflect the relative fault of Abbott and theAbbott Subsidiaries, on the one hand, and the Hospira Indemnitees entitled tocontribution, on the other hand.

 

(c)  Allocation of Relative Fault.  Solely for purposes of determining relativefault pursuant to this Section 4.07: (i) any fault associated with the business conducted with DelayedTransfer Assets or Delayed Transfer Liabilities (except for Abbott’s grossnegligence or intentional misconduct) or with the ownership, operation oractivities of the Hospira Business prior to the Effective Time (except withrespect to Abbott Other Liabilities) shall be deemed to be the fault of Hospiraand the Hospira Subsidiaries and no such fault shall be deemed to be the

 

31

----

 

fault of Abbott or the AbbottSubsidiaries; and (ii) any fault associated with the ownership, operation oractivities of the Abbott Business prior to the Effective Time shall be deemedto be the fault of Abbott and the Abbott Subsidiaries and no such fault shallbe deemed to be the fault of Hospira or the Hospira Subsidiaries.

 

(d)  Contribution Procedures.  The provisions of Sections 4.04through 4.11 shall govern any contribution claims.

 

SECTION4.08.  Covenant Not to Sue.  Each Party hereby covenants and agrees thatnone of it, any of its Subsidiaries or any Person claiming through it shallbring suit or otherwise assert any claim against any Indemnitee, or assert adefense against any claim asserted by any Indemnitee, before any court, arbitrator,neutral, mediator or administrative agency anywhere in the world, allegingthat:  (a) the assumption of any HospiraLiabilities pursuant to the Separation is void or unenforceable for any reason;or (b) the provisions of this Article IV are void or unenforceable forany reason.  The covenant in this Section4.08 shall run with title to the Hospira Assets and Hospira Liabilities,and shall bind any transferee, assignee or other Person to whom an interest inthe Hospira Assets or Hospira Liabilities may be transferred or assigned.

 

SECTION4.09.  Remedies Cumulative.  The remedies provided in this Article IVshall be cumulative and, subject to the provisions of Sections 4.05(g)and 7.01, shall not preclude assertion by any Indemnitee of any otherrights or the seeking of all other remedies against any Indemnifying Party.

 

SECTION4.10.  Inducement.  Hospira acknowledges and agrees thatAbbott’s willingness to cause, effect and consumate the Separation and theDistribution has been conditioned upon and induced by Hospira’s covenants andagreements in this Agreement and the Ancillary Agreements, including Hospira’sassumption of the Hospira Liabilities pursuant to the Separation and theprovisions of this Agreement and Hospira’s covenants and agreements containedin this Article IV.

 

SECTION4.11.  Post-Effective Time Conduct.  The Parties acknowledge that, after theEffective Time, each Party will be independent of the other Party, withresponsibility for its own actions and inactions and its own Liabilitiesrelating to, arising out of or resulting from the conduct of its businessfollowing the Effective Time, except as may otherwise be provided in anyPrincipal Ancillary Agreement, and each Party shall (except as otherwiseprovided in this Article IV, including Sections 4.02and 4.03) use commercially reasonable efforts to prevent suchLiabilities from being borne inappropriately by the other Party.

 

ARTICLE VCERTAIN OTHER MATTERS

 

SECTION5.01.  Insurance Matters.

 

(a)  No Liability.  Hospira does hereby, for itself and each ofits Subsidiaries, agree that none of Abbott, any Abbott Subsidiary or anyAbbott Indemnitee shall have any Liability whatsoever, and Hospira shall makeno claim or demand, or commence any Proceeding asserting any claim or demand, allegingsuch Liability, as a result of the policies, practices and

 

32

----

 

procedures regarding insurancematters of Abbott or any Abbott Subsidiary as in effect at any time prior tothe Effective Time, including as a result of the limits or scope of anyinsurance, the creditworthiness of any insurance carrier, the collectibility ofInsurance Proceeds, the terms and conditions of any policy, the handling ordisposition of any claims, the adequacy or timeliness of any notice to anyinsurance carrier with respect to any claim or potential claim or otherwise.

 

(b)  Termination of Insurance Contracts.  Notwithstanding anything to the contrary in Section2.11, Abbott shall be permitted to terminate, cancel, settle or commute anyinsurance contract which is a Mixed Contract.

 

SECTION5.02.  Certain Business Matters.  Except as expressly provided to the contraryin this Agreement or in any Principal Ancillary Agreement, nothing in thisAgreement or any Ancillary Agreement shall require either Party or any of theirrespective Subsidiaries to refrain from: (a) engaging in the same or similar activities or lines of businessas the other Party or any of its Subsidiaries; (b) doing business with anypotential or actual supplier or customer of the other Party or any of itsSubsidiaries; or (c) engaging in, or refraining from, any other activitieswhatsoever relating to any of the potential or actual suppliers or customers ofthe other Party or any of its Subsidiaries.

 

SECTION5.03.  Late Payments.  Except as provided in any AncillaryAgreement, any amount not paid when due pursuant to this Agreement or anyAncillary Agreement (and any amounts billed or otherwise invoiced or demandedand properly payable that are not paid within 30 days of the date of such bill,invoice or other demand) shall accrue interest at a rate per annum equal to thePrime Rate plus 2%.

 

ARTICLE VIEXCHANGE OF INFORMATION; CONFIDENTIALITY

 

SECTION6.01.  Agreement For Exchange ofInformation.

 

(a)  Exchange of Information.  Each of Abbott and Hospira, on behalf ofitself and its Subsidiaries, shall provide, or cause to be provided, to theother, at any time before or after the Effective Time, as soon as reasonablypracticable after written request therefor, any Information in its possessionor under its control to the extent that: (i) such Information relates to the Hospira Business, or any HospiraAsset or Hospira Liability, if Hospira is the requesting Party, or to theAbbott Business, or any Assets of Abbott (other than the Hospira Assets) orAbbott Liability, if Abbott is the requesting Party; or (ii) such Informationis required by the requesting Party to comply with any obligation imposed byany Governmental Authority; provided, however, that in the eventthat any Party determines that any such provision of Information could becommercially detrimental, violate any law or agreement, or waive anyattorney-client privilege, the Parties shall use commercially reasonableefforts to permit the compliance with such obligations in a manner that avoidsany such harm or consequence.  The Partyproviding Information pursuant to this subsection shall only be obligated toprovide such Information in the form, condition and format in which it thenexists and in no event shall such Party be required to perform any improvement,modification, conversion, updating or

 

33

----

 

reformatting of any suchInformation.  The Parties acknowledgethat the Tax Sharing Agreement shall exclusively govern the exchange ofInformation with respect to Taxes.

 

(b)  Compensation for Providing Information.  The Party requesting Information agrees toreimburse the other Party for the reasonable costs, if any, of creating,gathering, copying and transporting such Information. Except as may beotherwise specifically provided elsewhere in this Agreement or in any AncillaryAgreement, such costs shall be computed in accordance with the providingParty’s standard methodology and procedures.

 

SECTION 6.02.  Ownership of Information.  The provision of any Information pursuant toSection 6.01 shall not affect the ownership of such Information (whichshall be determined solely in accordance with the terms of this Agreement andthe Principal Ancillary Agreements), or constitute the grant of rights oflicense in any such Information.

 

SECTION6.03.  Record Retention.  To facilitate the possible exchange ofInformation pursuant to this Article VI and other provisions of thisAgreement after the Effective Time, the Parties agree to use commerciallyreasonable efforts to retain all Information in their respective possession orcontrol as of the Effective Time in accordance with the policies and proceduresset forth in Schedules 1.01(n) and 6.03 and such other policiesand retention schedules as may be reasonably adopted by the relevant Partyafter the Effective Time that are not inconsistent with Schedule 6.03.

 

SECTION6.04.  Limitations of Liability.  Neither Party shall have any Liability tothe other Party in the event that any Information exchanged or providedpursuant to this Agreement is found to be inaccurate in the absence of grossnegligence or willful misconduct by the Party providing such Information.  Neither Party shall have any Liability toany other Party if any Information is destroyed after commercially reasonableefforts by such Party to comply with the provisions of this Article VI.

 

SECTION6.05.  Other Agreements Providing ForExchange of Information.  The rightsand obligations granted under this Article VI are subject to anyspecific limitations, qualifications or additional provisions on the sharing,exchange, retention or confidential treatment of Information set forth in anyPrincipal Ancillary Agreement.

 

SECTION6.06.  Production of Witnesses;Records; Cooperation.

 

(a)  Availability of Witnesses and Information.  After the Effective Time, except as providedon Schedule 1.01(n) or in the case of a Proceeding by one Party or anyof its Subsidiaries against the other Party or any of its Subsidiaries, eachParty shall use commercially reasonable efforts to make available to the otherParty, upon written request, the former, current and future directors,officers, employees, and agents of such Party or its Subsidiaries as witnessesand any books, records or other documents within its control or which itotherwise has the ability to make available, to the extent that any such person(giving consideration to business and personal demands of such directors,officers, employees, and agents) or books, records or other documents mayreasonably be required in connection with any Proceeding in which therequesting Party may from time to time be involved that arises under thisAgreement or any Ancillary Agreement or otherwise arises out of or results directlyfrom actions, inactions, events,

 

34

----

 

omissions, conditions, facts orcircumstances occurring or existing prior to the Effective Time, regardless ofwhether such Proceeding is a matter with respect to which indemnification maybe sought hereunder.  The requestingParty shall bear all reasonable out of pocket costs and expenses in connectiontherewith.

 

(b)  Cooperation Generally.  Without limiting any provision of this Section6.06, the Parties shall cooperate and consult to the extent necessary oradvisable with respect to any Proceedings (other than a Proceeding by one Partyor any of its Subsidiaries against the other Party or any of its Subsidiaries)that arise under this Agreement or any Ancillary Agreement or otherwise ariseout of or result directly from actions, inactions, events, omissions,conditions, facts or circumstances occurring or existing prior to the EffectiveTime.

 

(c)  Infringement Claims.  Each Party acknowledges, on its own behalfand on behalf of its Subsidiaries, that it has no basis to believe that thebusiness or any act, product, technology, or service (including products,technology or services currently under development) of the other Partyinfringes, dilutes or misappropriates any intellectual property of a ThirdParty or constitutes unfair competition or trade practices under the laws ofany jurisdiction and each Party will use commercially reasonable efforts tocooperate with the other Party in connection with the defense of anyProceedings asserting that any such infringement, dilution, misappropriation orunfair competition or trade practices occurred prior to the Effective Time.

 

(d)  BusinessConflicts to be Disregarded.  Theobligation of the Parties to provide witnesses pursuant to this Section isintended to be interpreted in a manner so as to facilitate cooperation andshall include the obligation to provide as witnesses inventors and otheremployees without regard to whether the witness or the employer of the witness couldassert a possible business conflict (subject to the exception set forth in thefirst sentence of subsection (a) above).

 

SECTION6.07.  Confidentiality.

 

(a)  Confidentiality.  Subject to Section 6.08, Abbott, onbehalf of itself and each Abbott Subsidiary, and Hospira, on behalf of itselfand each Hospira Subsidiary, agrees to hold, and to cause its respectivedirectors, officers, employees, agents, accountants, counsel and other advisorsand representatives to hold, in strict confidence, with at least the samedegree of care that applies to Abbott’s confidential and proprietaryinformation pursuant to policies in effect as of the Effective Time, allInformation concerning the other (or its business) and the other’s Subsidiaries(or their respective businesses) that is either in its possession (includingInformation in its possession prior to the Effective Time) or furnished by theother or the other’s Subsidiaries or their respective directors, officers,employees, agents, accountants, counsel and other advisors and representativesat any time pursuant to this Agreement or any Ancillary Agreement, and shallnot use any such Information other than for such purposes as may be expresslypermitted hereunder or thereunder, except, in each case, to the extent thatsuch Information has been: (i) in the public domain through no fault of suchParty or its Subsidiaries or any of their respective directors, officers,employees, agents, accountants, counsel and other advisors and representatives;(ii) later lawfully acquired from other sources by such Party (or any of itsSubsidiaries) which sources are not themselves bound by a confidentialityobligation; or (iii)

 

35

----

 

independently generated withoutreference to any proprietary or confidential Information of the other Party.

 

(b)  No Release; Return or Destruction.  Each Party agrees not to release ordisclose, or permit to be released or disclosed, any Information addressed in Section6.07(a) to any other Person, except its directors, officers, employees,agents, accountants, counsel and other advisors and representatives who need toknow such Information, and except in compliance with Section 6.08 and Schedule1.01(n).  Without limiting theforegoing, when any Information furnished by the other Party after theEffective Time pursuant to this Agreement or any Ancillary Agreement is nolonger needed for the purposes contemplated by this Agreement or any AncillaryAgreement, each Party shall, at such Party’s option, promptly after receiving awritten request from the other Party either return to the other Party all suchInformation in a tangible form (including all copies thereof and all notes,extracts or summaries based thereon) or certify to the other Party that it has destroyedsuch Information (and such copies thereof and such notes, extracts or summariesbased thereon).

 

SECTION6.08.  Protective Arrangements.  In the event that either Party or any of itsSubsidiaries either determines on the advice of its counsel that it is requiredto disclose any Information pursuant to applicable law or the rules orregulations of any Governmental Authority or receives any demand under lawfulprocess or from any Governmental Authority to disclose or provide Informationof the other Party that is subject to the confidentiality provisions hereof,such Party shall notify the other Party prior to disclosing or providing suchInformation and shall cooperate at the expense of the requesting Party inseeking any reasonable protective arrangements requested by such otherParty.  Subject to the foregoing, theParty that received such request, or its Subsidiaries, may thereafter discloseor provide Information to the extent required by such law (as so advised bycounsel) or by lawful process or such Governmental Authority.

 

ARTICLE VIIDISPUTE RESOLUTION

 

SECTION7.01.  Disputes.

 

(a)  Alternative Dispute Resolution Procedures.  The Parties acknowledge that, from time totime after the Effective Time, a controversy, dispute or claim may arise relatingto either Party’s rights or obligations under this Agreement.  The Parties agree that any such controversy,dispute or claim (whether arising in contract, tort or otherwise) arising outof or relating in any way to this Agreement (including regarding whether anyAssets are Hospira Assets, any Liabilities are Hospira Liabilities or theinterpretation or validity of this Agreement) shall be resolved by theAlternative Dispute Resolution (“ADR”) provisions set forth in this Section7.01 and in Schedule 7.01, the result of which shall be bindingupon the Parties.

 

(i)  Notice.  Prior to initiating an ADR proceeding, aParty first must send written notice to the other Party in accordance with theprovisions of Section 9.05 describing the dispute and requestingattempted resolution by good faith negotiations.  Good faith

 

36

----

 

negotiationsshall be conducted in two stages, with the second stage being triggered only iffirst stage negotiations do not result in a resolution of the dispute.

 

(ii)  First StageNegotiations.  Following receipt ofthe written notice described in the preceding paragraph, the respective CEOs orPresidents of the Parties shall designate a group of no more than threeindividuals, exclusive of counsel, to participate in good faith negotiationsaimed at resolving the dispute.  Within21 days from receipt of the written notice, the respective groups shall meet inperson to conduct good faith negotiations. By mutual written consent, the Parties may extend the 21-day period forconducting first stage negotiations.  Ifthe Parties fail to meet within the 21-day period or the Parties fail toresolve the dispute during such period, and the period is not extended bymutual written agreement, the Parties shall engage in second stage negotiationsas described in the next paragraph.

 

(iii)  Second StageNegotiations.  Following theexpiration of the 21-day period described in the preceding paragraph, or anyextension thereof mutually agreed to in writing, if the Parties are unable toresolve the dispute, they shall engage in second stage negotiations between therespective CEOs or Presidents (or their designees) of the Parties.  If the dispute has not been resolved within14 days following the conclusion of first stage negotiations, either Party mayinitiate an ADR proceeding as provided in Schedule 7.01.  The Parties shall have the right to berepresented by counsel in such a proceeding.

 

(b)  Continuation of Services and Commitments.  Unless otherwise agreed in writing, theParties shall, and shall cause their respective Subsidiaries to, continue toprovide services and honor all other commitments under this Agreement and eachAncillary Agreement during the course of dispute resolution pursuant to theprovisions of this Article VII with respect to all matters subject tosuch dispute, controversy or claim.

 

ARTICLE VIIITERMINATION

 

SECTION8.01.  Termination.  This Agreement and all Ancillary Agreementsmay be terminated and the Distribution may be amended, modified or abandoned atany time prior to the Effective Time by and in the sole discretion of Abbottwithout the approval of Hospira.  In theevent of such termination, neither Party shall have any Liability of any kindto the other Party.  After the EffectiveTime, this Agreement may not be terminated except by an agreement in writingsigned by the Parties.

 

37

----

 

ARTICLE IXMISCELLANEOUS

 

SECTION9.01.  Counterparts; EntireAgreement; Corporate Power; Facsimile Signatures.

 

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

 

(b)  Entire Agreement.  This Agreement, the Ancillary Agreements andthe exhibits, schedules and annexes hereto and thereto contain the entireagreement 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 subjectmatter and there are no agreements or understandings between the Parties otherthan those set forth or referred to herein or therein.  Notwithstanding any other provisions in thisAgreement to the contrary, in the event and to the extent that there is aconflict between the provisions of this Agreement and the provisions of anyPrincipal Ancillary Agreement, the provisions of such Principal AncillaryAgreement shall control.

 

(c)  Corporate Power.  Abbott represents on behalf of itself and,to the extent applicable, each Abbott Subsidiary and Hospira represents onbehalf of itself and, to the extent applicable, each Hospira Subsidiary asfollows:

 

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

 

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

 

(d)  Facsimile Signatures.  Each Party acknowledges that it and theother Party may execute certain of the Ancillary Agreements by facsimile, stampor mechanical signature.  Each Partyexpressly adopts and confirms each such facsimile, stamp or mechanicalsignature made in its respective name as if it were a manual signature, agreesthat it shall not assert that any such signature is not adequate to bind suchParty to the same extent as if it were signed manually and agrees that at thereasonable request of the other Party at any time it shall as promptly asreasonably practicable cause each such Ancillary Agreement to be manuallyexecuted (any such execution to be as of the date of the initial date thereof).

 

SECTION9.02.  Governing Law.  This Agreement and, unless expressly providedtherein, each Ancillary Agreement, shall be governed by and construed andinterpreted in accordance with the laws of the State of Illinois irrespectiveof the choice of laws principles of the State of Illinois, as to all matters,including matters of validity, construction, effect, enforceability,performance and remedies.

 

38

----

 

SECTION9.03.  Assignability.  Except as set forth in any AncillaryAgreement, this Agreement and each Ancillary Agreement shall be binding uponand 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 party thereto may assign its rights or delegate itsobligations under this Agreement or any Ancillary Agreement without the expressprior written consent of the other Party hereto or the other partiesthereto.  Notwithstanding the foregoing,this Agreement and the Ancillary Agreements (except as may be otherwise providedin any such Ancillary Agreement) shall be assignable in whole in connectionwith a merger or consolidation or the sale of all or substantially all of theAssets of a Party so long as the resulting, surviving or transferee Personassumes all the obligations of the relevant party thereto by operation of lawor pursuant to an agreement in form and substance reasonably satisfactory tothe other Party.

 

SECTION9.04.  Third Party Beneficiaries.  Except for the indemnification rights underthis Agreement of any Abbott Indemnitee or Hospira Indemnitee in theirrespective capacities as such and for the releases under Section 4.01 ofany Person provided therein: (a) the provisions of this Agreement and eachAncillary Agreement are solely for the benefit of the Parties and theirrespective Subsidiaries, after giving effect to the Distribution, and are notintended to confer upon any Person except the Parties and their respectiveSubsidiaries, after giving effect to the Distribution, any rights or remedieshereunder; and (b) there are no other third party beneficiaries of thisAgreement or any Ancillary Agreement and neither this Agreement nor anyAncillary Agreement shall provide any other Third Party with any remedy, claim,liability, reimbursement, claim of action or other right in excess of thoseexisting without reference to this Agreement or any Ancillary Agreement.

 

SECTION9.05.  Notices.  All notices or other communications underthis Agreement or any Ancillary Agreement (except as otherwise provided therein)must be in writing and shall be deemed to be duly given: (a) when delivered inperson; (b) upon transmission via confirmed facsimile transmission, providedthat such transmission is followed by delivery of a physical copy thereof inperson, 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 suchcase addressed as follows:

 

If to Abbott,to:

 

AbbottLaboratories100 Abbott Park RoadBuilding AP6D, Dept. 364Abbott Park, Illinois  60064-6020Attn:  General CounselFacsimile:  (847) 938-6277

 

39

----

 

If to Hospirato:

 

Hospira, Inc.Legal Department  Dept. NLEG275 North Field Drive  P.O. Box 5045  Lake Forest, IL 60045-5045Attn:  General Counsel Facsimile:  (224) 212-3312

 

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

 

SECTION9.06.  Severability.  If any provision of this Agreement or anyAncillary Agreement or the application thereof to any Person or circumstance isdetermined by a court of competent jurisdiction to be invalid, void orunenforceable, the remaining provisions hereof or thereof, or the applicationof such provision to Persons or circumstances or in jurisdictions other thanthose as to which it has been held invalid or unenforceable, shall remain infull force and effect and shall in no way be affected, impaired or invalidatedthereby, so long as the economic or legal substance of the transactions contemplatedhereby or thereby, as the case may be, is not affected in any manner adverse toany Party.  Upon such determination, theParties shall negotiate in good faith in an effort to agree upon a suitable andequitable provision to effect the original intent of the Parties.

 

SECTION9.07.  Force Majeure.  Neither Party shall be deemed in default ofthis Agreement or any Ancillary Agreement to the extent that any delay orfailure in the performance of its obligations under this Agreement or anyAncillary Agreement results from any cause beyond its reasonable control andwithout its fault or negligence, such as acts of God, acts of GovernmentalAuthority, embargoes, epidemics, war, riots, insurrections, acts of terrorism,fires, explosions, earthquakes, floods, unusually severe weather conditions,labor problems or unavailability of parts, or, in the case of computer systems,any failure in electrical or air conditioning equipment.  In the event of any such excused delay, thetime for performance shall be extended for a period equal to the time lost byreason of the delay.

 

SECTION9.08.  Responsibility For Expenses.

 

(a)  Expenses Incurred on or Prior to theEffective Time.  Except as otherwiseexpressly set forth in this Agreement or any Principal Ancillary Agreement, allcosts and expenses incurred on or prior to the Effective Time in connectionwith the preparation, execution, delivery and implementation of this Agreementand any Ancillary Agreement, the Separation, the Registration Statement and theDistribution and the consummation of the transaction contemplated hereby andthereby shall be charged to and paid by Abbott.

 

(b)  Expenses Incurred or Accrued after theEffective Time.  Except as otherwiseexpressly set forth in this Agreement or any Principal Ancillary Agreement,each Party shall bear its own costs and expenses incurred or accrued after theEffective Time.

 

40

----

 

SECTION9.09.  Headings.  The article, section and paragraph headingscontained in this Agreement and in the Ancillary Agreements are for referencepurposes only and shall not affect in any way the meaning or interpretation ofthis Agreement or any Ancillary Agreement.

 

SECTION9.10.  Survival of Covenants.  Except as expressly set forth in anyPrincipal Ancillary Agreement, the covenants, releases, indemnities,representations and warranties contained in this Agreement and each AncillaryAgreement, and liability for the breach of any obligations contained herein ortherein, shall survive the Effective Time and shall remain in full force andeffect thereafter.

 

SECTION9.11.  Subsidiaries.  Abbott shall cause to be performed, andhereby guarantees the performance of, all actions, agreements and obligationsset forth herein to be performed by any Abbott Subsidiary and Hospira shallcause to be performed, and hereby guarantees the performance of, all actions,agreements and obligations set forth herein to be performed by any HospiraSubsidiary.

 

SECTION9.12.  Waivers of Default.  Waiver by either Party of any default by theother Party of any provision of this Agreement or any Ancillary Agreement shallnot be deemed a waiver by the waiving Party of any subsequent or other default,nor shall it prejudice the rights of the other Party.

 

SECTION 9.13.  Amendments.  No provisions of this Agreement or any Ancillary Agreement shallbe deemed amended, supplemented or modified unless such amendment, supplementor modification is in writing and signed by an authorized representative ofboth Parties.  No provisions of thisAgreement or any Ancillary Agreement shall be deemed waived unless such waiveris in writing and signed by the authorized representative of the Party againstwhom it is sought to be enforced.

 

SECTION9.14.  Interpretation.  Words in the singular shall be deemed toinclude the plural and vice versa and words of one gender shall be deemed toinclude the other genders as the context requires.  The terms “hereof,” “herein,” and “herewith” and words of similarimport shall, unless otherwise stated, be construed to refer to this Agreementas a whole (including all of the Schedules and Exhibits hereto and thereto) andnot to any particular provision of this Agreement.  Article, Section, Exhibit and Schedule references are to theArticles, Sections, Exhibits, and Schedules to this Agreement unless otherwisespecified.  Unless otherwise stated, allreferences to any agreement shall be deemed to include the exhibits, schedulesand 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 orunless otherwise specified.  The word“or” shall not be exclusive.  Unlessotherwise specified in a particular case, the word “days” refers to calendardays.  References herein to thisAgreement or any Ancillary Agreement shall be deemed to refer to this Agreementor such Ancillary Agreement as of the Effective Time and as it may be amendedthereafter, unless otherwise specified. References to the performance, discharge or fulfillment of any Liabilityin accordance with its terms shall have meaning only to the extent suchLiability has terms; if the Liability does not have terms, the reference shallmean performance, discharge or fulfillment of such Liability.

 

41

----

 

SECTION9.15.  Advisors.  Abbott may select any investment banker(s)and manager(s) in connection with the Distribution, as well as any financialprinter, information or exchange agent and outside counsel for Abbott, whichmay include Mayer, Brown, Rowe & Maw LLP, Baker & McKenzie andMcDermott, Will & Emery. Hospira acknowledges, for itself and each HospiraSubsidiary, that Mayer, Brown, Rowe & Maw LLP, Baker & McKenzie andMcDermott, Will & Emery have acted only in the capacity as counsel toAbbott, and not as counsel to Hospira or any Hospira Subsidiary, in connectionwith this Agreement and the Ancillary Agreements and the documents andtransactions contemplated herein or therein (other than in connection with theFinancing Agreements and any other arrangements providing financing to Hospira,with respect to which such firms may act as counsel to both Abbott andHospira).

 

SECTION9.16.  Mutual Drafting.  This Agreement and the Ancillary Agreementsshall be deemed to be the joint work product of the Parties and any rule ofconstruction that a document shall be interpreted or construed against adrafter of such document shall not be applicable.

 

* * * * *

 

42

----

 

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

 
|   | **ABBOTT LABORATORIES** |
|--------|-------------------------|
|   |
|   |
|   | By:                     |   |
|   |                    | Name: |
|   |                    | Title: |
|   |
|   |
|   | **HOSPIRA, INC.**       |
|   |
|   |
|   | By:                     |   |
|   |                    | Name: |
|   |                    | Title: |

 

43

----