Document:

Exhibit 10.2

 

TAX SHARING AGREEMENT

 

between

 

 

ABBOTT LABORATORIES

 

on behalf of itself

 

and the ABBOTT AFFILIATES

 

and

 

 

HOSPIRA, INC.

 

on behalf of itself

 

and the HOSPIRA AFFILIATES

 

 

TAX SHARING AGREEMENT

 

This Tax
Sharing Agreement (the “Agreement”) is entered into as of the
                  
day of
                  ,
2004, between Abbott Laboratories (“Abbott”), an Illinois corporation, and
Hospira, Inc. (“Hospira”), a Delaware corporation.

 

R E C I T A L S:

 

WHEREAS, the
board of directors of Abbott has determined that it is appropriate and
advisable to: (i) separate Abbott’s core hospital business from Abbott’s
remaining businesses (the “Separation”), which will include the transfer of the
assets (including interests in intangible assets and stock of subsidiaries)
used in connection with the core hospital business to Hospira (the
“Contribution”); and (ii) following the Separation, make a distribution, on a
pro rata basis, to holders of common shares, without par value, of Abbott
(together with the associated preferred stock purchase rights) of all of the
outstanding shares of common stock, par value $0.01 per share, of Hospira
(together with the associated preferred stock purchase rights), owned by Abbott
(the “Distribution”) (the date of such Distribution, the “Distribution Date”);
and

 

WHEREAS,
Abbott and Hospira intend that the Contribution and Distribution and certain
other transactions effected as part of the Separation qualify as Tax-free under
Sections 355, 361, and 368 of the Internal Revenue Code of 1986, as amended
(the “Code”);

 

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

 

WHEREAS,
Abbott and Hospira desire to allocate the responsibilities for various Taxes
and to provide for certain additional Tax matters;

 

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

 

Article I.                                               DEFINITIONS

 

Section 1.01                                Definitions.  Reference is made to Section 5.13 regarding
the interpretation of certain words and phrases used in this Agreement.  In addition, for the purpose of this
Agreement, the following terms shall have the meanings set forth below.

 

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

 

“Abbott Group” means Abbott and
all Affiliates of Abbott other than any member of the Hospira Group.

 

“Affiliate” means any entity
that is directly or indirectly under the Control of the entity in question.

 

1

 

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

 

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

 

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

 

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

 

“Closing Date” means, for any
country, the date the TMDS Agreement for that country terminates.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

“EBA” means the Employee
Benefits Agreement entered into by and between Abbott and Hospira as the same
may be amended.

 

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

 

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

 

“Governmental Authority” 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 New York
Stock Exchange, Inc. and any similar self-regulatory body under applicable
securities laws or regulations.

 

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

 

“Hospira Group” means Hospira
and all Affiliates of Hospira.

 

“ICO Agreement” means the
International Commercial Operations Agreement entered into by and between
Abbott and Hospira as the same may be amended.

 

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

 

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

 

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

 

“IRS” means the United States
Internal Revenue Service.

 

“Local Closing” means the
transactions that occur on the Closing Date.

 

“Parties” means the parties to
this Agreement.

 

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

 

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

 

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

 

“Prime Rate” means the rate
which Citibank N.A. (or its successors or another major money center commercial
bank agreed to by the parties) announces from time to time as its prime lending
rate, as in effect from time to time.

 

3

 

“Private Letter Ruling” means the
private letter ruling issued by the IRS on December 4, 2003, in connection with
the Contribution, Distribution, and related transactions, including the request
for such rulings together with all supplemental filings and exhibits thereto
submitted to the IRS on behalf of Abbott or its subsidiaries in connection
therewith.

 

“Puerto Rican Ruling” means the
ruling, if any, issued by the Treasury Department of Puerto Rico pursuant to
the ruling request  filed on behalf of
Abbott, Abbott Laboratories de Puerto Rico, Inc., Hospira, and Hospira Puerto
Rico LLC on March 19, 2004 with respect to the Puerto Rican Transaction,
together with all supplemental filings and exhibits thereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

“Tax Return” means any report
of Tax due, any claims for refund of Tax paid, any information return with
respect to Tax, any election made with respect to Tax, or any other similar
report, statement, declaration, or document required to be filed under the Code
or other law with respect to Tax, including any attachments, exhibits, or other
materials submitted with any of the foregoing, and including any amendments or
supplements to any of the foregoing for any taxpayer or consolidated, combined,
or unitary group of taxpayers.

 

“TMDS Agreement” means any of
the Transition Marketing and Distribution Services Agreements by and between
Hospira and an Abbott Affiliate as the same may be amended.

 

“Third Party” means any Person
other than Abbott, any Abbott Affiliate, Hospira and any Hospira Affiliate.

 

“Transition Period Tax” has the
meaning ascribed to such term in Section 3.02.

 

“U.S. Transferred Employee” has
the meaning set forth in the Employee Benefits Agreement by and between Abbott
and Hospira.

 

Article II.                                           RESPONSIBILITY
FOR TAX

 

Section 2.01                                Responsibility
for Tax.

 

(a)               Except as specifically provided in any
of the agreements contemplated by the Distribution Agreement, including the EBA
with respect to Employment Taxes, Abbott shall be responsible for, and shall
indemnify and hold harmless the Hospira Group from any liability for (i) any
Tax imposed by any Tax Authority on Abbott or an Abbott

 

5

 

Affiliate, including Hospira and all Hospira Affiliates, for any
Pre-Distribution Period, except any Covered Transaction Tax for which Hospira
is responsible under Section 3.01(b); and (ii) any Tax imposed by any Tax
Authority on any member of the Abbott Group for any Post-Distribution Period,
except any Transition Period Tax for which Hospira is responsible under Section
3.02.

 

(b)              Except as specifically provided in any of
the agreements contemplated by the Distribution Agreement, including the EBA
with respect to Employment Taxes, Hospira shall be responsible for, and shall
indemnify and hold harmless the Abbott Group from any liability for (i) any Tax
imposed by any Tax Authority on Hospira or a Hospira Affiliate for any
Post-Distribution Period; (ii) any Covered Transaction Tax for which Hospira is
responsible under Section 3.01(b); and (iii) any Transition Period Tax for
which Hospira is responsible under Section 3.02.

 

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

 

Section 2.02                                Refunds,
Tax Benefits, and Other Allocations

 

(a)               Refunds and Carrybacks.

 

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

 

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

 

(iii)       Payment of Refunds.  Except as provided in Section 2.02(a)(iv), Hospira shall forward
to Abbott, or reimburse Abbott for, any refunds due Abbott (pursuant to the
terms of this Section 2.02(a)) after receipt thereof (less any Tax Detriment
attributable to such refunds), and Abbott shall forward to Hospira, or
reimburse Hospira for, any refunds due Hospira (pursuant to the terms of this
Section 2.02(a)) after receipt thereof (less any Tax Detriment attributable to
such refunds).  In the case of a refund
received in the form of a credit against other or future Tax liabilities,
reimbursement with respect to such refund shall be due in each case on the due
date for payment of the Tax against which such refund has been credited.  Any payment required to be made pursuant to
this Section 2.02(a)(iii) shall be made within thirty (30) days of the receipt
of the refund.  If Abbott reasonably so
requests, Hospira, at Abbott’s expense, shall file for and pursue any refund to
which Abbott is entitled under this Section 2.02(a).  If Hospira reasonably so

 

6

 

requests, Abbott, at Hospira’s expense, shall file for and pursue any
refund to which Hospira is entitled under this Section 2.02(a).  The Party making a payment pursuant to this
Section 2.02(a)(iii) must deliver with the payment a statement describing  in reasonable detail the basis for the
calculation of the amount being paid.

 

(iv)      Carrybacks.

 

1)              The
Hospira Group shall be entitled to any refund of Abbott’s Tax for a
Pre-Distribution Period resulting from carrying back any item of loss,
deduction or credit that arises in any Post-Distribution Period of Hospira only
to the extent that (A) Abbott has no item of loss, deduction, or credit that
can be carried back to such taxable period and (B) such carryback does not have
a material adverse impact on Abbott, as reasonably determined by Abbott.  If Abbott 
receives any such refund, it shall pay the portion thereof to which
Hospira is entitled within thirty (30) days of receipt of such refund if
Hospira’s portion is $100 million or less. 
If Hospira’s portion is more than $100 million, then Abbott shall pay
the initial $100 million within thirty (30) days of receipt of such refund, and
any amounts in excess of $100 million shall be paid within thirty (30) days of
the later of (C) a Determination with respect to Abbott’s Tax for such
Pre-Distribution Period or (D) a Determination with respect to Hospira’s Tax
for the Post-Distribution Period that gave rise to the refund received by
Abbott; provided, however, that
if Hospira provides Abbott with a letter of credit in a form reasonably
acceptable to Abbott and issued by a major money center commercial bank
reasonably acceptable to Abbott not expiring before the later of clause (C) or
(D) of this Section 2.02(a)(iv)(1), then Abbott shall pay to Hospira that
portion of the refund covered by the letter of credit no later than thirty (30)
days after receipt of the refund or of the letter of credit, whichever is
later.

 

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

 

7

 

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

 

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

 

(b)              Effect of Audit Adjustments.

 

Notwithstanding Section 2.01 —

 

(i)             Payments by Hospira to Abbott.  Except as provided in Sections 3.01(b)
and  3.02, if as a result of a
Determination, any adjustment shall be made to any Tax Return relating, in
whole or in part, to Tax for which any member of the Abbott Group is responsible,
and if such adjustment results in both (x) a Tax Detriment to any member of the
Abbott Group for any taxable period and (y) a Tax Benefit to any member of the
Hospira Group for any Post-Distribution Period, then Hospira shall pay to
Abbott an amount equal to the lesser of the Tax Benefit for each taxable period
and the Corresponding Portion of the Tax Detriment.

 

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

 

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

 

8

 

(c)               Other Allocations

 

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

 

(ii)          Allocation of Earnings and Profits.  The allocation of earnings and profits
between Abbott and Hospira shall be reasonably determined by Abbott pursuant to
Section 312(h) of the Code and the Treasury Regulations thereunder.  A preliminary allocation of earnings and
profits through December 31, 2002, shall be provided no later than forty-five
(45) days after Abbott receives the allocation from the public accounting firm
that prepares such allocation, but no later than September 30, 2004.  The allocation of earnings and profits from
January 1, 2003, through the Distribution Date shall be provided no later than
December 31, 2005.

 

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

 

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

 

Section 2.03                                Option
Deductions.

 

(a)               Except as provided in Section 2.03(b),
upon the exercise of any option to purchase Abbott stock, Abbott shall claim
any Tax deduction attributable to such exercise on its Tax Returns and Hospira
shall not claim such deduction on its Tax Returns.  On the exercise of any option to purchase Hospira stock, Hospira
shall claim any Tax deduction attributable to such exercise on its Tax Returns
and Abbott shall not claim such deduction on its Tax Returns.

 

(b)              Abbott and Hospira agree to file all Tax
Returns on the basis that (i) any Abbott restricted stock and (ii) any option
to purchase Abbott stock held by an employee of Hospira was granted to such
individual by Abbott in connection with the performance of services for
Abbott.  To the extent any Tax deduction
claimed by Abbott attributable to the exercise of such options is disallowed to
Abbott, and a Tax Authority makes a Determination that Hospira is entitled to
such deduction, Abbott shall notify Hospira of the receipt of such
Determination, promptly after receipt thereof, and Hospira shall pay to Abbott
the lesser of the amount of Hospira’s Tax Benefit and the amount of Abbott’s
corresponding Tax Detriment in accordance with Section 2.02(b).  To the extent any Tax deduction claimed by
Hospira attributable to the exercise of an option to purchase Hospira stock is

 

9

 

disallowed to Hospira, and a Tax Authority makes a Determination that
Abbott is entitled to such deduction, Hospira shall notify Abbott of the
receipt of such Determination, promptly after receipt thereof, and Abbott shall
pay to Hospira the lesser of the amount of Abbott’s Tax Benefit and the amount
of Hospira’s corresponding Tax Detriment in accordance with Section
2.02(b).  The provisions of this Section
2.03 shall apply mutatis mutandis
to restricted shares, disqualifying dispositions to which Section 421(c) of the
Code applies, and other equity based compensation.

 

Section 2.04                                Tax
Returns.

 

(a)               Abbott shall prepare and timely file all
Tax Returns for Pre-Distribution Periods for Abbott and all of its Affiliates,
including Hospira and all of its Affiliates, and all Tax Returns for Straddle
Periods for all members of the Abbott Group. 
In connection with each federal, state, local, and foreign Tax Return
that is required under this Agreement to be filed by Abbott for taxable periods
ending in 2004, Hospira shall provide Abbott, no later than November 30, 2004,
with a Tax Package for the purpose of preparing such Tax Return.  Hospira shall provide a supplemental Tax
Package with respect to each such Tax Return, if necessary, no later than
January 31, 2005, and Hospira shall timely furnish to Abbott additional Tax
information and documents as Abbott may reasonably request.  With respect to any information required to
be provided by Hospira pursuant to this Section 2.04(a), (i) Abbott shall
utilize such information in the preparation of the appropriate Tax Returns as
provided by Hospira, except to the extent (a) Hospira provides its prior
written consent to change any such information, or (b) Abbott determines in
good faith that such information is inaccurate or incomplete in a material
respect, and (ii) Hospira agrees to indemnify and hold harmless Abbott and its
Affiliates from and against any cost, fine, penalty, or other expense of any
kind attributable to the misconduct or negligence of Hospira or any of its
Affiliates in supplying Abbott with inaccurate or incomplete information.  An appropriate officer of Hospira shall
provide a certification that, to such officer’s best knowledge and belief, any
and all information provided pursuant to this Section 2.04(a) is accurate and
complete.  If Hospira fails to provide
any information required by this Section 2.04(a) within the time period
specified, Abbott may file the applicable Tax Returns based on the information
available at the time such Tax Returns are due and Hospira shall indemnify and
hold harmless Abbott and its Affiliates from Taxes or other costs imposed on
Abbott or any of its Affiliates but only to the extent resulting from Hospira’s
failure to provide such information in a timely manner.  In addition, Hospira shall provide Abbott
with all documents and information, and make available employees and officers
of Hospira and Hospira Affiliates as Abbott reasonably requests to prepare and
file any Tax Return for any Pre-Distribution Period (including any claims for
refunds described in Section 2.02(a)) or to conduct any Tax Contest with
respect to any such Tax Return.

 

(b)              Hospira shall prepare and timely file all
Tax Returns for Straddle Periods for all members of the Hospira Group.  If Abbott is responsible under Section
2.01(a) for a portion of any Tax reported on a Straddle Period Tax Return for
any member of the Hospira Group, Hospira shall provide Abbott with a copy of
such Tax Return at least thirty (30) days prior to its due date.  Abbott shall notify Hospira of any
disagreement within 20 days of Abbott’s receipt of such Tax Return.  Any dispute shall be resolved pursuant to
the

 

10

 

procedures provided by this Agreement.

 

(c)               Hospira shall not file (or allow any
member of the Hospira Group to file) any amended Tax Return for any
Pre-Distribution Period.

 

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

 

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

 

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

 

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

 

Section 2.06                                Tax
Contests.

 

(a)               Notice. 
Each Party shall provide prompt notice to the other Party of any pending
or threatened Tax audit, assessment, or proceeding, or other Tax Contest, of
which it becomes aware, related to Tax for which it is indemnified by the other
Party hereunder.  Such notice shall
contain factual information (to the extent known) describing any

 

11

 

asserted Tax liability in reasonable detail and shall be accompanied by
copies of any notice and other documents received from any Tax Authority with
respect to any such matters.  If an
Indemnified Party has knowledge of an asserted Tax liability with respect to a
matter for which it is to be indemnified hereunder and such Party fails to give
the Indemnifying Party prompt notice of such asserted Tax liability, then (i)
if the Indemnifying Party is precluded from contesting the asserted Tax
liability in any forum as a result of the failure to give prompt notice, the
Indemnifying Party shall have no obligation to indemnify the Indemnified Party
for any Tax resulting from such assertion of Tax liability, and (ii) if the
Indemnifying Party is not precluded from contesting the asserted Tax liability
in any forum, but such failure to give prompt notice results in a monetary
detriment to the Indemnifying Party, then any amount that the Indemnifying
Party is otherwise required to pay the Indemnified Party pursuant to this
Agreement shall be reduced by the amount of such detriment.

 

(b)              Control of Tax Contests.

 

(i)             Hospira. 
Hospira shall have full responsibility and discretion in conducting,
including settling, any Tax Contest involving a Tax for which it is responsible
under Section 2.01(b), except for any Tax Contest involving any Covered
Transaction Tax for which Hospira is responsible under Section 3.01(b) and any
Transition Period Tax for which Hospira is responsible under Section 3.02.

 

(ii)          Abbott. 
Abbott shall have full responsibility and discretion in conducting,
including settling, any Tax Contest involving (x) any Tax for which it is
responsible under Section 2.01(a), (y) any Covered Transaction Tax for which
Hospira is responsible under Section 3.01(b), except as provided in paragraph
(iii), below and (z) any Transition Period Tax for which Hospira is responsible
under Section 3.02.  Abbott shall
consult in good faith with Hospira in connection with any Tax Contest described
in clauses (y) or (z) of this Section 2.06(b)(ii).

 

(iii)       Covered Transaction Taxes.  Hospira shall have the right to participate
in the conduct of a Tax Contest related to any Covered Transaction Tax as a
result of the application of Section 355(e) of the Code if, and only if, (x)
Hospira has acknowledged in writing its liability for such Covered Transaction
Tax, (y) Hospira shall have provided Abbott with a letter of credit in a form
reasonably acceptable to Abbott and issued by a major money center commercial
bank reasonably acceptable to Abbott, not expiring before a Determination has
occurred with respect to Abbott’s Tax for the Post-Distribution Period that
gave rise to the Covered Transaction Tax at issue, and in an amount equal to
the maximum amount of Covered Transaction Tax at issue in the Tax Contest and
(z) no Tax Return of any member of the Abbott Group with respect to which any
member of the Abbott Group may reasonably be viewed as having an actual or
potential liability for any Tax not indemnified against by Hospira is held open
as a result of such Tax Contest.  Abbott
shall not settle any Tax Contest described in this paragraph (iii) without the
consent of Hospira, which consent shall not be unreasonably withheld.

 

12

 

Article III.                                       TRANSACTIONS
TAX

 

Section 3.01                                Transactions
Tax.

 

(a)               General.  Except as otherwise provided in Section 3.01(b), Abbott shall be
responsible for, and shall indemnify and hold harmless the Hospira Group from
any and all (i) liabilities sustained by Abbott or Hospira as a result of the
Distribution failing to qualify as Tax-free to the Abbott shareholders pursuant
to Section 355(a) of the Code, and (ii) federal, state, local, and foreign Tax
imposed by any Tax Authority on Abbott or any Abbott Affiliate as a result of
(w) the failure of any of the transactions described in the Private Letter
Ruling to be treated as provided in such ruling; (x) the failure of the
distribution of the stock of Hospira Ltd., a Bahamas corporation, (the
“Bahamian Distribution”) to qualify for Tax-free treatment under Sections 355
and 361 of the Code; (y) the failure of any of the transactions described in
the Puerto Rican Ruling (the “Puerto Rican Transaction”) to be treated as
provided in such ruling; and (z) the inclusion, or taking into account, of any
income or gain by Abbott or its Affiliates (including any member of the Hospira
Group) under Treasury Regulations Section 1.1502-13 or 1.1502-19 (or any
corresponding provisions of other applicable Tax laws) as a result of the Distribution
(collectively “Covered Transaction Tax”).

 

(b)              Inconsistent Acts and Events.  Hospira shall be responsible for, and shall
indemnify and hold harmless the Abbott Group from and against any liability
for, any Covered Transaction Tax (including without limitation reasonable
attorney fees and other costs incurred in connection therewith) resulting from
(i) any breach by any member of the Hospira Group of any of the representations
or covenants under Article IV hereof, (ii) any Specified  Action performed by any member of the
Hospira Group (whether or not Section 4.02(e) is complied with), and (iii) any
Section 355(e) Event with respect to Hospira (whether or not such Section
355(e) Event is caused by a Specified 
Action).  A Section 355(e) Event
with respect to Hospira means any event, involving the stock of Hospira or a
Hospira Affiliate or assets of any member of the Hospira Group, that causes the
Distribution, the distribution described in the Private Letter Ruling by Abbott
Laboratories, Inc. of the stock of Hospira Worldwide, Inc. (the “Internal
Distribution”), or the Bahamian Distribution to be a taxable event to any
member of the Abbott Group as the result of the application of Section 355(e)
of the Code.

 

Section 3.02                                Transition
Period Tax.  Notwithstanding Section
2.02(b)(i), if, as a result of a Determination, any member of the Abbott Group
incurs a Tax Detriment for a Post-Distribution Period with respect to any
transaction undertaken pursuant to any of the TMDS Agreements or the ICO
Agreement, other than a transaction to effect a Local Closing, Hospira shall be
responsible for, and shall indemnify and hold harmless the Abbott Group from
and against any liability for, an amount equal to 50 percent of the sum of such
Tax Detriment, reasonable attorney fees, and other costs incurred with respect
thereto (the “Transition Period Tax”) whether or not any Tax Benefit results to
any member of the Hospira Group; provided, however, if, at any time there
is: (i) a merger or consolidation of Hospira; (ii) the sale of all or
substantially all of the assets of Hospira; or (iii) the acquisition by a Third
Party of at least 30 percent of the combined voting power of the
then-outstanding securities of Hospira entitled to vote generally in the

 

13

 

election of directors, Hospira
shall indemnify Abbott for 100 percent of any Transition Period Tax with
respect to which a Determination occurs after the occurrence of the event
described in clauses (i) through (iii) above, unless (a) the resulting,
surviving, or transferee Person described above in clauses (i) through (iii)
above assumes all the obligations of Hospira hereunder by operation of law or
pursuant to an agreement and (b) Abbott consents to such assumption, (which
consent shall not be withheld unreasonably). 
It shall not be deemed to be unreasonable for Abbott to withhold consent
on the basis that the Person proposing to make such assumption is a competitor
of Abbott.

 

Article IV.                                      REPRESENTATIONS
AND COVENANTS

 

Section 4.01                                Representations.

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

Section 4.02                                Covenants.

 

(a)               Successor Employer.  In connection with the Distribution, Abbott
and Hospira covenant and agree to treat Hospira as a “successor employer”
pursuant to the alternate procedures in Revenue Procedure 96-60 for payroll Tax
reporting purposes.  Hospira shall
assume reporting responsibilities for filing Forms W-2 and other payroll Tax
forms for the U.S. Transferred Employees for the entire 2004 calendar
year.  Abbott covenants and agrees to
cooperate in the administration and implementation of the alternate procedures
for successor payroll processing provided by Revenue Procedure 96-60 and not to
report such compensation on any basis inconsistent therewith to any
governmental authority.  Hospira
covenants and agrees to indemnify and reimburse Abbott for any costs of
responding to any notices received from any governmental authority, the costs
of defending the position that Hospira qualifies as a “successor employer”
before any governmental agency, and any additional Taxes, fines, penalties,
and/or interest imposed on Abbott if such position ultimately is found to be
incorrect.

 

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

 

(i)             Specified Actions.  Any time before the second anniversary of
the Distribution Date, Hospira shall not (and shall cause its Affiliates to
not) (A) liquidate, merge, or consolidate with or into any corporation that was
not already wholly owned by Hospira or by a wholly owned subsidiary of Hospira
prior to such transaction; (B) issue any of its capital stock in one or more
transactions, other than (i) issuances to employees, directors, or independent
contractors in connection with the performance of services for Hospira (that
are not excessive by reference to the services performed) which issuances
either (x) are with respect to the exercise of options of Hospira that are
substituted for Abbott options or (y) satisfy the requirements of Treasury
Regulations Section 1.355-7T(d)(6) to not be treated for purposes of Section
355(e) of the Code to be part of a plan or series of related transactions that
includes the Distribution, the Internal Distribution, or the Bahamian
Distribution, or (ii) issuances of stock to a retirement plan qualified under
Section 401(a) or 403(a) of the Code in a transaction that satisfies the
requirements of Treasury Regulations Section 1.355-7T(d)(7); (C) redeem,
purchase, or otherwise reacquire any of its capital stock in one or more transactions;
(D) change the voting rights of any of its stock; (E) issue any options to
acquire Hospira Shares other than options that satisfy the requirements of
Treasury Regulations Section 1.355-7T(e)(3)(ii); (F) sell, exchange,
distribute, or otherwise dispose of, other than in the ordinary course of
business, all or a substantial part of the assets of any of the trades or
businesses relied on to satisfy Section 355(b) of the Code; or (G) discontinue
or cause to be discontinued the active conduct of any of the trades or
businesses relied on to satisfy Section

 

15

 

355(b) of the Code. 
Notwithstanding the foregoing, clauses (A) through (E) of this Section
4.02(b)(i) shall not apply unless there are transactions described in such
clauses any time before the second anniversary of the Distribution Date that
result in one or more Persons acquiring directly or indirectly stock
representing, in the aggregate, 25 percent or greater interest in Hospira (as
defined in Sections 355(d)(4) and 355(e) of the Code).

 

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

 

(iii)       Section 355(e). 
Without in any manner limiting paragraph (i) or (ii) of Section 4.02(b),
Hospira covenants and agrees that, through the second anniversary of the
Distribution Date, it shall refrain from entering into (and it shall cause its
Affiliates to refrain from entering into) any agreement, understanding,
arrangement, or substantial negotiation with respect to any transaction or
event (including stock issuances, option grants, capital contributions,
acquisitions, or changes in the voting power of any of its stock), that could
reasonably be expected to cause Section 355(e) of the Code to apply to the
Distribution, the Internal Distribution, or the Bahamian Distribution.

 

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

 

(d)              Tax Returns.  Each of Abbott and Hospira covenants and agrees that it shall
refrain from taking, and it shall cause its Affiliates to refrain from taking,
any position on a Tax Return that is inconsistent with (i) the Tax treatment of
the transactions provided by the Private Letter Ruling, (ii) the Contribution
qualifying for Tax-free treatment under Sections 361 and 368 of the Code, (iii)
the Tax treatment of the transactions provided by the Puerto Rican Ruling, (iv)
the payment obligations of the TMDS Agreements and the ICO Agreement, (v) the
allocation of the benefits and burdens of Hospira assets and liabilities
pursuant to Section 2.03 of the Distribution Agreement and Sections 2.2 and 3.1
of the ICO Agreement, or (vi) the documents effecting any transaction
undertaken in connection with the Separation that is not addressed by the
Private Letter Ruling.

 

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

 

16

 

in writing) either:

 

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

 

(ii)          In case of the Distribution, the Internal
Distribution, or the Bahamian Distribution, Hospira obtains an opinion,
reasonably acceptable to Abbott, of an independent nationally recognized Tax
counsel, reasonably acceptable to Abbott, on the basis of facts and
representations consistent with the facts at the time of such action, that such
action will not affect the Tax treatment of the transactions provided by the
Private Letter Ruling or the intended Tax treatment of the Bahamian
Distribution, or

 

(iii)       In case of the Puerto Rican Transaction, Hospira
obtains:

 

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

 

(b)         an opinion, reasonably acceptable to Abbott,
of an independent Tax counsel, reasonably acceptable to Abbott,

 

on the basis of facts and representations consistent with the facts at
the time of such action, that such action will not affect the Tax treatment of
the transactions provided by the Puerto Rican Ruling.

 

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

 

Section 4.03                                No
Continuing Liability for Former Members.

 

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

 

17

 

(b)              Hospira Affiliates.  If a Hospira Affiliate ceases to be a member
of the Hospira Group as a result of a sale or exchange of all of the stock of
such member, other than an exchange for which the consideration received by
Hospira is the stock of Hospira or a Hospira Affiliate, the departing Hospira
Affiliate shall be released from its obligations under this Agreement upon its
departure from the Hospira Group; provided, however, that no member of the
Hospira Group shall be released from any obligations under Section 2.01(b)(ii)
hereof unless approved in writing by Abbott, which approval shall not be
unreasonably withheld.

 

Article V.                                          MISCELLANEOUS
PROVISIONS

 

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

 

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

 

(b)              Entire Agreement.  This Agreement and the exhibits hereto
contain the entire agreement between the Parties with respect to the subject
matter hereof, supersede all previous agreements, negotiations, discussions,
writings, understandings, commitments and conversations with respect to such
subject matter and there are no agreements or understandings between the
Parties other than those set forth or referred to herein.  Notwithstanding any other provisions in the
Distribution Agreement or any other agreement entered into in connection with the
Distribution (except the EBA) to the contrary, in the event and to the extent
that there is a conflict between the provisions of this Agreement and the
provisions of the Distribution Agreement or any other agreement entered into in
connection with the Distribution (except the EBA), the provisions of this
Agreement shall control.

 

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

 

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

 

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

 

(d)              Facsimile Signatures.  Each Party acknowledges that it and the
other Party may execute this Agreement or amendment hereto by facsimile, stamp
or mechanical signature.  Each Party
expressly adopts and confirms each such facsimile, stamp or mechanical
signature made in its respective name as if it were a manual signature, agrees
that it shall not assert that any such signature is not adequate to bind such
Party to the same extent as if it were signed manually and agrees that at the
reasonable request of the other Party at any time it

 

18

 

shall as promptly as reasonably practicable cause this Agreement or any
amendment hereto to be manually executed (any such execution to be as of the
date of the initial date thereof).

 

Section 5.02                                Governing
Law.  This Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of
Illinois irrespective of the choice of laws principles of the State of
Illinois, as to all matters, including matters of validity, construction,
effect, enforceability, performance and remedies.

 

Section 5.03                                Assignability.  This Agreement shall be binding upon and
inure to the benefit of the Parties, respectively, and their respective
successors and permitted assigns; provided, however, that neither Party
may assign its rights or delegate its obligations under this Agreement without
the express prior written consent of the other Party hereto.  Notwithstanding the foregoing, this
Agreement shall be assignable in whole in connection with a merger or
consolidation or the sale of all or substantially all of the assets of a Party
so long as the resulting, surviving or transferee Person assumes all the
obligations of the relevant Party thereto by operation of law or pursuant to an
agreement in form and substance reasonably satisfactory to the other Party.

 

Section 5.04                                Third
Party Beneficiaries.  The provisions of
this Agreement are solely for the benefit of the Parties and their respective
Affiliates, after giving effect to the Distribution, and are not intended to
confer upon any Person except the Parties and their respective Affiliates,
after giving effect to the Distribution, any rights or remedies hereunder; and
(b) there are no other third party beneficiaries of this Agreement and this
Agreement shall not provide any other third party with any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.

 

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

 

If to Abbott,
to:

 

Abbott
Laboratories

100 Abbott Park Road

Building AP6D, Dept. 364

Abbott Park, IL  60064-6020

Facsimile: (847) 938-6277

Attention: General Counsel

 

19

 

With a copy
to:

 

Abbott
Laboratories

100 Abbott Park Road

D-367 AP6D

Abbott Park, IL  60064-6057

Facsimile: 

Attention: Vice President-Tax

 

If to Hospira,
to:

 

Hospira, Inc.

Legal Department

Dept. NLEG

275 N. Field Drive

P.O. Box 5045

Lake Forest, Illinois 60045-5045

Facsimile: (224) 212-3312

Attention: General Counsel

 

With a copy to:

 

Hospira, Inc.

275 N. Field Drive

Lake Forest, Illinois 60045

Facsimile:

Attention: Vice President – Tax.

 

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

 

Section 5.06                                Severability.  If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof or thereof, or the application of such provision to Persons
or circumstances or in jurisdictions other than those as to which it has been
held invalid or unenforceable, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so long as the economic
or legal substance of the transactions contemplated hereby or thereby, as the
case may be, is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
provision to effect the original intent of the Parties.

 

Section 5.07                                Force
Majeure.  Neither Party shall be deemed
in default of this Agreement to the extent that any delay or failure in the
performance of its obligations under this Agreement results from any cause
beyond its reasonable control and without its fault or negligence, such as acts
of God, acts of Governmental Authority, embargoes, epidemics, war, riots,
insurrections, acts of terrorism, fires, explosions, earthquakes, floods,
unusually severe weather conditions, labor

 

20

 

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, the time for performance shall
be extended for a period equal to the time lost by reason of the delay.

 

Section 5.08                                Headings.  The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.

 

Section 5.09                                Survival
of Covenants.  The covenants, releases,
indemnities, representations and warranties contained in this Agreement, and
liability for the breach of any obligations contained herein, shall survive the
Effective Time and shall remain in full force and effect thereafter.

 

Section 5.10                                Affiliates.  Abbott shall cause to be performed, and
hereby guarantees the performance of, all actions, agreements and obligations
set forth herein to be performed by any member of the Abbott Group and Hospira
shall cause to be performed, and hereby guarantees the performance of, all
actions, agreements and obligations set forth herein to be performed by any
member of the Hospira Group.

 

Section 5.11                                Waivers
of Default.  Waiver by either Party of
any default by the other Party of any provision of this Agreement shall not be
deemed a waiver by the waiving Party of any subsequent or other default, nor
shall it prejudice the rights of the other Party.

 

Section 5.12                                Amendments.  No provisions of this Agreement shall be
deemed amended, supplemented or modified unless such amendment, supplement or
modification is in writing and signed by an authorized representative of both
Parties.  No provisions of this
Agreement shall be deemed waived unless such waiver is in writing and signed by
the authorized representative of the Party against whom it is sought to be
enforced.

 

Section 5.13                                Interpretation.  Words in the singular shall be deemed to
include the plural and vice versa and words of one gender shall be deemed to
include the other genders as the context requires.  The terms “hereof,” “herein,” and “herewith” and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole (including all of the Exhibits hereto) and not to any particular
provision of this Agreement.  Article,
Section, and Exhibit references are to the Articles, Sections, and Exhibits to
this Agreement unless otherwise specified. 
Unless otherwise stated, all references to any agreement shall be deemed
to include the exhibits to such agreement. 
The word “including” and words of similar import when used in this
Agreement shall mean “including, without limitation,” unless the context
otherwise requires or unless otherwise specified.  The word “or” shall not be exclusive.  Unless otherwise specified in a particular case, the word “days”
refers to calendar days.  References
herein to this Agreement shall be deemed to refer to this Agreement as of the
Effective Time and as it may be amended thereafter, unless otherwise
specified.  References to the
performance, discharge or fulfillment of any liability in accordance with its
terms shall have meaning only to the extent such liability has terms.

 

Section 5.14                                Advisors.  Abbott may select any Tax Counsel in
connection with the Distribution, which may include Mayer, Brown, Rowe &
Maw LLP, Baker & McKenzie and McDermott, Will & Emery.  Hospira acknowledges, for itself and each
Hospira Affiliate, that

 

21

 

Mayer, Brown, Rowe & Maw
LLP, Baker & McKenzie and McDermott, Will & Emery have acted only in
the capacity as counsel to Abbott, and not as counsel to Hospira or any Hospira
Affiliate, in connection with this Agreement and the provisions contemplated
herein.

 

Section 5.15                                Mutual
Drafting.  This Agreement shall be
deemed to be the joint work product of the Parties and any rule of construction
that a document shall be interpreted or construed against a drafter of such
document shall not be applicable.

 

Section 5.16                                Dispute
Resolution.  Any and all disputes
between Abbott and Hospira arising out of any provision of this Agreement shall
be resolved through the procedures provided in the Master ADR Agreement
attached hereto as Exhibit 1.

 

Section 5.17                                Payments.

 

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

 

(b)              Procedure for Making Other Payments.  If a Party is responsible for any Tax under
Section 2.01 (the “Responsible Party”) and such Tax must be remitted by the
other Party (the “Remitting Party”), the Remitting Party shall send the
Responsible Party an invoice requesting payment accompanied by a statement describing
in reasonable detail the amount owed and the particulars relating thereto.  Unless a provision in this Agreement
specifically provides a different time for payment, the Responsible Party shall
pay to the Remitting Party any payment it owes to the Remitting Party under
this Agreement no later than thirty (30) days before the Remitting Party must
remit the Tax to the appropriate Tax Authority.

 

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

 

(d)              Interest on Late Payments.  Unless a provision in this Agreement
specifically provides otherwise, any payment required to be made pursuant to
this Agreement that is not made on or before the due date for such payment
shall bear interest from the date after the due

 

22

 

date to and including the date of payment at the Prime Rate plus two
percent.  Such interest shall be paid at
the same time as the payment to which it relates.  Any interest payable pursuant to this paragraph that is not paid
when due shall bear interest at the Prime Rate plus two percent.

 

23

 

IN WITNESS WHEREOF,
the Parties have executed and delivered this Agreement as of the day and year
first written above.

 

	
   

  	
  ABBOTT LABORATORIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Thomas
  C. Freyman

  	
   

  
	
   

  	
  Title:  Executive Vice President, Finance and
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOSPIRA, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:
  Christopher B. Begley

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  	
   

  

 

24Exhibit 10.3

 

EMPLOYEE BENEFITS AGREEMENT

 

by and among

 

ABBOTT LABORATORIES,

 

TAP PHARMACEUTICAL PRODUCTS INC.

 

and

 

HOSPIRA, INC.

 

dated

 

April     , 2004

 

 

Table of Contents

 

	
  Article 1
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 2
  General Principles

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Allocation of Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Employment with Hospira

  	
   

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Establishment of Hospira Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Restrictions on Employment

  	
   

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Post-Distribution Transferred Employees and
  Hospira Requested Employees

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 3
  Collective Bargaining Agreements and Union Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 4
  U.S. Qualified and Non-Qualified Retirement Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Annuity Retirement Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Stock Retirement Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Faultless Rubber Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Ashland 401(k) Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Supplemental Pension Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Abbott Supplemental 401(k) Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 5
  Non-U.S. Retirement Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Canadian Pension Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Irish Pension Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Overseas Managers’ Pension Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Other Non-U.S. Retirement Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 6
  Welfare and Fringe Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Severance Compensation and Benefits

  	
   

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Retiree Medical And Life Insurance Coverage

  	
   

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  VEBAs

  	
   

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  COBRA

  	
   

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Matching Grant and Combined Appeal Programs

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 7
  Equity and Executive Compensation Programs

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Equity Incentive Programs

  	
   

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Discontinued Participation in ESPP

  	
   

  

 

2

 

	
  7.3

  	
  Deferred Compensation Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Grantor Trusts

  	
   

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Cash Profit Sharing

  	
   

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Other Incentive Programs

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 8
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Transfer of Records and Information

  	
   

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Preservation of Rights to Amend or
  Terminate Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Transition Services

  	
   

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Reimbursement

  	
   

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  Clara Abbott Foundation

  	
   

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  Incorporation By Reference

  	
   

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  Limitation on Enforcement

  	
   

  
	
   

  	
   

  	
   

  
	
  8.8

  	
  Assignability

  	
   

  
	
   

  	
   

  	
   

  
	
  8.9

  	
  Further Assurances and Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  8.10

  	
  Third Party Consent

  	
   

  
	
   

  	
   

  	
   

  
	
  8.11

  	
  Effect if Distribution Does not Occur

  	
   

  
	
   

  	
   

  	
   

  
	
  8.12

  	
  Disputes

  	
   

  
	
   

  	
   

  	
   

  
	
  8.13

  	
  Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
  8.14

  	
  Mutual Drafting

  	
   

  

 

3

 

EMPLOYEE BENEFITS AGREEMENT

 

This Employee Benefits Agreement (this “Agreement”) is made as of
April       , 2004 by and among Abbott
Laboratories (“Abbott”), Hospira, Inc. (“Hospira”) and, solely for purposes of
Sections 2.4, 8.7, and 8.8, TAP Pharmaceutical Products Inc. (“TAP”).

 

BACKGROUND

 

Abbott and Hospira have entered into the Separation and Distribution
Agreement (as defined herein) pursuant to which Abbott shall spin-off the
Hospira Business (as defined herein). 
Abbott shall accomplish this spin-off by distributing all of the common
stock of Hospira to the shareholders of Abbott as a dividend after Abbott
contributes to Hospira the assets primarily associated with the Hospira
Business and after Hospira assumes the liabilities primarily associated with
the Hospira Business, all in accordance with the Separation and Distribution
Agreement and agreements related thereto, including this Agreement.  After the Distribution (as defined herein),
Abbott and Hospira shall be separate and independent corporations.

 

The employees of the Hospira Business are currently employed by the
Abbott Group (as defined herein).  The
employees of the Hospira Business are expected to become employees of the
Hospira Group (as defined herein) on or prior to the Distribution Date or with
respect to certain employees outside of the United States, after the
Distribution Date.  This Agreement
describes the employment and the employee benefit plan arrangements that shall
apply to Transferred Employees (as defined herein).  Additional information relating to agreements of Abbott and
Hospira with respect to Transferred Employees are included in the Transition Services
Agreements.

 

AGREEMENT

 

Article 1

 

Definitions

 

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

 

(a)                                  “Abbott”
shall have the meaning given it in the first sentence of this Agreement.

 

(b)                                 “Abbott
ARP” shall mean the Abbott Laboratories Annuity Retirement Plan.

 

(c)                                  “Abbott
Benefit Plan” shall mean each Benefit Plan established, maintained, or
contributed to by the Abbott Group for the benefit of Transferred Employees.

 

4

 

(d)                                 “Abbott
Compensation Committee” shall mean the compensation committee of the board of
directors of Abbott.

 

(e)                                  “Abbott DCP” shall mean the Abbott
Laboratories Deferred Compensation Plan.

 

(f)                                    “Abbott
ESPP” shall mean the Abbott Laboratories Affiliate Employee Stock Purchase Plan
and any sub-plan established thereunder in accordance with the laws of any
non-U.S. jurisdiction.

 

(g)                                 “Abbott
Group” shall mean Abbott and its Subsidiaries (excluding any member of the
Hospira Group after the Distribution) or, where the context requires, a company
within the Abbott Group.

 

(h)                                 “Abbott KSP” shall mean the Abbott
Laboratories 401(k) Supplemental Plan.

 

(i)                                     “Abbott OMPP” shall mean the Overseas
Managers’ Pension Plan of Abbott Laboratories.

 

(j)                                     “Abbott
Option” shall mean an option to purchase one or more Abbott common shares
granted under the Abbott Stock Programs.

 

(k)                                  “Abbott
Retained Employee” shall mean any employee other than (i) a Transferred
Employee or (ii) a Hospira Requested Employee.

 

(l)                                     “Abbott
Retiree Life Plan” shall mean the Abbott Laboratories Retiree Life Plan.

 

(m)                               “Abbott
Retiree Medical Plan” shall mean the Abbott Laboratories Retiree Health Care
Plan.

 

(n)                                 “Abbott
SRP” shall mean the Abbott Laboratories Stock Retirement Plan (Part A).

 

(o)                                 “Abbott
Stock Programs” shall mean, collectively, the Abbott Laboratories 1996
Incentive Stock Program, the Abbott Laboratories 1991 Incentive Stock Program,
and any sub-plan established under those programs in accordance with the laws
of any non-U.S. jurisdiction.

 

(p)                                 “Abbott
Supplemental ARP” shall mean the Abbott Laboratories Supplemental Pension Plan.

 

(q)                                 “Abbott
VEBAs” shall mean, collectively, the Abbott Laboratories Employee Benefit
Trust, the Abbott Laboratories Health Care Trust, and the Abbott Laboratories
Employees Insurance Trust.

 

5

 

(r)                                    “ABO
Funded Ratio” shall have the meaning given it in Section 4.1(c) of this
Agreement.

 

(s)                                  “Allocated
Employee Number” shall mean, with respect to any country identified on
Schedule 1 hereto, the number of Employees shown on Schedule 1
opposite that country’s name as being the number of Employees to be transferred
to the Hospira Group.

 

(t)                                    “Ashland
401(k) Plan” shall mean the Abbott Laboratories Ashland Union 401(k) Plan and
Trust.

 

(u)                                 “Benefit
Plan” shall mean, any employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control or termination pay,
hospitalization or other medical, disability, life, or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plan,
program, agreement, or arrangement and each other employee benefit plan,
program, agreement, or arrangement.

 

(v)                                 “COBRA”
shall mean coverage required by Section 4980B of the Code and regulations
thereunder or Section 601 et. seq. of ERISA.

 

(w)                               “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

(x)                                   “Distribution”
shall have the meaning given it in the Separation and Distribution Agreement.

 

(y)                                 “Distribution
Date” shall have the meaning given it in the Separation and Distribution
Agreement.

 

(z)                                   “Employee”
shall mean any individual who is (i) identified or described on Schedule 2
hereto, (ii) a Post-Distribution Employee, or (iii) a Hospira Requested
Employee.

 

(aa)                            “Employment
Taxes” shall mean withholding, payroll, social security, workers compensation,
unemployment, and disability taxes imposed by any Tax Authority, and any interest,
penalties, additions to tax, or additional amount with respect to the foregoing
imposed on any taxpayer or consolidated, combined, or unitary group of
taxpayers.

 

(bb)                          “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

(cc)                            “ESOP”
shall mean an employee stock ownership plan, as defined in
Section 407(d)(6) of ERISA and Section 4975(e)(7) of the Code.

 

6

 

(dd)                          “Faultless
Rubber Plan” shall mean the 1950 Pension Plan of the Faultless Rubber Company
and the Pension, Insurance and Severance Award Agreement.

 

(ee)                            “Hospira”
shall have the meaning given it in the first sentence of this Agreement.

 

(ff)                                “Hospira
ARP” shall mean the Abbott/Hospira Transitional Annuity Retirement Plan.

 

(gg)                          “Hospira
Benefit Plan” shall mean any Benefit Plan established, maintained, or
contributed to by the Hospira Group.

 

(hh)                          “Hospira
Board” shall mean the board of directors of Hospira.

 

(ii)                                  “Hospira
Business” shall have the meaning given it in the Separation and Distribution
Agreement.

 

(jj)                                  “Hospira
Canadian Pension Plan” shall mean a defined benefit pension plan established by
the Hospira Group with respect to employees of Hospira residing in Canada.

 

(kk)                            “Hospira
Group” shall mean Hospira and its Subsidiaries or, where the context requires,
a company within the Hospira Group.

 

(ll)                                  “Hospira
KSP” shall mean the Hospira 401(k) Supplemental Plan.

 

(mm)                      “Hospira
Officer” shall mean each Transferred Employee who is a “reporting officer”
under Rule 16a-1(f) under the Securities Exchange Act of 1934.

 

(nn)                          “Hospira
OMPP” shall mean the Overseas Managers’ Pension Plan of Hospira, Inc.

 

(oo)                          “Hospira
Option” shall mean an option to purchase one or more shares of Hospira common
stock granted under the Hospira SIP in connection with the cancellation of an
Abbott Option.

 

(pp)                          “Hospira
Requested Employee” shall mean any employee of the Abbott Group who was hired
or transferred to another work location or position by the Abbott Group prior
to, on, or following the Distribution Date, at the written request of Hospira’s
Corporate Vice President of Human Resources, regardless of whether that
employee becomes a Transferred Employee.

 

(qq)                          “Hospira
SIP” shall mean the Hospira 2004 Long-Term Stock Incentive Plan.

 

7

 

(rr)                                “Hospira
SRP” shall mean the Hospira 401(k) Retirement Savings Plan.

 

(ss)                            “Hospira
Supplemental ARP” shall mean the Hospira Supplemental Pension Plan.

 

(tt)                                “Hospira
VEBA” shall mean the Hospira Master Welfare Trust.

 

(uu)                          “KSP
Transferred Employee” shall mean a U.S. Transferred Employee who participates
in the Abbott KSP immediately prior to the Distribution Date.

 

(vv)                          “Liabilities”
shall have the meaning given it in the Separation and Distribution Agreement.

 

(ww)                      “Non-U.S.
Transferred Employee” shall mean a Transferred Employee who works primarily
outside of the United States or who works primarily in Puerto Rico.

 

(xx)                              “Post-Distribution
Employee” shall mean each sales or marketing employee of the Abbott Group
identified by Abbott and Hospira in accordance with Step 1 of the procedures
described in Schedule 3 hereto.

 

(yy)                          “Post-Distribution
Transferred Employee” shall mean any Post-Distribution Employee who becomes a
Transferred Employee after the Distribution Date but prior to the end of the
Restricted Period.

 

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

 

(aaa)                      “Request
End Date” shall mean, with respect to any Hospira Requested Employee, the
earliest, if any, of the following dates: (i) the date on which Hospira
provides notice to Abbott that Hospira does not intend to employ the Hospira
Requested Employee, (ii) the date on which Hospira provides notice to Abbott
that the Hospira Requested Employee has rejected an offer of employment with
the Hospira Group, or (iii) the date following the expiration of the Restricted
Period in the event that the Hospira Requested Employee remains employed by the
Abbott Group on that date.

 

(bbb)                   “Restricted
Period” shall mean the period beginning on the Distribution and ending on the
second anniversary thereof.

 

(ccc)                      “Separation
and Distribution Agreement” shall mean the Separation and Distribution
Agreement by and between Abbott Laboratories and Hospira, Inc. dated
April 12, 2004.

 

8

 

(ddd)                   “Subsidiary”
shall have the meaning given it in the Separation and Distribution Agreement.

 

(eee)                      “TAP”
shall have the meaning given it in the first sentence of this Agreement.

 

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

 

(ggg)                   “Transfer
Date” shall mean, as applicable: (i) with respect to each Transferred Employee
(other than a Post-Distribution Transferred Employee or a Hospira Requested
Employee), the Distribution Date; and (ii) with respect to each
Post-Distribution Transferred Employee and each Hospira Requested Employee, the
date on which such person becomes employed by the Hospira Group.

 

(hhh)                   “Transferred
Employee” shall mean an Employee who accepts an offer of employment with the
Hospira Group or who continues in employment automatically by operation of law
with the Hospira Group, in either case pursuant to Section 2.2 or 2.5 of
this Agreement.

 

(iii)                               “Transferred
Expatriate Employee” shall mean each Employee identified on Schedule 4
hereto who becomes a Transferred Employee.

 

(jjj)                               “Transition
Period” shall mean the period beginning on the Distribution and ending on
December 31, 2004.

 

(kkk)                      “Transition
Services Agreements” shall mean the transition services agreements and the
transition marketing and distribution agreements that are entered into in
connection with the Separation and Distribution Agreement between Abbott and
Hospira.

 

(lll)                               “U.S.
Transferred Employee” shall mean a Transferred Employee who works primarily in
the United States (other than a Transferred Employee who works in Puerto Rico).

 

Article 2

 

General
Principles

 

2.1                               Allocation
of Liabilities.

 

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

 

9

 

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

 

(ii)          the transfer of any Transferred Employee’s
employment from the Abbott Group to the Hospira Group;

 

(iii)       all Liabilities (including Liabilities with
respect to employees, former employees and retirees) relating to, arising out
of or resulting from the Faultless Rubber Plan and the Ashland 401(k) Plan.

 

(iv)      the employment (or termination of employment) of
any Hospira Requested Employee by the Abbott Group prior to, on, or after the
Distribution Date (including all Liabilities to the extent relating to, arising
out of, or resulting from Employment Taxes or any Abbott Benefit Plan) subject
to Section 2.5(b) of this Agreement; and

 

(v)         obligations, Liabilities and responsibilities
expressly assumed by Hospira pursuant to this Agreement.

 

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

 

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

 

(ii)          the employment, whether prior to, on, or
after the Distribution Date, by the Abbott Group of all persons who work or
worked primarily in the United States (other than Puerto Rico) and who are
deceased, retired, terminated, on pay continuation leave, or on medical leave
of absence for more than one year (including all Liabilities to the extent
relating to, arising out of, or resulting from Employment Taxes or any Abbott
Benefit Plan);

 

(iii)       medical and dental claims which are incurred by
any U.S. Transferred Employee (or his or her beneficiaries) prior to the
Transfer Date;

 

10

 

(iv)      obligations, Liabilities and responsibilities
under (A) the Abbott Retiree Medical Plan and the Abbott Retiree Life Plan for
retirement eligible Transferred Employees (as more fully described in
Section 6.2 of this Agreement), (B) the Abbott DCP (as more fully
described in Section 7.3 of this Agreement), and (C) the grantor trusts of
Transferred Employees (as more fully described in Section 7.4 of this
Agreement); and

 

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

 

2.2                               Employment
with Hospira.

 

(a)                                  Offers
of Employment.  As of the
Distribution Date, the Hospira Group shall continue the employment (on a basis
consistent with subsection (b) below) of each Employee (who is not a
Post-Distribution Employee or a Hospira Requested Employee) in jurisdictions
where employment continues automatically by operation of law, and shall offer
to employ (on a basis consistent with subsection (b) below) each other
Employee (who is not a Post-Distribution Employee or a Hospira Requested
Employee), or as otherwise agreed by the parties.  The parties acknowledge that the process of transferring
Employees to the Hospira Group may, as agreed upon by the parties, in certain
cases, begin prior to the Distribution Date. 
Abbott shall use commercially reasonable efforts to ensure that no
Employee’s transfer of employment to Hospira prior to the Distribution Date
will cause a loss of coverage under any Abbott Benefit Plan prior to the
Distribution Date.

 

Post-Distribution Employees shall be offered employment by the Hospira
Group, or shall continue to be employed by the Hospira Group, as the case may
be, as determined by Abbott and Hospira in accordance with Section 2.5(a)
of this Agreement and the procedures described in Schedule 3 hereto and
effective at such time or times as determined in accordance with those
procedures.  To the extent any dispute
arises pursuant to this paragraph, including with respect to the procedures
described in that Schedule 3, that dispute shall be resolved by mutual
written agreement between the Chief Executive Officers of Abbott and Hospira
(or their designees).

 

Hospira Requested Employees (who are not Post-Distribution Employees)
shall be offered employment by the Hospira Group, or shall continue to be
employed by the Hospira Group, as the case may be, as determined by Abbott and
Hospira, subject to Section 2.5(b) of this Agreement.

 

(b)                                 Compensation
and Benefits.  Except as expressly
provided in this Agreement, no Transferred Employee shall participate in the
Abbott Benefit Plans following his or her Transfer Date.  After the Transfer Date, the Hospira Group
may provide compensation and benefits to a U.S. Transferred Employee or
Transferred Expatriate Employee under any Hospira Benefit Plan.  Except as expressly provided in this Agreement,
during the Transition Period, the Hospira Group shall provide benefits (e.g.,
pension and welfare benefits) to each U.S. Transferred Employee and each

 

11

 

Transferred Expatriate Employee that are substantially similar to the
benefits provided to that U.S. Transferred Employee or Transferred Expatriate
Employee immediately prior to the Transfer Date.  During the Transition Period, the Hospira Group shall provide each
U.S. Transferred Employee and each Transferred Expatriate Employee with base
compensation (including salary and hourly rate) that is not less than the
compensation provided to that U.S. Transferred Employee or Transferred
Expatriate Employee immediately prior to the Transfer Date, provided, however,
that the compensation of each Hospira Officer may be adjusted by the Hospira
Board (or an appropriate committee thereof) without regard to the Hospira
Officer’s compensation immediately prior to the Transfer Date.  During the Transition Period, the Hospira
Group shall make all scheduled increases to any U.S. Transferred Employee’s or
Transferred Expatriate Employee’s salary or hourly rate to the extent that the
scheduled increase is not already reflected in any prior discretionary increase
made by the Hospira Group to that salary or hourly rate.  The Hospira Group shall not reduce any U.S.
Transferred Employee’s or Transferred Expatriate Employee’s salary or hourly
rate during the Transition Period other than: (i) the salaries of Hospira
Officers as determined by the Hospira Board (or an appropriate committee
thereof) or (ii) reductions corresponding to a change in the affected
Transferred Employee’s circumstances and made in the ordinary course of
business (including, but not limited to, reductions in connection with shift
changes, schedule changes, demotions, job changes and job
performance).  Nothing in the preceding
sentence shall prevent the Hospira Group from terminating the employment of any
U.S. Transferred Employee or Transferred Expatriate Employee, whether due to
individual terminations of employment or reductions in force or otherwise, in
all cases in compliance with applicable law.

 

After expiration of the Transition Period, the Hospira Group may
implement compensation and benefits for the U.S. Transferred Employees and
Transferred Expatriate Employees as it deems appropriate; provided, however,
that the Hospira Group shall repatriate a Transferred Expatriate Employee to
his or her home or jurisdiction on terms no less favorable than the terms under
the Transferred Expatriate Employee’s written employment/expatriate agreement
with Abbott as in effect immediately prior to the Transfer Date.

 

The Hospira Group shall employ each Non-U.S. Transferred Employee
(other than Transferred Expatriate Employees) on such terms and conditions as
the Hospira Group deems necessary or advisable, except where otherwise required
by local law.

 

(c)                                  Service
Credit.  Except as expressly provided in this Agreement, during the Transition
Period, for purposes of determining eligibility, vesting, accrued benefits, and
benefit level, each of the Hospira Benefit Plans shall give U.S. Transferred
Employees and Transferred Expatriate Employees credit for all service credited
for those purposes by the comparable Abbott Benefit Plan as of the Transfer
Date, except to the extent that this service credit would result in a
duplication of benefits.  For the
avoidance of doubt, nothing in this Agreement shall require the Hospira Group
to provide any U.S. Transferred Employee or Transferred Expatriate Employee
with credit for his or her service with the Abbott Group (i) under any Hospira
Benefit Plan after the

 

12

 

Transition Period or (ii) under any Hospira Benefit Plan that does not have
a comparable Abbott Benefit Plan during the Transition Period.

 

(d)                                 Vacation,
Holidays and Leaves of Absence.  In
accordance with Section 2.1(a)(i) of this Agreement, effective as of the
Transfer Date, Hospira shall assume all Liabilities of the Abbott Group with
respect to accrued vacation or leaves of absence, and required payments related
thereto, for each Transferred Employee.

 

Notwithstanding the foregoing, where (and only to the extent) required
by applicable state law, the Abbott Group shall provide each U.S. Transferred
Employee with the opportunity to elect to receive a payment of his or her
accrued vacation as of the Transfer Date, the Abbott Group shall pay that
accrued vacation to any such individual who elects to receive a payment and the
Hospira Group shall not assume any accrued vacation or receive the accrual with
respect to a U.S. Transferred Employee who elects a payment in accordance with
the foregoing.

 

During the Transition Period, the Hospira Group shall continue to apply
the vacation, holiday and leave of absence policy or practice (whether or not
legally required) applicable to each U.S. Transferred Employee and each
Transferred Expatriate Employee immediately prior to the Transfer Date so that
each U.S. Transferred Employee and each Transferred Expatriate Employee shall
be entitled to use any vacation time or leave of absence, and/or receive any
pay related thereto, to which that Employee would otherwise be entitled under
the Abbott Benefit Plans related to vacation time or leave of absence as of the
Transfer Date, taking into account, to the extent applicable, any reduction in
vacation time for which any U.S. Transferred Employee has received a payment of
accrued vacation as of the Transfer Date.

 

Vacation, holiday and leave of absence policies for Transferred
Employees for periods after the Transition Period shall be determined by
Hospira in its sole discretion.

 

2.3                               Establishment
of Hospira Plans.

 

Prior to the Distribution Date, Hospira shall adopt the following
employee benefit plans and their related trusts: (a) the Hospira SIP, (b) the
Hospira ARP, (c) the Hospira SRP, (d) the Hospira Health Care Plan, and (e) the Hospira Life Accident Plan.  Hospira shall also adopt (i) the Hospira
Supplemental ARP, (ii) the Hospira KSP, (iii) the Hospira Flexible Benefit Plan, (iv) the Hospira Extended Disability
Plan, and (v) the Hospira OMPP, none of which shall have a related trust
unless Hospira elects, in its sole and absolute discretion, to establish a
rabbi trust or other trust for any of those plans.  During the Transition Period, each of the foregoing Hospira
Benefit Plans, except as expressly provided in this Agreement, shall be
substantially similar in all material respects to the corresponding Abbott
Benefit Plan as in effect as of the Distribution Date.  As more fully described in Articles 4, 5 and
6 or as otherwise mutually agreed upon by Abbott and Hospira from time to time,
Abbott shall, or shall cause the applicable Abbott Benefit Plan’s related trust
to, transfer to the relevant Hospira Benefit Plan’s related trust, amounts
equal to trust assets, insurance reserves, and other related assets of each
Abbott

 

13

 

Benefit Plan’s related trust relating to the Liabilities of such Abbott
Benefit Plan assumed by Hospira or such Hospira Benefit Plan.  As more fully described in Articles 4, 5 and
6, or as otherwise mutually agreed upon by Abbott and Hospira from time to
time, Hospira shall, or shall cause the relevant Hospira Benefit Plan to,
assume the Liabilities of the corresponding Abbott Benefit Plan with respect to
all benefits accrued under that Abbott Benefit Plan by Transferred Employees
prior to the Transfer Date.  Except as
expressly provided in this Agreement, after the Transition Period, Hospira may
modify or terminate any Hospira Benefit Plan, as it deems appropriate.

 

Hospira shall cause the Hospira Benefit Plans to honor all plan
elections made by Transferred Employees pursuant to corresponding Abbott
Benefit Plans.  Except as provided in
this Agreement, Abbott and Hospira shall use commercially reasonable efforts to
ensure that the Distribution and the transfer of any Transferred Employee’s
employment to the Hospira Group will not entitle that Transferred Employee to a
distribution or payment of benefits under any Abbott Benefit Plan.

 

2.4                               Restrictions
on Employment.

 

Hospira agrees that, during the Restricted Period and without the
express written consent of Abbott or TAP, as applicable, it shall not, and
shall not permit any of its Subsidiaries to, employ any person, other than a
Transferred Employee, who is or was an employee of Abbott or TAP (or their
respective Subsidiaries) and whose employment with Abbott and/or TAP (and/or
their respective Subsidiaries) terminated at any time after August 22,
2003 and before the last day of the Restricted Period.  Abbott and TAP each agree that, during the
Restricted Period and without the express written consent of Hospira, each
shall not, and shall not permit any of their respective Subsidiaries to, employ
any person who is a Transferred Employee or any other person who becomes an
employee of Hospira or any of its Subsidiaries prior to the expiration of the
Restricted Period.  The foregoing
restrictions shall not apply to any person (other than a Post-Distribution
Employee who rejects an offer of employment from the Hospira Group) whose
employment with Hospira, Abbott or TAP (or their respective Subsidiaries), as
applicable, terminates due to a job elimination or reduction in force.

 

2.5                               Post-Distribution Transferred Employees and Hospira Requested Employees.

 

(a)                                  Transfer
Date for Post-Distribution Transferred Employees.  The Transfer Date of each Post-Distribution Transferred Employee
shall be determined by Abbott and Hospira, provided that in no event shall the
Transfer Date of any Post-Distribution Transferred Employee occur following the
Restricted Period.  Unless otherwise
determined by Abbott and Hospira or otherwise required by local law, all Post-Distribution
Transferred Employees and Hospira Requested Employees working primarily in the
same country shall have the same Transfer Date.

 

(b)                                 Hospira
Requested Employees.  As soon as
practicable following the Request End Date of any Hospira Requested Employee,
Abbott shall either terminate the employment of that Hospira Requested Employee
or notify Hospira that the

 

14

 

Abbott Group intends to continue to employ the Hospira Requested
Employee following the Request End Date. 
Notwithstanding Section 2.1(a)(iv) of this Agreement, in the event
that Abbott notifies Hospira that the Abbott Group will continue to employ a
Hospira Requested Employee following Request End Date, Abbott shall retain all
Liabilities relating to, arising out of, or resulting from the employment (or
termination of employment) of that Hospira Requested Employee on and following
the Request End Date, provided that Abbott and Hospira shall negotiate to
apportion those Liabilities arising in part both before and after the Request
End Date.

 

Article 3

 

Collective
Bargaining Agreements and Union Matters 

 

Hospira shall assume all Liabilities with respect to or arising under
any collective bargaining agreements with respect to U. S. Transferred
Employees in Ashland, Ohio.

 

Article 4

 

U.S.
Qualified and Non-Qualified Retirement Plans

 

4.1                               Annuity
Retirement Plan.

 

(a)                                  Establishment
of Hospira ARP.  Effective on or
before the Distribution Date, Hospira shall establish the Hospira ARP, which,
for the Transition Period, shall provide for a benefit formula that is
substantially similar in all material respects to the benefit formula in effect
under the Abbott ARP as of the Distribution Date.  As soon as practicable after the Distribution Date and upon
receipt by Abbott of (i) copies of the Hospira ARP; (ii) copies of certified
resolutions of the Hospira Board (or its authorized committee or other
delegate) evidencing adoption of the Hospira ARP and the related trust(s) and
the assumption by the Hospira ARP of the Liabilities set forth in Section 4.1(d)
of this Agreement; and (iii) either (A) a favorable determination letter issued
by the Internal Revenue Service with respect to the Hospira ARP and its related
trust, or (B) an opinion of Hospira’s
counsel, which opinion is reasonably satisfactory to Abbott’s counsel, with
respect to the qualified status of the Hospira ARP under Section 401(a) of
the Code and the tax-exempt status of its related trust under
Section 501(a) of the Code, Abbott shall direct the trustee of the
Abbott ARP to transfer from the trust(s) which forms a part of the Abbott ARP
to the trust(s) which forms a part of the Hospira ARP the amounts described in
Section 4.1(b) of this Agreement.

 

(b)                                 ERISA
Section 4044 Transfer.  The
amount of assets to be transferred from the Abbott ARP to the Hospira ARP shall
be determined as of the Distribution Date in accordance with Section 4044
of ERISA and shall comply in all respects with Sections 414(l) of the
Code.  Assumptions not specifically
dictated by Section 4044 of ERISA shall be based on the assumptions used
in the report prepared by Hewitt
Associates entitled Actuarial Report Abbott Laboratories Annuity Retirement
Plan as of January 1, 2003 (signed October 2003).  The Hospira ARP shall receive a 

 

15

 

pro-rata share of any
contributions made to the Abbott ARP after the Distribution Date but on behalf
of the 2003 plan year.  The pro-rata
share of the contributions for the Hospira ARP shall be determined as if the 2003
plan year contribution had been part of the Abbott ARP’s assets at the time the
asset allocation was performed.  The
transfer amount described above shall be credited or debited, as applicable,
with a pro rata share of the actual investment earnings or losses allocable to
the transfer amount for the period between the Distribution Date and an
assessment date set by Abbott that is no more than ten (10) days prior to the
date upon which assets are actually transferred from the Abbott ARP to the
Hospira ARP.  During this time, benefits
for U.S. Transferred Employees who terminate employment with the Hospira Group
shall be paid from the Abbott ARP.  The
ultimate transfer amount shall be reduced by the amount of these benefits and
credited or debited by the actual investment earnings or losses from the
payment date to the assessment date set by Abbott above.  In
addition, during this time, Hospira will be responsible for a pro rata share of
trustee and administration fees to the extent included in the Abbott ARP’s
trust expenses.  The entries in the
Abbott ARP funding standard account shall be divided between the two plans
based on the guidance provided in Revenue Ruling 81-212.

 

(c)                                  Additional
Transfer.  In addition to, and
within sixty (60) days following, the transfer of assets from the Abbott ARP to
the Hospira ARP described in Section 4.1(b) of this Agreement, Abbott
shall pay Hospira an amount equal to that amount which, if contributed by
Hospira to the Hospira ARP immediately following the transfer of assets required
by Section 4.1(b) of this Agreement, would cause the ABO Funded Ratio of
the Hospira ARP and the Abbott ARP to be equivalent as of the Distribution
Date.  With respect to a plan, the ABO
Funded Ratio shall equal the fair market value of assets of that plan divided
by the Accumulated Benefit Obligation of that plan, as determined under FAS 87.  In
calculating the ABO Funded Ratio, the assets for the Hospira ARP shall include
the amount transferred directly from the Abbott ARP in accordance with
Section 4.1(b) of this Agreement and the amount to be paid by Abbott in
accordance with this Section 4.1(c). 
The pro-rata share of the 2003
plan year contributions assigned to the Abbott ARP in 4.1(b), that are
contributed following the Distribution Date, shall be taken into account for
purposes of calculating the ABO Funded Ratio of the Abbott ARP as of the
Distribution Date as if those contributions had been part of the assets of the
Abbott ARP on the Distribution Date. Similarly, the pro-rata share of the 2003
plan year contributions assigned to the Hospira ARP in Section 4.1(b) of
this Agreement, that are contributed following the Distribution Date, shall be
taken into account for purposes of calculating the ABO Funded Ratio of the
Hospira ARP as of the Distribution Date as if those contributions had been part
of the assets of the Hospira ARP on the Distribution Date.  With the exception of the discount rate, the
Accumulated Benefit Obligation shall be calculated using the assumptions and
methodology used to calculate Abbott’s December 31, 2003, FAS 87
disclosure information.  The discount
rate shall be determined as of the Distribution Date using Abbott’s FAS 87
discount rate setting methodology consistent with Abbott’s past practices.
Hospira shall not be required to reimburse Abbott for any tax benefit received
by Hospira with respect to any contribution to the Hospira ARP.

 

16

 

(d)                                 Transferred
ARP Liabilities.  As of the
Distribution Date, Hospira shall cause the Hospira ARP to assume all
Liabilities under the Abbott ARP for U.S. Transferred Employees (including
Liabilities in respect of QDROs established in relation to U.S. Transferred
Employees) and the Abbott ARP shall be relieved of all such Liabilities;
provided, however that the Abbott ARP shall continue to pay benefits associated
with those Liabilities until assets are transferred from the Abbott ARP to the
Hospira ARP in accordance with this Section 4.1.

 

(e)                                  Hospira
ARP During the Transition Period. 
During the Transition Period (and thereafter to the extent required by
applicable law), the Hospira ARP shall provide that:

 

(i)             U.S. Transferred Employees shall (A) be
eligible to participate in the Hospira ARP to the extent they were eligible to
participate in the Abbott ARP as of the Distribution Date, and (B) receive
credit for vesting, eligibility and benefit service for all service credited
for those purposes under the Abbott ARP as of the Distribution Date as if that
service had been rendered to Hospira;

 

(ii)          the compensation paid by the Abbott Group to
all U.S. Transferred Employees which is recognized under the Abbott ARP as of
the Distribution Date shall be credited and recognized for all applicable
purposes under the Hospira ARP as though it were compensation from the Hospira
Group;

 

(iii)       subject to applicable law, the accrued benefit
of each U.S. Transferred Employee under the Abbott ARP as of the Distribution
Date shall be paid under the Hospira ARP at the time and in a form that would
have been permitted under the Abbott ARP as in effect as of the Distribution
Date, with employment by the Abbott Group prior to the Distribution Date
treated as employment by the Hospira Group under the Hospira ARP for purposes
of determining eligibility for optional forms of benefit, early retirement
benefits, or other benefit forms;

 

(iv)      to the extent required by Section 411(d)(6)
of the Code, any accrued benefit, early retirement benefit, retirement-type
subsidy, or optional form of benefit provided under the Abbott ARP during the
Transition Period shall be provided by the Hospira ARP with respect to each
U.S. Transferred Employee’s accrued benefit as of the Distribution Date and
service with the Abbott Group (prior to the Distribution Date) and the Hospira
Group during the Transition Period shall be recognized for purposes of
determining eligibility to elect or to receive those benefits;

 

(v)         all beneficiary designations in effect under
the Abbott ARP as of the Distribution Date shall remain in effect after the
Distribution Date under the Hospira ARP as if made under the Hospira

 

17

 

ARP unless those designations are subsequently changed in accordance
with the Hospira ARP; and

 

(vi)      the Hospira ARP shall assume and honor the terms
of all QDROs in effect under the Abbott ARP as of the Distribution Date with
respect to U.S. Transferred Employees.

 

(f)                                    Composition
of Assets.  The composition of the assets that will be
transferred from the Abbott ARP to the Hospira ARP shall be mutually determined
by the applicable fiduciaries of the Abbott ARP and Hospira ARP.

 

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

 

(h)                                 Abbott
ARP After Distribution Date.  On and
after the Distribution Date, no employees of the Hospira Group, including U.S.
Transferred Employees, shall accrue any benefits under the Abbott ARP and their
service with and compensation from the Hospira Group on or after that date
shall be disregarded for all purposes of the Abbott ARP.  Without limiting the generality of the
foregoing, each U.S. Transferred Employee shall cease to be an active
participant in the Abbott ARP effective as of the Distribution Date.

 

4.2                               Stock
Retirement Plan.

 

(a)                                  Establishment
of Hospira SRP.  Effective on or
before the Distribution Date, Hospira shall establish the Hospira SRP.  During the Transition Period, the terms of
the Hospira SRP shall be substantially similar in all material respects to the
terms of the Abbott SRP as of the Distribution Date; provided, however, that
(i) the Hospira SRP shall not be required to be an ESOP or to contain an ESOP
feature and (ii) the Hospira SRP shall not be required to make available an
Abbott stock fund as an investment feature for contributions made under the
Hospira SRP after the Distribution Date. 
On or prior to the Distribution Date, Hospira shall provide Abbott with
(A) a copy of the Hospira SRP; (B) a copy of certified resolutions of Hospira’s
board of directors (or its authorized committee or other delegate) evidencing
adoption of the Hospira SRP and the related trust(s) and the assumption by the
Hospira SRP of the Liabilities set forth in Section 4.2(c) hereof; and (C)
either (I) a favorable determination letter issued by the Internal Revenue
Service with respect to the Hospira SRP and its related trust or (II) an opinion of Hospira’s counsel, which opinion
is reasonably satisfactory to Abbott’s counsel, with respect to the qualified
status of the Hospira SRP under Section 401(a) of the Code and the
tax-exempt status of its related trust under Section 501(a) of the Code.  As soon as practicable on or following the
Distribution Date Abbott shall cause the

 

18

 

trustee of the Abbott SRP to
transfer from the trust(s) which forms a part of the Abbott SRP to the trust(s)
which forms a part of the Hospira SRP the amounts described below.

 

(b)                                 Transfer
of Account Balances.  The amount to
be transferred (in cash, Abbott common shares, shares of Hospira common stock,
promissory notes evidencing outstanding loans to U.S. Transferred Employees and
other assets or any combination thereof in cash or in kind, as instructed by
the trustees of the Abbott SRP) from the Abbott SRP to the Hospira SRP shall
equal the account balances of U.S. Transferred Employees (excluding account
balances in respect of QDROs established in relation to U.S. Transferred
Employees) under the Abbott SRP, determined as of the date of the
transfer.  Hospira shall cause the
transferred amounts to be allocated among the U.S. Transferred Employees’
accounts under the Hospira SRP and to such investment funds in the same manner
in which those amounts were allocated under the Abbott SRP.  Any asset and liability transfer pursuant to
this Section 4.2 shall comply in all respects with Sections 414(l) and
411(d)(6) of the Code.

 

(c)                                  Assumed
SRP Liabilities.  As of the date of
transfer of the assets described in Section 4.2(b) above, Hospira shall
cause the Hospira SRP to assume all Liabilities for all accrued benefits under
the Abbott SRP for the U.S. Transferred Employees (excluding Liabilities in
respect of QDROs established in relation to U.S. Transferred Employees), and
the Abbott SRP shall be relieved of all Liabilities for those benefits.

 

(d)                                 Hospira
SRP During the Transition Period. 
During the Transition Period (and thereafter to the extent required by
applicable law), the Hospira SRP shall provide that:

 

(i)             U.S. Transferred Employees shall (A) be
eligible to participate in the Hospira SRP to the extent they were eligible to
participate in the Abbott SRP as of the Distribution Date, and (B) receive
credit for vesting purposes for all service credited for that purpose under the
Abbott SRP as of the Distribution Date as if that service had been rendered to
Hospira;

 

(ii)          the accrued benefit of each U.S. Transferred
Employee under the Abbott SRP as of the date of the transfer of assets from the
Abbott SRP (which accrued benefit shall be the U.S. Transferred Employee’s
account balance, including any outstanding promissory notes) shall be paid
under the Hospira SRP at the time and in a form that would have been permitted
under the Abbott SRP as of the Distribution Date; and

 

(iii)       all elections and beneficiary designations in
effect under the Abbott SRP as of the Distribution Date shall remain in effect after
the Distribution Date under the Hospira SRP as if made under the Hospira SRP
unless those elections or designations are subsequently changed in accordance
with the Hospira SRP.

 

19

 

(e)                                  Determination
Letter Requests.  Hospira shall
submit applications to the Internal Revenue Service as soon as practicable
following the Distribution Date (but no later than the last day of the remedial
amendment period as defined in applicable Code provisions) for a determination
regarding the qualification of the Hospira SRP and the tax status of its
related trust as of the Distribution Date and shall make any amendments
reasonably requested by the Internal Revenue Service in order to receive a
favorable determination letter regarding the Hospira SRP.

 

(f)                                    Abbott
SRP After Distribution Date.  On and
after the Distribution Date, no employees of the Hospira Group, including U.S.
Transferred Employees, shall accrue any benefits under the Abbott SRP.  Without limiting the generality of the
foregoing, U.S. Transferred Employees shall cease to be active participants in
the Abbott SRP effective as of the Distribution Date.

 

(g)                                 SRP
Fiduciaries.  For avoidance of
doubt, for all periods after the Distribution Date, the parties agree that the
applicable fiduciaries of each of the Abbott SRP and the Hospira SRP,
respectively, shall have the sole authority with respect to the Abbott SRP and
the Hospira SRP, respectively, to determine the investment alternatives, the
terms and conditions with respect to those investment alternatives and such
other matters as are within the scope of their duties under Section 404 of
ERISA.

 

(h)                                 Loss
of Unvested Benefits/Distributions. 
For the avoidance of doubt, the transfer of any Transferred Employee’s employment
to the Hospira Group will not result in loss of that Transferred Employee’s
unvested benefits under the Abbott SRP or the Hospira SRP and no Transferred
Employee shall be entitled to a distribution of his benefit under the Abbott
SRP as a result of such transfer of employment.

 

(i)                                     Abbott
SRP QDROs.  The Abbott SRP shall
retain and honor the terms of all QDROs in effect under the Abbott SRP as of
the Distribution Date with respect to U.S. Transferred Employees.

 

4.3                               Faultless
Rubber Plan.

 

Effective as of the Distribution Date, Hospira shall assume sponsorship
of and all of Abbott’s rights, powers, duties, obligations and Liabilities
under and with respect to the Faultless Rubber Plan.

 

4.4                               Ashland
401(k) Plan.

 

Effective as of the Distribution Date, Hospira shall assume sponsorship
of any and all of Abbott’s rights, powers, duties, obligations and Liabilities
under and with respect to the Ashland 401(k) Plan.

 

20

 

4.5                               Supplemental
Pension Plan.

 

(a)                                  Establishment
of Hospira Supplemental ARP. 
Effective on or before the Distribution Date, Hospira shall establish
the Hospira Supplemental ARP which, for the Transition Period, shall be
substantially similar in all material respects to the Abbott Supplemental ARP
as of the Distribution Date; provided, however, that Hospira shall not be
required to establish any grantor or other trusts to fund benefits under the
Hospira Supplemental ARP.

 

(b)                                 Assumed
Supplemental ARP Liabilities. 
Except as provided below, as of the Distribution Date, Hospira shall,
and shall cause the Hospira Supplemental ARP to, assume all Liabilities for all
accrued obligations under the Abbott Supplemental ARP for the benefits for U.S.
Transferred Employees determined as of the Distribution Date, and Abbott and
the Abbott Supplemental ARP shall be relieved of all Liabilities for those
benefits.  Notwithstanding the
foregoing, the parties acknowledge that certain Liabilities of Hospira with
respect to the Hospira Supplemental ARP shall be satisfied by Abbott, as
described in Section 7.4 of this Agreement.

 

(c)                                  Hospira
Supplemental ARP During the Transition Period.  As of the Distribution Date, the Hospira Supplemental ARP shall
provide that:

 

(i)             U.S. Transferred Employees who are
participants in the Hospira Supplemental ARP and whose benefits are transferred
to the Hospira Supplemental ARP from the Abbott Supplemental ARP shall receive
credit for vesting, eligibility and benefit service for all service credited
for those purposes under the Abbott Supplemental ARP as of the Distribution
Date as if that service had been rendered to Hospira;

 

(ii)          the compensation paid by the Abbott Group to
all U.S. Transferred Employees which was recognized under the Abbott
Supplemental ARP as of the Distribution Date shall be credited and recognized
for all applicable purposes under the Hospira Supplemental ARP as though it
were compensation from the Hospira Group; and

 

(iii)       the Hospira Supplemental ARP shall not be
amended in any manner that would reduce the accrued benefit (including any
early retirement subsidy) of any U.S. Transferred Employee.

 

(d)                                 Abbott
Supplemental ARP After Distribution Date. 
On and after the Distribution Date, no employees of the Hospira Group,
including U.S. Transferred Employees, shall participate in or accrue any
benefits under the Abbott Supplemental ARP. 
Without limiting the generality of the foregoing, U.S. Transferred
Employees shall cease to participate in the Abbott Supplemental ARP effective
as of the Distribution Date.

 

21

 

4.6                               Abbott
Supplemental 401(k) Plan.

 

(a)                                  Establishment
of Hospira KSP.  Effective on or
before the Distribution Date, Hospira shall establish the Hospira KSP which,
for the Transition Period, shall be substantially similar in all material
respects to the Abbott KSP as of the Distribution Date; provided, however, that
(i) Hospira may limit participation in the Hospira KSP to KSP Transferred
Employees and (ii) Hospira shall not be required to establish any grantor or
other trusts to fund benefits under the Hospira KSP.

 

(b)                                 Abbott
KSP Liabilities.  Except as
expressly provided in Section 4.6(c) of this Agreement, Abbott shall
retain all Liabilities relating to, arising out of, or resulting from the
Abbott KSP.  As of the Distribution
Date, Abbott shall take all action reasonably necessary to convert the Deferred
Account (as defined in the Abbott KSP) of any KSP Transferred Employee into a
Trust Account (as defined in the Abbott KSP). 
Except as expressly provided in Section 4.6(c) of this Agreement,
on and after the Distribution Date, no employees of the Hospira Group,
including KSP Transferred Employees, shall participate in or accrue any
benefits under the Abbott KSP.

 

(c)                                  Hospira
KSP Book Accounts.  During the
Transition Period, Hospira shall maintain an unfunded book account under the
Hospira KSP for KSP Transferred Employees. 
Hospira shall credit those accounts with (i) the amounts deferred by KSP
Transferred Employees into the Hospira KSP according to elections made by those
KSP Transferred Employees plus (ii) any related employer matching contributions
in relation to the amounts described in (i). 
In the absence of a new election made by KSP Transferred Employees under
the Hospira KSP, Hospira shall honor the terms of elections made by KSP
Transferred Employees under the Abbott KSP. As soon as practicable following
the Transition Period, Hospira shall pay Abbott (or the trustee of the
applicable KSP Transferred Employee’s grantor trust) an amount equal to the
aggregate balance of the book accounts described above and Abbott shall ensure
that those amounts are allocated accordingly among the grantor trusts of those
KSP Transferred Employees.  Abbott shall
maintain the grantor trusts in accordance with Section 7.4 of this
Agreement.

 

Article 5

 

Non-U.S.
Retirement Plans

 

5.1                               Canadian
Pension Plan.

 

Effective on or before the Distribution Date, Hospira shall establish
the Hospira Canadian Pension Plan the terms of which shall be substantially
similar in all material respects to the terms of the Abbott Laboratories,
Limited Retirement Income Plan as in effect immediately prior to the
Distribution Date.  For two (2) years
following the Distribution Date, Hospira shall not materially amend the Hospira
Canadian Pension Plan other than as required by applicable law.  The assets and Liabilities determined as of
the Distribution Date under the Abbott Laboratories, Limited Retirement Income
Plan attributable to Non-U.S. Transferred Employees who are participants in that
plan shall be

 

22

 

transferred to the Hospira
Canadian Pension Plan.  The amount of
assets and Liabilities subject to the transfer shall be calculated on a
Projected Benefit Obligation basis, as determined under FAS 87, by Mercer Human Resource Consulting LLC,
and the amount of the transfer and the terms and conditions of the transfer
shall be approved by Abbott’s Vice President, Compensation and Development and
Hospira’s Vice President of Compensation & Benefits.  Abbott and Hospira agree to use commercially
reasonable efforts to accomplish this transfer as soon as practicable following
the Distribution Date and to cooperate with each other to make such filings and
disclosures and obtain such approvals as may be deemed necessary or advisable.

 

5.2                               Irish
Pension Plans.

 

The assets and Liabilities determined as of the Distribution Date under
the Abbott Ireland
Pension & Death Benefit Plan for Salaried Staff, Abbott Ireland Pension & Death Benefit
Plan for Executive Staff, and
Abbott Ireland Pension & Death Benefit Plan for Hourly Employees attributable
to Non-U.S. Transferred Employees who are participants in those plans shall be
transferred to defined benefit pension plans to be established by Hospira.  The amount of assets and Liabilities subject
to the transfer shall be calculated on an Accumulated Benefit Obligation basis, as determined under FAS 87, by the
trustees of those plans, in consultation with Mercer Human Resources Consulting LTD, and the amount of the
transfer and the terms and conditions of the transfer shall be approved by
Abbott’s Vice President, Compensation and Development and Hospira’s Vice
President of Compensation & Benefits. 
Abbott and Hospira agree to use commercially reasonable efforts to
accomplish these transfers as soon as practicable following the Distribution
Date and to cooperate with each other to make such filings and disclosures and
obtain such approvals as may be deemed necessary or advisable.

 

5.3                               Overseas
Managers’ Pension Plan.

 

(a)                                  Establishment
of Hospira OMPP.  Effective on or
before the Distribution Date, Hospira shall establish the Hospira OMPP which
shall be substantially similar in all material respects to the Abbott OMPP as
of the Distribution Date provided, however, that Hospira may limit
participation in the Hospira OMPP to Transferred Employees who participated in
the Abbott OMPP immediately prior to their Transfer Dates.  Except as provided below, Hospira may amend
the Hospira OMPP at any time following the Distribution Date, including during
the Transition Period.

 

(b)                                 Assumed
OMPP Liabilities.  As of the
Distribution Date, Hospira shall, and shall cause the Hospira OMPP to assume
all Liabilities for all accrued obligations under the Abbott OMPP for the
benefits for Non-U.S. Transferred Employees determined as of the Distribution
Date, and Abbott and the Abbott OMPP shall be relieved of all Liabilities for
those benefits.

 

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

 

23

 

(i)             Non-U.S. Transferred Employees who are
participants in the Hospira OMPP and whose benefits are transferred to the
Hospira OMPP from the Abbott OMPP shall receive credit for vesting, eligibility
and benefit service for all service credited for those purposes under the
Abbott OMPP as of the Distribution Date as if that service had been rendered to
Hospira;

 

(ii)          the compensation paid by the Abbott Group to
all Non-U.S. Transferred Employees which was recognized under the Abbott OMPP
as of the Distribution Date shall be credited and recognized for all applicable
purposes under the Hospira OMPP as though it were compensation from the Hospira
Group; and

 

(iii)       the Hospira OMPP shall not be amended in any
manner that would reduce the accrued benefit (including any early retirement
subsidy) of any Non-U.S. Transferred Employee.

 

(d)                                 Abbott
OMPP After Distribution Date.  On
and after the Distribution Date, no employees of Hospira, including Non-U.S.
Transferred Employees, shall participate in or accrue any benefits under the
Abbott OMPP.  Without limiting the
generality of the foregoing, Non-U.S. Transferred Employees shall cease to
participate in the Abbott OMPP effective as of the Distribution Date.

 

5.4                               Other
Non-U.S. Retirement Plans.  If Hospira assumes any Liabilities with
respect to Non-U.S. Transferred Employees under an Abbott Benefit Plan which is
a defined benefit pension plan, and such Liabilities are not otherwise
addressed in this Article 5, then Abbott’s Vice President, Compensation
and Development and Hospira’s Vice President of Compensation and Benefits shall
mutually agree as to the amount, if any, of the assets to be transferred by the
Abbott Group (or the relevant Abbott Benefit Plan) to the Hospira Group (or the
relevant Hospira Benefit Plan) with respect to such Liabilities.

 

Article 6

 

Welfare
and Fringe Benefit Plans

 

6.1                               Severance Compensation and Benefits.

 

In accordance with Section 2.1 of this Agreement, Hospira shall be
responsible for any and all Liabilities to, or relating to, Transferred
Employees relating to severance and unemployment compensation and benefits and,
except as expressly provided below, Abbott shall be responsible for any and all
Liabilities to, or relating to, Abbott Retained Employees relating to severance
and unemployment compensation and benefits. 
Notwithstanding the foregoing, in the event that, with respect to any
country, (a) the number of Post-Distribution Transferred Employees in that
country at the conclusion of Abbott’s provision of transitional services in
that country is less than the

 

24

 

Allocated Employee Number for
that country and (b) Abbott reasonably concludes that it must layoff Post-Distribution
Employees in that country as a result of the Hospira Group’s failure to employ
a number of Post-Distribution Employees in that country equal to the Allocated
Employee Number, then, subject to the following sentence, Hospira shall
reimburse Abbott for the costs associated with those layoffs.  Notwithstanding the foregoing, Hospira shall
not be required to reimburse Abbott for a number of layoffs in any country
greater than (i) the Allocated Employee Number for that country less (ii) the
sum of (x) the number of Post-Distribution Transferred Employees in that
country and (y) the
number of Post-Distribution Employees in that country (other than
Post-Distribution Transferred Employees) to whom Hospira makes an offer of
employment that includes cash and long-term incentive compensation equivalent
to that provided to the Post-Distribution Employee by the Abbott Group.

 

6.2                               Retiree Medical And Life Insurance Coverage.

 

(a)                                  Abbott
Healthcare and Life Insurance Coverage. 
Abbott shall extend post-retirement healthcare and life insurance
coverage under the Abbott Retiree Medical Plan and the Abbott Retiree Life Plan
to each U.S. Transferred Employee (including any of his or her eligible
dependents) who, as of the Distribution Date, is eligible to retire under the
Abbott ARP.  Any U.S. Transferred
Employee who is eligible to elect coverage (or any eligible dependent who is
eligible to elect coverage) under the Abbott Retiree Medical Plan and Abbott
Retiree Life Plan shall be entitled to elect to begin that coverage as of any
date elected by that U.S. Transferred Employee that is after the Distribution
Date and on or after his or her termination of employment (for any reason) with
the Hospira Group.  Any post-retirement
healthcare and life insurance coverage provided to U.S. Transferred Employees
(and his or her dependents) shall be subject in all respects to the terms and
conditions of the Abbott Retiree Medical Plan and Abbott Retiree Life Plan as
in effect from time to time.  Abbott
shall be solely liable for any such post-retirement healthcare and life
insurance coverage.

 

(b)                                 Abbott
Coverage Requirements.  Abbott
expressly reserves the right to amend, alter, modify or terminate the terms of
the Abbott Retiree Medical Plan and/or the Abbott Retiree Life Plan, as the
case may be, at any time and to interpret the provisions of those plans with
respect to its employees, U.S. Transferred Employees and all of its other
former employees and their respective dependents; provided, however, that
Abbott agrees that any amendments, alterations, modifications, or terminations
with respect to those plans shall be applied in a consistent manner to Abbott
retirees and U.S. Transferred Employees who are eligible for coverage under
those plans.  Abbott shall not be
responsible or otherwise liable for the provision of post-retirement healthcare
and life insurance coverage to any U.S. Transferred Employees other than as
expressly provided in this Section 6.2. 
Only service and compensation with the Abbott Group prior to the
Distribution Date shall be taken into account for all purposes of the Abbott
Retiree Health Plan and the Abbott Retiree Life Plan, including, but not
limited to, for purposes of determining contribution levels.

 

(c)                                  Hospira
Healthcare and Life Insurance Coverage.  Nothing in this Agreement shall require Hospira to establish or
maintain any post-termination

 

25

 

healthcare and life insurance
coverage for any person, except as required by COBRA or other applicable law.

 

6.3                               VEBAs.

 

Effective as of the Distribution Date, Hospira shall establish the
Hospira VEBA and shall take all actions reasonably necessary to ensure that the
Hospira VEBA satisfies the requirements of Section 501(c)(9) of the Code
and is exempt from tax under Section 501(a) of the Code, including, but
not limited to, filing any required determination letter filing with the
Internal Revenue Service.  Effective as
of the Distribution Date, after making appropriate adjustment for any incurred
but not reported claims payable from the Abbott VEBAs, Abbott shall cause each
of the Abbott VEBAs to transfer to the Hospira VEBA any remaining assets and
reserves under the Abbott VEBAs which are attributable to contributions by U.S.
Transferred Employees.  Abbott and
Hospira shall each take any and all actions as they deem necessary or
appropriate to ensure that the transfer of assets and reserves from the Abbott
VEBAs to the Hospira VEBA does not result in any adverse tax consequences to
any of the Abbott VEBAs or the Hospira VEBA, Abbott, Hospira, or any
participants or beneficiaries under the Abbott VEBAs or the Hospira VEBA.  Abbott and Hospira shall cooperate with each
other to effect the provisions of this Section 6.3.

 

6.4                               COBRA.

 

Effective as of the Distribution Date, Hospira shall assume all
obligations for providing COBRA coverage to U.S. Transferred Employees (and
their eligible dependents), regardless of whether the qualifying event giving
rise to that coverage occurred prior to, on, or after the Distribution Date.

 

6.5                               Matching Grant and Combined Appeal Programs.

 

(a)                                  Matching
Grant Program.  Abbott shall retain
all Liabilities with respect to the Abbott Laboratories Matching Grant
Program.  Abbott shall match all
eligible contributions and grants made by each U.S. Transferred Employee prior
to the Distribution Date, in accordance with the terms of the Abbott
Laboratories Matching Grant Program. 
Hospira shall not be required to maintain a matching contribution
program following the Distribution Date.

 

(b)                                 Combined
Appeal Program.  Hospira shall
establish a Combined Appeal Program with terms that are substantially similar
to the terms of Abbott’s Combined Appeal Program as of the Distribution
Date.  Absent a new election by a U.S.
Transferred Employee under Hospira’s Combined Appeal Program, Hospira shall
honor elections made by U.S. Transferred Employees pursuant to Abbott’s
Combined Appeal Program.  Hospira shall
not be required to maintain a Combined Appeal Program following the Transition
Period.

 

26

 

Article 7

 

Equity
and Executive Compensation Programs

 

7.1                               Equity
Incentive Programs.

 

(a)                                  Treatment
of Abbott Options/Non-Retirement Eligible. 
Subject to Sections 7.1(c) and (d) of this Agreement, as of the Distribution
Date, (i) Abbott shall cancel, as of the Distribution Date, each Abbott Option
held by a Transferred Employee who is not eligible to retire under the Abbott
ARP or any other Abbott retirement plan designated by Abbott as of the
Distribution Date (where that retirement eligibility shall be determined by
Abbott in its sole discretion as of the Distribution Date, based on the terms
and conditions of the Abbott ARP or such other retirement plan covering the
applicable Transferred Employee, as applicable) and which is outstanding
immediately prior to the Distribution Date (whether or not then exercisable),
and (ii) Hospira shall grant each such Transferred Employee a Hospira Option in
respect of such cancelled Abbott Option.

 

The number of covered shares and the exercise price of the Hospira
Options shall reflect the Distribution and preserve the corresponding Abbott
Option’s intrinsic value as of the Distribution Date, that value being equal to
(A) the difference between the fair market value of a share of Abbott common
stock at the last closing price prior to the Distribution less that Abbott
Option’s exercise price per share, multiplied by (B) the number of shares
subject to that Abbott Option.  Each
Hospira Option shall maintain the same ratio between the exercise price per
share and the fair market value per share as reflected in the respective Abbott
Option being cancelled.  The exercise
price and number of shares subject to a Hospira Option granted in respect of
the cancelled Abbott Option shall be determined in accordance with
Section 424 of the Code so as to retain, where applicable and possible,
the tax and accounting treatment of each such Abbott Option.

 

The Hospira Options shall contain substantially similar terms and
conditions as the Abbott Options for which they were substituted.  On or prior to the Distribution Date, Abbott
and Hospira shall take such actions necessary to effectuate the foregoing,
including compliance with securities laws and other legal requirements
associated with the grant of stock options in the affected non-U.S.
jurisdictions.  Abbott agrees to assist
and facilitate the adoption and approval of the Hospira SIP in order to
maximize the possible tax benefits to Hospira consistent with the requirements
of Treasury Regulation Section 1.162-27(f)(4)(iii).

 

(b)                                 Treatment
of Abbott Options/Retirement Eligible. 
With respect to each Abbott Option which is held by a Transferred
Employee eligible to retire under the Abbott ARP or another Abbott retirement
plan as of the Distribution Date (where that retirement eligibility shall be
determined by Abbott in its sole discretion as of the Distribution Date, based
on the terms and conditions of the ARP or such other retirement plan covering
the applicable Transferred Employee, as applicable) and which is outstanding
immediately prior to the Distribution Date (whether or not then

 

27

 

exercisable), the Abbott
Compensation Committee shall take the necessary actions on or prior to the
Distribution Date to provide, solely for purposes of the Abbott Stock Programs,
that a retirement eligible Transferred Employee’s separation from employment
with Abbott to be employed with Hospira, under the provisions of this
Agreement, shall be treated as a retirement from an Abbott retirement plan for
purposes of the Abbott Stock Programs. 
The Abbott Compensation Committee shall make adjustments to Options held
by a retirement eligible Transferred Employee in accordance with the terms of
the Abbott Stock Programs as it deems necessary and/or appropriate to reflect
the spin-off of the Hospira Business.

 

(c)                                  Abbott
Options in Certain Non-U.S. Jurisdictions. 
Notwithstanding the provisions of Section 7.1(a) of this Agreement,
Abbott and Hospira may mutually agree, in their sole discretion, not to cancel
an Abbott Option and grant a corresponding Hospira Option in non-U.S.
jurisdictions where those actions will create or trigger adverse legal,
accounting or tax consequences for either Abbott, Hospira, and/or the affected
Non-U.S. Transferred Employees.  In such
circumstances, the Abbott Options of the affected Non-U.S. Transferred
Employees shall terminate in accordance with the terms of the Abbott Stock
Programs and the underlying option agreement and Hospira shall equitably
compensate the affected Non-U.S. Transferred Employees in an alternate manner
determined by Hospira in its sole discretion.

 

(d)                                 Treatment
of Abbott Options/Post-Distribution Transferred Employees.  Notwithstanding the provisions of
Section 7.1(a) of this Agreement, each Abbott Option held by a
Post-Distribution Transferred Employee or a Hospira Requested Employee who is
not eligible to retire under the Abbott ARP or any other Abbott retirement plan
designated by Abbott as of his or her Transfer Date (where that retirement
eligibility shall be determined by Abbott in its sole discretion as of that
Transfer Date, based on the terms and conditions of the ARP or such other
retirement plan covering that Employee, as applicable) and which is outstanding
immediately prior to that Transfer Date shall terminate in accordance with the
terms of the Abbott Stock Programs and the underlying option agreement and
Hospira shall equitably compensate that Employee in an alternate manner
determined by Hospira in its sole discretion.

 

(e)                                  Restricted
Stock.  The Abbott Compensation
Committee shall take the necessary actions on or prior to the Distribution Date
to cause the lapse of Restrictions (as defined in the applicable award
agreements) with respect to all Abbott restricted stock granted under the
Abbott Stock Programs held by each Transferred Employee (retirement eligible
and non-retirement eligible) as of the Distribution Date.

 

7.2                               Discontinued Participation in ESPP.

 

As of the Distribution Date, each Non-U.S. Transferred Employee (other
than a Post-Distribution Transferred Employee or Hospira Requested Employee)
who participates in the Abbott ESPP shall cease participation in the Abbott
ESPP and shall have his or her payroll deductions refunded by the Abbott Group as
soon as administratively practicable in accordance with the terms of the Abbott
ESPP.  As of the Transfer Date, each
Post-Distribution Transferred Employee or Hospira Requested

 

28

 

Employee who participates in
the Abbott ESPP shall cease participation in the Abbott ESPP and shall have his
or her payroll deductions refunded by the Abbott Group as soon as
administratively practicable in accordance with the terms of the Abbott ESPP.

 

7.3                               Deferred
Compensation Plan.

 

Abbott shall retain all Liabilities relating to, arising out of, or
resulting from the Abbott DCP.  Prior to
April 26, 2004 (or such later date as Abbott may determine, but in no
event later than the Distribution Date), Abbott shall amend the Abbott DCP to
provide that each Employee shall make an election, prior to April 26, 2004
(or such later date as Abbott may determine, but in no event later than the
Distribution Date) to either (i) treat that Employee’s commencement of
employment with the Hospira Group as a ‘termination of employment’ (as defined
in the Abbott DCP) with Abbott, provided that that Employee remains an employee
of the Abbott Group through the date immediately prior to the Distribution Date
or (ii) treat that Employee’s continuation of employment with the Hospira Group
as if it was a continuation of employment with the Abbott Group solely for
purposes of distribution of benefits (and not continued contributions).  Those U.S. Transferred Employees who
participate in the Abbott DCP and who do not timely execute an election shall
be treated as having made an election pursuant to (ii) above.  In the event that a Transferred Employee
makes an election pursuant to (i) above, distributions from the Abbott DCP
shall not begin any sooner than one (1) year following that Transferred
Employee’s Transfer Date.  Hospira
agrees that it shall provide written notice to Abbott of the subsequent
termination of employment of a Transferred Employee who makes an election
pursuant to (ii) above, in order for Abbott to carry out its obligations
hereunder.  With respect to any
Transferred Employee who makes an election pursuant to (ii) above, subsequent
termination of employment from the Hospira Group shall have the same effect
under the Abbott DCP as a termination of employment from the Abbott Group.  No deferrals shall be made under the Abbott
DCP in respect of Transferred Employees with respect of any period following
the Distribution Date.

 

7.4                               Grantor Trusts.

 

(a)                                  Grantor
Trust Payment Election.  On or prior
to the Distribution Date, Abbott shall solicit from each U.S. Transferred
Employee, who has a grantor trust that was created pursuant to an Abbott
Benefit Plan, a newly completed Grantor Trust Payment Election form for each
such trust.  The new forms shall
acknowledge that continued employment with the Hospira Group shall have the
same effect as continued employment with the Abbott Group with respect to the
determination of the settlement date under those trusts.  Hospira agrees that it shall provide written
notice to Abbott of the subsequent termination of employment of a U.S.
Transferred Employee with a grantor trust subject to this Section 7.4, in
order for Abbott to carry out its obligations hereunder and under the grantor
trust.  Abbott agrees that it shall, as
administrator of the applicable trusts, inform the trustee of the grantor
trusts of the proper settlement dates, when they occur, based on those U.S.
Transferred Employees’ continued employment with, and subsequent termination
from, Hospira.  A subsequent termination

 

29

 

of employment from the Hospira
Group shall have the same effect under the terms of the grantor trusts as a
termination of employment from the Abbott Group.

 

(b)                                 Maintenance
of Grantor Trusts.  Abbott will
retain the Liabilities associated with the Abbott Supplemental ARP for U.S.
Transferred Employees who have grantor trusts. 
Abbott shall continue to be obligated to maintain all U.S. Transferred
Employee’s grantor trusts which were created pursuant to any Abbott Benefit
Plan and shall continue to make annual contributions as may be required
pursuant to the terms and conditions of those grantor trusts.  Abbott shall treat any contributions relating
to services provided during the Transition Period that are made into the
applicable grantor trusts (either by Abbott or Hospira) the same as
contributions relating to services provided prior to the Distribution Date
which were made into the trusts by Abbott.

 

(c)                                  Necessary
Actions.  Abbott shall take all
commercially reasonable actions deemed necessary to give effect to this
Section 7.4, including, but not limited to, amending the grantor trusts or
any related Abbott Benefit Plan.

 

(d)                                 Hospira
Contributions.  Hospira shall be
obligated to make contributions to the applicable grantor trusts with respect
to any amounts earned for services rendered to the Hospira Group during the
Transition Period, whether those amounts are paid directly to the trustee for
the applicable grantor trusts or to Abbott for contributions into the
applicable grantor trusts, at the same time and in the same manner, as
contributions are made by Abbott with respect to any amounts earned for
services rendered to Abbott prior to the Distribution Date.

 

7.5                               Cash Profit
Sharing.

 

Each U.S. Transferred Employee who participated in the Abbott Cash
Profit Sharing Plan immediately prior to the Distribution Date and who remains
employed by the Hospira Group after the Distribution Date and through
November 15, 2004, shall be entitled to receive from Hospira a cash
payment for the 2004 plan year ending September 30, 2004 based on the same
percentage of eligible earnings used under the Abbott Cash Profit Sharing Plan
for such plan year.  The terms and conditions of payments to be made by
Hospira pursuant to this Section 7.5 shall be substantially similar in all
material respects to those that applied under the Abbott Cash Profit Sharing
Plan as in effect on the Distribution Date. 
Hospira shall make all determinations of payments under this
Section 7.5 and shall be solely responsible for all payments to or with
respect to U.S. Transferred Employees hereunder.  Hospira shall have no obligation to provide any cash profit
sharing plan in respect of periods following September 30, 2004.

 

7.6                               Other
Incentive Programs.

 

During the Transition Period, Hospira shall provide U.S. Transferred
Employees with Hospira cash incentive programs (other than the Abbott Cash
Profit Sharing Plan, the treatment of which is addressed in Section 7.5
above) on terms and conditions which are substantially similar in all material
respects to the terms and conditions of the cash incentive programs provided to
those U.S. Transferred Employees

 

30

 

on the Distribution Date;
provided, however that, after the Distribution Date, Hospira may change the
performance metrics and criteria to reflect its incentive strategies.  All payments to U.S. Transferred Employees
under the cash incentive programs described in this Section 7.6 shall be
made at such times as prescribed by those programs.  Hospira shall make in its sole discretion all determinations of
payments under the cash incentive programs described in this Section 7.6 with
respect to U.S. Transferred Employees and shall be solely responsible for all
payments to or with respect to U.S. Transferred Employees hereunder.  Hospira shall have no obligation to continue
any cash incentive program following the Transition Period.

 

Article 8

 

Miscellaneous

 

8.1                               Transfer of Records and Information.

 

Subject to applicable law,
Abbott shall transfer to Hospira any and all employment records and information
(including, but not limited to, any Form W-2 or other Internal Revenue Service
forms) with respect to Transferred Employees and other records reasonably
required by Hospira to enable Hospira to properly carry out its obligations
under this Agreement.  Such transfer of
records and information shall generally occur as soon as administratively practicable
following (a) the date hereof or (b) with respect to records and information
that are relevant to services provided in the Transition Services Agreements,
the date upon which the provision of those services terminates.  After the transfer of those records to
Hospira, Hospira shall permit Abbott to have reasonable access to such records
and such information, each as set forth in Article VI of the Separation
and Distribution Agreement.

 

8.2                               Preservation
of Rights to Amend or Terminate Plans.

 

Nothing in this Agreement shall be construed as a limitation on the
right of the Abbott Group or the Hospira Group to amend or terminate any
Benefit Plan so long as that amendment or termination is not contrary to this
Agreement.  In addition, nothing in this
Agreement shall be construed as a limitation on the right of the Abbott Group
or the Hospira Group to amend any Benefit Plan to conform to requirements of
applicable law or the provisions of a collective bargaining agreement,
including any changes that are effective during the Transition Period.

 

31

 

8.3                               Transition
Services.

 

Except as otherwise provided in the Transition Services Agreements or
as otherwise expressly provided herein, neither party shall have any
responsibility for providing services to the other party with respect to
employee or Benefit Plan matters after the Distribution Date.

 

8.4                               Reimbursement.

 

Abbott
and Hospira acknowledge that the Abbott Group, on the one hand, and the Hospira
Group, on the other hand, may incur costs and expenses (including, without
limitation, contributions to Benefit Plans and the payment of insurance
premiums) which are, as set forth in this Agreement, the responsibility of the
other party.  Accordingly, Abbott and
Hospira agree to reimburse each other, as soon as practicable but in any event
within thirty (30) days of receipt from the other party of appropriate
verification, for all such costs and expenses.

 

8.5                               Clara
Abbott Foundation.

 

For purposes of clarification, no reference to benefits or Benefit Plan
contained in this Agreement shall include or affect the benefits and services
provided to employees or retirees of the Abbott Group by the Clara Abbott
Foundation.

 

8.6                               Incorporation
By Reference.

 

The following sections of the Separation and Distribution Agreement are
hereby incorporated into this Agreement by reference: Section 9.01.
Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures,
Section 9.02. Governing Law, Section 9.04. Third Party Beneficiaries,
Section 9.05. Notices, Section 9.06. Severability, Section 9.07.
Force Majeure, Section 9.08. Responsibility for Expenses,
Section 9.09. Headings, Section 9.10. Survival of Covenants,
Section 9.12. Waivers of Default, and Section 9.13. Amendments.

 

8.7                               Limitation
on Enforcement.

 

This Agreement is an agreement solely between Abbott and Hospira and,
to the extent applicable, TAP.  Nothing
in this Agreement, whether express or implied, confers upon any employee of the
Abbott Group, the Hospira Group, TAP, any Employee, any beneficiary of an Employee,
any former employee of the Abbott Group or TAP or any other person, any rights
or remedies, including, but not limited to any right to (a) employment or
recall; (b) continued employment or continued service for any specified period;
or (c) claim any particular compensation, benefit or aggregation of benefits,
of any kind or nature.

 

8.8                               Assignability.

 

This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided,
however,

 

32

 

that no party hereto may assign
its respective rights or delegate its respective obligations under this
Agreement without the express prior written consent of the other parties
hereto.  Notwithstanding the foregoing,
this Agreement will be assignable in whole in connection with a merger or
consolidation or the sale of all or substantially all of the Assets (as defined
in the Separation and Distribution Agreement) of a party hereto so long as the
resulting, surviving or transferee Person (as defined in the Separation and
Distribution Agreement) assumes all the obligations of the relevant party
hereto by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other parties hereto.

 

8.9                               Further
Assurances and Consents.

 

In addition to the actions specifically provided elsewhere in this
Agreement, each of the parties hereto shall use commercially reasonable efforts
to (a) execute and deliver such further instruments and documents and take such
other actions as the other party may reasonably request in order to effectuate
the purposes of this Agreement and carry out the terms hereof; (b) take or
cause to be taken, all actions and do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations
and agreements or otherwise to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using
commercially reasonable efforts to obtain any consent and approvals and to make
any filings and applications necessary or desirable in order to consummate the
transactions contemplated by this Agreement; provided that no party hereto
shall be obligated to pay any consideration therefor (except for filing fees
and other similar charges) to any third party from whom those consents,
approvals and amendments are required or to take any action or omit to take any
action if the taking or the omission to take action would be unreasonably burdensome
to the party or the business thereof.

 

8.10                        Third
Party Consent.

 

If the obligation of any party under this Agreement is dependent on the
consent of a third party, such as a vendor or insurance company, and that
consent is withheld, Abbott and Hospira shall use commercially reasonable
efforts to implement the applicable provisions of this Agreement to the fullest
extent practicable.  If any provision of
this Agreement cannot be implemented due to the failure of a third party to
consent, Abbott and Hospira shall negotiate in good faith to implement the
provision in a mutually satisfactory manner, taking into account the original
purposes of the provision in light of the Distribution and communications to
affected Transferred Employees.

 

8.11                        Effect if Distribution Does not Occur.

 

If the Distribution does not occur, then all actions and events that
are to be taken under this Agreement as of the Distribution Date or otherwise
in connection with the Distribution, shall not be taken or occur except to the
extent specifically provided by Abbott.

 

33

 

8.12                        Disputes.

 

Abbott and Hospira agree to use commercially reasonable efforts to
resolve in an amicable manner any and all controversies, disputes and claims
between them arising out of or related in any way to this Agreement.  Abbott and Hospira agree that any
controversy, dispute or claim (whether arising in contract, tort or otherwise)
arising out of or related in any way to this Agreement, which cannot be amicably
resolved informally will be resolved pursuant to the alternative dispute
resolution procedures set forth in Article VII of the Separation and
Distribution Agreement and the Master ADR Agreement attached hereto as
Schedule 5.

 

8.13                        Schedules.

 

As of the Distribution Date, the parties shall update Schedules 2 and 4
to this Agreement.

 

8.14                        Mutual
Drafting.

 

This Agreement will be deemed to be the joint work product of the
parties and any rule of construction that a document shall be interpreted or construed
against a drafter of such document shall not be applicable.

 

34

 

The parties have caused this Agreement to be signed by their authorized
representatives as of the Distribution Date.

 

	
  HOSPIRA, INC.

  	
  ABBOTT LABORATORIES

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title

  	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Solely for purposes of Sections 2.4, 8.7,
  and 8.8

  	
   

  
	
   

  	
   

  
	
  TAP PHARMACEUTICAL PRODUCTS INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
									

 

35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}]]