Document:

Exhibit 10.3

 

FORM OF TAX SHARING AGREEMENT

 

Between

 

ABBOTT LABORATORIES

 

on behalf of itself

 

and the ABBOTT AFFILIATES

 

and

 

ABBVIE INC.

 

on behalf of itself

 

and the ABBVIE AFFILIATES

 

 

TAX SHARING AGREEMENT

 

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

 

R E C I T A L S:

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I.   DEFINITIONS

 

Section 1.01                            Definitions.  Reference is made to Section 5.01 of this Agreement and Section 9.15 of the Distribution Agreement regarding the interpretation of certain words 

 

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and phrases used in this Agreement. Capitalized terms used in this Agreement and not defined in this Section 1.01 shall have the meanings assigned to them in the Distribution Agreement. In addition, for the purpose of this Agreement, the following terms shall have the meanings set forth below.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“IRS” means the United States Internal Revenue Service.

 

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

 

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

 

“Parties” means the parties to this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Remitting Party” has the meaning ascribed to such term in Section 5.05(b).

 

“Responsible Party” has the meaning ascribed to such term in Section 5.05(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

 

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any taxpayer or consolidated, combined or unitary group of taxpayers; and (ii) any Employment Tax.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II.   RESPONSIBILITY FOR TAX

 

Section 2.01                            Responsibility for Tax.

 

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

 

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

 

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liabilities in the Separation and including such transfers contemplated to occur after the Effective Time except to the extent recoupable by Abbott or any Abbott Affiliate, and (v) any Tax imposed on Abbott or an Abbott Affiliate as a result of an action undertaken, or a failure to act, by AbbVie or an AbbVie Affiliate after the Effective Time (other than described in Section 2.01(d)).

 

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

 

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

 

Section 2.02                            Refunds, Tax Benefits, and Other Allocations

 

(a)                        Refunds and Carrybacks.

 

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

 

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

 

(iii)                     Payment of Refunds.  Except as provided in Section 2.02(a)(iv), AbbVie shall forward to Abbott, or reimburse Abbott for, any refunds due Abbott (pursuant to the terms of this Section 2.02(a)) after receipt thereof (less any Tax Detriment attributable to such refunds), and Abbott shall forward to AbbVie, or reimburse AbbVie for, any refunds due AbbVie (pursuant to the terms of this Section 2.02(a)) after receipt

 

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

 

(iv)                    Carrybacks.

 

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

 

2)                            If AbbVie has a loss or other Tax attribute for any Post-Distribution Period that is to be carried back to any Pre-Distribution Period, AbbVie shall notify Abbott that such item should be carried back.  Such notification shall include a description in reasonable detail of the grounds for the refund and the amount thereof, and a certification by an appropriate officer of AbbVie setting forth AbbVie’s belief, based on a thorough

 

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examination of the facts and Tax law relating to the Tax treatment of such item, that (A) the Tax treatment of such item is supported by “substantial authority” within the meaning of Section 6662 of the Code (and the Treasury Regulations thereunder) or, where applicable, any analogous provision of state, local or foreign law and (B) the transaction has economic substance for purposes of Section 7701 of the Code and any analogous provision of state, local or foreign law.  Abbott, at AbbVie’s expense, shall cooperate with AbbVie in connection with the filing and processing of any AbbVie carryback and shall provide AbbVie with copies of all correspondence related thereto.

 

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

 

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

 

(b)                        Effect of Audit Adjustments.

 

Notwithstanding Section 2.01 —

 

(i)                           Payments by AbbVie to Abbott.  Except as provided in 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 AbbVie Group for any Post-Distribution Period, then AbbVie shall pay to Abbott an amount equal to the lesser of the Tax Benefit for each taxable period and the Corresponding Portion of the Tax Detriment.  For the avoidance of doubt, this Section 2.02(b)(i) shall apply to any adjustment under Section 482 of the Code or any similar provisions increasing the amount of payments received or

 

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deemed received by Abbott or any Abbott Affiliate under the Abbott Park Lease.

 

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

 

(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.

 

(c)                         Other Allocations

 

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

 

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

 

(iii)                     Treatment of Tax Attributes.  Abbott shall in good faith advise AbbVie in writing of the portion, if any, of the Tax attributes, including overall foreign loss or consolidated, combined or unitary attributes, which Abbott determines shall be allocated or apportioned to the AbbVie Group under applicable Law. AbbVie and all members of the AbbVie Group shall prepare all Tax Returns in accordance with such written notice. In the event that any temporary or final amendments to Treasury Regulations are promulgated after the date of this Agreement that provide for any election to apply such regulations retroactively, then any such election shall be made only to the extent that Abbott and AbbVie collectively agree to make such election. As soon as

 

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practicable after receipt of a written request from AbbVie, Abbott shall provide copies of any studies, reports, and workpapers supporting the Tax attributes, including earnings and profits, allocable to the AbbVie Group. For the absence of doubt, Abbott shall not be liable to AbbVie or any member of the AbbVie Group for any failure of any determination under this Section 2.0(c) to be accurate under applicable Law.

 

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

 

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

 

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

 

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

 

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AbbVie the lesser of the amount of its Tax Benefit and the amount of the corresponding Tax Detriment in accordance with Section 2.02(b).

 

Section 2.04                            Tax Returns.

 

(a)                        Except as provided in Section 2.04(b), Abbott shall prepare and timely file all Tax Returns for Pre-Distribution Periods for Abbott and all of its Affiliates, including AbbVie and all of its Affiliates, and all Tax Returns for Straddle Periods for all members of the Abbott Group.  In connection with each federal, state, local, and foreign Tax Return that is required under this Agreement to be filed by Abbott for taxable periods ending in 2012, AbbVie shall timely furnish to Abbott Tax information and documents as Abbott may reasonably request.  With respect to any information required to be provided by AbbVie pursuant to this Section 2.04(a), (i) Abbott shall utilize such information in the preparation of the appropriate Tax Returns as provided by AbbVie, except to the extent (a) AbbVie provides its prior written consent to change any such information, or (b) Abbott determines in good faith that such information is inaccurate or incomplete in a material respect, and (ii) AbbVie agrees to indemnify and hold harmless Abbott and its Affiliates from and against any cost, fine, penalty, or other expense of any kind attributable to the misconduct or negligence of AbbVie or any of its Affiliates in supplying Abbott with inaccurate or incomplete information.  An appropriate officer of AbbVie shall provide a certification that, to such officer’s best knowledge and belief, any and all information provided pursuant to this Section 2.04(a) is accurate and complete.  If AbbVie fails to provide any information required by this Section 2.04(a) within the time period specified, Abbott may file the applicable Tax Returns based on the information available at the time such Tax Returns are due and AbbVie shall indemnify and hold harmless Abbott and its Affiliates from Taxes or other costs imposed on Abbott or any of its Affiliates but only to the extent resulting from AbbVie’s failure to provide such information in a timely manner.  In addition, AbbVie shall provide Abbott with all documents and information, and make available employees and officers of AbbVie and AbbVie Affiliates as Abbott reasonably requests to prepare and file any Tax Return for any Pre-Distribution Period or Straddle Period (including any claims for refunds described in Section 2.02(a)) or to conduct any Tax Contest with respect to any such Tax Return.  [If AbbVie is responsible under Section 2.01 for a portion of any Tax reported on a Tax Return prepared under this Section 2.04(a) by Abbott, Abbott shall provide AbbVie with a copy of such Tax Return at least thirty (30) days prior to its due date.  AbbVie shall notify Abbott of any disagreement within 20 days of AbbVie’s receipt of such Tax Return.  Any dispute shall be resolved pursuant to the procedures provided by this Agreement.  AbbVie shall be solely responsible for preparing and timely filing all Tax Returns relating to non-income taxes of AbbVie or any AbbVie Affiliate for a Pre-Distribution Period and shall prepare and timely file all Tax Returns for Straddle Periods for all members of the AbbVie Group.  If Abbott is responsible under Section 2.01(a) for a portion of any Tax reported

 

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on a Straddle Period Tax Return for any member of the AbbVie Group, AbbVie shall provide Abbott with a copy of such Tax Return at least thirty (30) days prior to its due date.  Abbott shall notify AbbVie of any disagreement within 20 days of Abbott’s receipt of such Tax Return.  Any dispute shall be resolved pursuant to the procedures provided by this Agreement.

 

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

 

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

 

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

 

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

 

(b)                        Record Retention.  Each of Abbott and AbbVie shall retain all Tax Records in its possession as of the Effective Time relating to any Pre-Distribution Period that are relevant to the other Party for purposes described in Section

 

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2.05(a) until such time as the other Party shall consent to the disposition of such Tax Records, which consent shall not be withheld unreasonably.

 

Section 2.06                            Tax Contests.

 

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

 

(b)                        Control of Tax Contests.

 

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

 

(iii)                     Covered Transaction Taxes.  AbbVie shall have the right to participate in the conduct of a Tax Contest related to Covered Transactions Taxes

 

14

 

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

 

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

 

ARTICLE III.   TRANSACTIONS TAX

 

Section 3.01                            Transactions Tax.

 

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

 

15

 

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

 

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

 

ARTICLE IV.   REPRESENTATIONS AND COVENANTS

 

Section 4.01                            Representations.

 

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

 

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

 

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

 

(d)                        AbbVie represents that, as of the date of this Agreement, neither it nor any of its Affiliates has any plan or intention to take any action that is inconsistent with the Tax treatment of the transactions provided by the Private Letter

 

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Ruling, the Other Tax Rulings or Tax Opinion or that otherwise would result in a Covered Transaction Tax.

 

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

 

Section 4.02                            Covenants.

 

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

 

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performing the compensation payment, withholding, depositing and Tax form filing functions described above.

 

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

 

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

 

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promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

 

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

 

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

 

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

 

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

 

(e)                         Exception.  Notwithstanding the foregoing, AbbVie shall be permitted to take an action inconsistent with Section 4.02(b), if, prior to taking such action, AbbVie provides notification to Abbott of its plans with respect to such

 

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action and promptly responds to any inquiries by Abbott following such notification, and (unless Abbott agrees otherwise in writing) either:

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)                          Duty to Mitigate Recognition or Recapture of Income. Prior to any event that may result in recognition or recapture of income (including under any gain recognition agreement entered into pursuant to Treasury Regulations Section 1.367(a)-8), Abbott and AbbVie shall use (and shall cause the members of the Abbott Group and AbbVie Group, respectively, to use) all commercially

 

20

 

reasonably efforts to eliminate such gain recognition or recapture of income or otherwise avoid or minimize the impact thereof to the other party, including by the execution of an appropriate gain recognition agreement pursuant to Treasury Regulations Section 1.367(a)-8.

 

(g)                         ICO Agreement

 

(i)                           Deferred AbbVie Local Business.  A payment made under an ICO Agreement in connection with the transfer and acquisition of a Deferred AbbVie Local Business by AbbVie or an AbbVie Affiliate following the Distribution Date and the corresponding payment by Abbott or an Abbott Affiliate to AbbVie or an AbbVie Affiliate shall be characterized for U.S. income Tax purposes and on any related Tax Return as the purchase by Abbott or the relevant Abbott Affiliate, as the case may be, of the Deferred AbbVie Local Business of the Abbott Affiliate operating such business following the Distribution Date in exchange for such Abbott Affiliate transferring the Deferred AbbVie Local Business to the AbbVie Affiliate (the “Reporting Position”) occurring on the Distribution Date.  The Parties agree that if a Tax Authority challenges the Reporting Position, the Parties will jointly defend such position until a Determination.  If the Determination with respect to such challenge does not confirm the Reporting Position, the Party receiving a Tax Benefit as a result of such Determination shall pay the amount of such Tax Benefit to the other Party incurring the Tax Detriment, if any, under the principles of Section 2.02(b) hereof but in no event exceeding the amount of such Tax Detriment.

 

(ii)                        Other Payments and Income.  The payment by Abbott or any Abbott Affiliate or by AbbVie or any AbbVie Affiliate under Section 2.05 or Section 2.6 of any ICO Agreement shall be characterized for U.S. income Tax purposes, as paid by or received by Abbott or any Abbott Affiliate in its capacity as agent of AbbVie or any AbbVie Affiliate with respect to the Deferred AbbVie Local Business (the “Payment Reporting Position”).  AbbVie or the relevant AbbVie Affiliate shall account for the net income of the Deferred AbbVie Local Business following the Distribution Date for U.S. federal income Tax purposes and on the relevant U.S. federal income Tax Returns and Abbott or the relevant Abbott Affiliate shall not report such income for purposes of filing their U.S. federal income Tax Returns (the “Income Reporting Position”).  Any foreign Taxes paid with respect to the income of the Deferred AbbVie Local Business shall be, for all U.S. income Tax purposes, for the account of AbbVie or the relevant AbbVie Affiliate and Abbott or the relevant AbbVie Affiliate shall not claim such foreign income Taxes for U.S. income Tax purposes on any Tax Return (the “Foreign Tax Credit Reporting Position”).  The Parties further agree to defend the Payment Reporting Position, the Income Reporting Position and the Foreign Tax Credit Reporting Position if challenged

 

21

 

by the IRS until a Determination.  If the Determination does not confirm the relevant position, and such Determination results in a Tax Detriment to a Party and a Tax Benefit to the other Party, the Party receiving the Tax Benefit shall pay the amount of such Tax Benefit to the other Party incurring the Tax Detriment under the principles of Section 2.01(b) hereof but in no event exceeding the amount of such Tax Detriment.

 

Section 4.03                            No Continuing Liability for Former Members.

 

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

 

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

 

ARTICLE V.   MISCELLANEOUS PROVISIONS

 

Section 5.01                            Incorporation by Reference.  The following sections of the Distribution Agreement are hereby incorporated into this Agreement by reference: Section 9.01. Counterparts; Entire Agreement; Corporate Power; Signatures and Delivery, Section 9.02. Governing Law, Section 9.03. Assignability, Section 9.04. Third Party Beneficiaries, Section 9.06. Severability, Section 9.07. Force Majeure, Section 9.10. Headings, Section 9.11. Survival of Covenants, Section 9.12. Subsidiaries, Section 9.13. Waivers of Default, and Section 9.14. Amendments, Section 9.15. Interpretation, and Section 9.18. Mutual Drafting.

 

Section 5.02                            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

 

22

 

Building AP6D, Dept. 364

Abbott Park, IL 60064-6020

Facsimile: (847) 938-6277

Attention: General Counsel

 

With a copy to:

Abbott Laboratories

100 Abbott Park Road

Building AP6D, Dept. 367

Abbott Park, IL 60064-6057

Facsimile: (847) 935-3346

Attention: Vice President-Tax

 

If to AbbVie, to:

AbbVie Inc.

1 North Waukegan Road

North Chicago, Illinois 60064

Facsimile:

Attention: General Counsel

 

With a copy to:

AbbVie Inc.

1 North Waukegan Road

North Chicago, Illinois 60064

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

 

Section 5.04                            Dispute Resolution.  Any and all disputes between Abbott and AbbVie arising out of any provision of this Agreement shall be resolved through the procedures provided in Schedule 7.01 of the Distribution Agreement.

 

Section 5.05                            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

 

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

 

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

 

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

 

 

	
Abbott   Laboratories
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
AbbVie Inc.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Title
    	
 
    

 

25Exhibit 10.4

 

SPECIAL PRODUCTS MASTER AGREEMENT

 

BY AND BETWEEN

 

ABBOTT LABORATORIES

 

AND

 

ABBVIE INC.

 

DATED AS OF [·]

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE I
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
 
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II
    	
ABBVIE SPECIAL PRODUCTS ASSETS
    	
12
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
 
    	
AbbVie Special Products Assets
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.02
    	
 
    	
Liabilities
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.03
    	
 
    	
Disclaimer of Representations and Warranties
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.04
    	
 
    	
Further Assurances
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III
    	
GRANT OF RIGHTS
    	
14
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
 
    	
Grant of Rights to Abbott
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.02
    	
 
    	
Grant of Rights to AbbVie
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.03
    	
 
    	
Sublicense Rights
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.04
    	
 
    	
Obligation with Respect to Affiliates and   Subsidiaries
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.05
    	
 
    	
In-Licensed Intellectual Property
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.06
    	
 
    	
Third Party License Agreements
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
INTELLECTUAL PROPERTY RIGHTS
    	
19
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
 
    	
Disclosure of Improvements and Special   Products Know-How
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.02
    	
 
    	
Ownership
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.03
    	
 
    	
Prosecution of Patent Rights
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.04
    	
 
    	
Prosecution Costs
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.05
    	
 
    	
Prosecution Cooperation
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.06
    	
 
    	
Notice of Issuance
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.07
    	
 
    	
Matters Involving Infringement
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.08
    	
 
    	
Third Party Infringement Suit
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V
    	
GOVERNANCE
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
DEVELOPMENT MATTERS
    	
22
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
 
    	
Development Rights and Responsibilities
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.02
    	
 
    	
Development Activities for Special Products
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.03
    	
 
    	
Development Activities for New Products
    	
24
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
COMMERCIALIZATION MATTERS
    	
24
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
 
    	
Abbott Territory
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.02
    	
 
    	
AbbVie Territory
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VIII
    	
MANUFACTURING MATTERS
    	
26
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
 
    	
Supply
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
Section 8.02
    	
 
    	
Cooperation
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IX
    	
REGULATORY MATTERS
    	
27
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
 
    	
Ownership of Regulatory Approvals
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.02
    	
 
    	
Allocation of Regulatory Responsibilities
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.03
    	
 
    	
Sharing of Correspondence with Governmental   Authorities
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.04
    	
 
    	
Pharmacovigilance and Medical Inquiries
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.05
    	
 
    	
Labeling Changes
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.06
    	
 
    	
Notification or Information
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.07
    	
 
    	
Recalls
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE X
    	
INDEMNIFICATION
    	
30
    
	
 
    	
 
    	
 
    
	
Section 10.01
    	
 
    	
Indemnification by AbbVie
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.02
    	
 
    	
Indemnification by Abbott
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.03
    	
 
    	
Indemnification Obligations Net of Insurance   Proceeds and Other Amounts
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.04
    	
 
    	
Procedures for Indemnification of Third   Party Claims
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.05
    	
 
    	
Additional Matters
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.06
    	
 
    	
Right of Contribution
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.07
    	
 
    	
Remedies Cumulative
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.08
    	
 
    	
Survival of Indemnities
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.09
    	
 
    	
Covenant Not to Sue
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XI
    	
CONFIDENTIALITY
    	
35
    
	
 
    	
 
    	
 
    
	
Section 11.01
    	
 
    	
Confidentiality
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11.02
    	
 
    	
Protective Arrangements
    	
37
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11.03
    	
 
    	
Other Permitted Disclosures
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XII
    	
DISPUTE   RESOLUTION
    	
38
    
	
 
    	
 
    	
 
    
	
Section 12.01
    	
 
    	
Disputes
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XIII
    	
TERM
    	
39
    
	
 
    	
 
    	
 
    
	
Section 13.01
    	
 
    	
Term
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
Section 13.02
    	
 
    	
Expiration
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
Section 13.03
    	
 
    	
Survival
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XIV
    	
MISCELLANEOUS
    	
40
    
	
 
    	
 
    	
 
    
	
Section 14.01
    	
 
    	
Counterparts; Entire Agreement; Corporate   Power; Facsimile Signatures
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.02
    	
 
    	
Governing Law
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.03
    	
 
    	
Assignability
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.04
    	
 
    	
Third Party Beneficiaries
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.05
    	
 
    	
Notices
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.06
    	
 
    	
Severability
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.07
    	
 
    	
Force Majeure
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.08
    	
 
    	
No Set Off
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.09
    	
 
    	
Responsibility for Expenses
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.10
    	
 
    	
Headings
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.11
    	
 
    	
Subsidiaries
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.12
    	
 
    	
Waivers of Default
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.13
    	
 
    	
Amendments
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.14
    	
 
    	
Interpretation
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.15
    	
 
    	
Public Announcements
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.16
    	
 
    	
Specific Performance
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.17
    	
 
    	
Mutual Drafting
    	
45
    

 

iii

 

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

 

R E C I T A L S:

 

WHEREAS, Abbott and AbbVie have entered into that certain Separation and Distribution Agreement dated as of [· ] (the “Separation Agreement”) that, among other things, sets forth the terms and conditions pursuant to which the AbbVie Business (as defined in the Separation Agreement) is separated from the Abbott Business (as defined in the Separation Agreement) (the “Separation”);

 

WHEREAS, each of Abbott and AbbVie has determined that it is necessary and advisable in connection with the Separation to allocate ownership of certain intellectual property, permits, approvals and other Assets (as defined in the Separation Agreement) relating to, and responsibilities for, certain Special Products (as defined herein); and

 

WHEREAS, Abbott and AbbVie desire to set forth the terms and conditions that shall govern the allocation of rights and responsibilities of Abbott and AbbVie with respect to the Special Products.

 

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

 

ARTICLE I
 DEFINITIONS

 

Section 1.01          Definitions.  Reference is made to Section 14.13 regarding the interpretation of certain words and phrases used in this Agreement.  Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Separation 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 Indemnitees” means: (i) Abbott and each Abbott Subsidiary; (ii) each of the respective past, present and future directors, officers, employees or agents of the entities described in (i) above, in each case in their respective capacities as such; and (iii) each of the heirs, executors, administrators, successors and assigns of any of the foregoing.

 

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

 

(i)            any Abbott Special Products Liability;

 

 

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

 

(iii)          except as otherwise set forth in any applicable Special Products Ancillary Agreement, the conduct of any business, operation or activity by  or on behalf of Abbott or an Abbott Subsidiary from and after the Effective Time with respect to Special Products; and

 

(iv)          any breach by Abbott or an Abbott Subsidiary of this Agreement or any Special Products Ancillary Agreement.

 

“Abbott In-Licensed Intellectual Property” means any In-Licensed Intellectual Property Controlled by Abbott or any Abbott Subsidiary.

 

“Abbott New Product Know-How” means any Know-How Controlled by Abbott or any Abbott Subsidiary to the extent such Know-How is related to the research, Development, Manufacture, use, or Commercialization of a New Product (but that does not also relate to a Special Product).

 

“Abbott New Product Patents” means any Patent Controlled by Abbott or any Abbott Subsidiary that covers the Development, Manufacture, use or Commercialization of a New Product (but that does not also cover a Special Product).

 

“Abbott Special Products Clinical Development Data” means, with respect to a given Special Product, any Clinical Development Data Controlled by Abbott or any Abbott Subsidiary and existing as of the Effective Time relating to such Special Product or generated by or on behalf of Abbott or any Abbott Subsidiary during the term of this Agreement in the course of conducting Clinical Development with respect to such Special Product.  Abbott Special Products Clinical Development Data does not include any Clinical Development Data that constitutes an AbbVie Special Products Asset and is conveyed to AbbVie or any of its Subsidiaries pursuant to the Separation Agreement.

 

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

 

“Abbott Special Products Patents” means any Patent Controlled by Abbott or any Abbott Subsidiary that covers the Development, Manufacture, use or Commercialization of a Special Product.  Abbott Special Products Patents do not include any Patents that constitute AbbVie Special Products Assets and are conveyed to AbbVie or any of its Subsidiaries pursuant to the Separation Agreement.

 

2

 

“Abbott Special Products Regulatory Documentation” means any Regulatory Documentation Controlled by Abbott or any Abbott Subsidiary to the extent such Regulatory Documentation relates to a Special Product.  Abbott Special Products Regulatory Documentation does not include any Regulatory Documentation that constitutes AbbVie Special Products Assets and is conveyed to AbbVie or any of its Subsidiaries pursuant to the Separation Agreement.

 

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

 

“Abbott Territory” means anywhere in the world other than the AbbVie Territory.

 

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

 

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

 

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

 

(i)            any AbbVie Special Products Liability;

 

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

 

(iii)          except as otherwise set forth in any applicable Special Products Ancillary Agreement, the conduct of any business, operation or activity by  or on behalf of AbbVie or an AbbVie Subsidiary from and after the Effective Time with respect to Special Products; and

 

(iv)          any breach by AbbVie or an AbbVie Subsidiary of this Agreement or any Special Products Ancillary Agreement.

 

“AbbVie In-Licensed Intellectual Property” means any In-Licensed Intellectual Property Controlled by AbbVie or any AbbVie Subsidiary.

 

“AbbVie New Product Know-How” means any Know-How Controlled by AbbVie or any AbbVie Subsidiary to the extent such Know-How is related to the research, Development, Manufacture, use, or Commercialization of a New Product (but that does not also relate to a Special Product).

 

“AbbVie New Product Patents” means any Patent Controlled by AbbVie or any AbbVie Subsidiary that covers the Development, Manufacture, use or Commercialization of a New Product (but that does not also cover a Special Product).

 

3

 

“AbbVie Special Products Assets” has the meaning set forth in Section 2.01.

 

“AbbVie Special Products Clinical Development Data” means, with respect to a given Special Product, any Clinical Development Data Controlled by AbbVie or any AbbVie Subsidiary and existing as of the Effective Time relating to such Special Product (including that Clinical Development Data that constitutes an AbbVie Special Products Asset and is conveyed to AbbVie or any of its Subsidiaries pursuant to the Separation Agreement) or generated by or on behalf of AbbVie or any AbbVie Subsidiary during the term of this Agreement in the course of conducting Clinical Development with respect to such Special Product.

 

“AbbVie Special Products Liabilities” means the Liabilities (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time) relating to, arising out of or resulting from (i) actions, inactions, or omissions by or on behalf of Abbott or any Abbott Subsidiary occurring or existing prior to the Effective Time, or (ii) conditions, events, facts or circumstances occurring or existing prior to the Effective Time, in each of clauses (i) and (ii) with respect to: (A) the AbbVie Special Products Assets; (B) the Commercialization of, or in connection with the Commercialization of, a Special Product in the AbbVie Territory; (C) the provision of a Special Product pursuant to a compassionate use, patient name or similar program in both the AbbVie Territory and the Abbott Territory; (D) the Manufacture of, or in connection with the Manufacture of, a Special Product at a site transferred to AbbVie or an AbbVie Subsidiary or held by a Transferred Entity as part of the Separation; or (E) the Development of, or in connection with the Development of, a Special Product at a site transferred to AbbVie or an AbbVie Subsidiary or held by a Transferred Entity as part of the Separation.

 

“AbbVie Special Products Patents” means any Patent Controlled by AbbVie or any AbbVie Subsidiary that covers the Development, Manufacture, use or Commercialization of a Special Product, including those Patents that constitute AbbVie Special Products Assets and are conveyed to AbbVie or any of its Subsidiaries pursuant to the Separation Agreement.

 

“AbbVie Special Products Regulatory Documentation” means any Regulatory Documentation Controlled by AbbVie or any AbbVie Subsidiary to the extent such Regulatory Documentation relates to a Special Product, including that Regulatory Documentation that constitutes an AbbVie Special Products Asset and is conveyed to AbbVie or any of its Subsidiaries pursuant to the Separation Agreement.

 

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

 

“AbbVie Territory” means: (i) for all Special Products other than Luvox®, Advicor® and Simcor®, the United States; (ii) for Luvox®, Japan; and (iii) for Advicor® and Simcor®, the entire world except Canada.

 

4

 

“Act” means the United States Federal Food, Drug, and Cosmetic Act, as amended, and the rules, regulations, guidelines, guidances and requirements promulgated thereunder, as may be in effect from time to time.

 

“ADR” has the meaning set forth in Section 12.01(a).

 

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

 

“Agreement” means this Special Products Master Agreement and each of the Schedules and Exhibits hereto.

 

“Ancillary Agreement” has the meaning set forth in the Separation Agreement.

 

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

 

“Clinical Development” means those pre-clinical and clinical activities, including post Regulatory Approval studies that are necessary or reasonably useful to obtain or maintain Regulatory Approval for a product for an indication, including testing in animals for purposes of obtaining or maintaining a Regulatory Approval.

 

“Clinical Development Data” means all data and results (including pre-clinical and clinical trial results) generated by or on behalf of either Party, or their respective Subsidiaries, from the conduct of Clinical Development whether prior to or after the Effective Time.

 

“Commercialization” means, with respect to a Special Product or New Product, any and all activities directed to marketing, advertising, promoting, detailing, distributing, importing, exporting, offering for sale and selling such Special Product or New Product. Commercialization shall not include providing Special Products pursuant to a compassionate use, patient name or similar program.  When used as a verb, “Commercialize” means to engage in Commercialization.

 

“Confidential Information” has the meaning set forth in Section 11.01(a).

 

5

 

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

 

“Control” means, with respect to any Patents, Trademarks, Know-How or Regulatory Documentation, that a Party or one of its Subsidiaries possesses the right, whether directly or indirectly, and whether by ownership, license or sublicense, covenant not to sue or otherwise (other than by operation of the license and other grants set forth in this Agreement) to grant a license, sublicense or other right (including the right to reference Regulatory Documentation) to such item or right as provided for herein, without violating the terms of any agreement or other arrangement with any Third Party or this Agreement.

 

“Development” or “Develop” means Clinical Development and Non-Clinical Development by or, subject to Section 3.03, on behalf of a Party.

 

“Development Plan” has the meaning set forth in Section 6.02(d).

 

“Direct Claim” has the meaning set forth in Section 10.05(b).

 

“Dispute” has the meaning set forth in Section 12.01(a).

 

“Drug Approval Application” means an application for Regulatory Approval required before commercial sale or use of a Special Product or New Product in a regulatory jurisdiction or any amendments thereto submitted to a Governmental Authority.

 

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

 

“FDA” means the United States Food and Drug Administration, or any successor agency thereto.

 

“Field-of-Use” means all prophylactic or therapeutic pharmaceutical uses of a Special Product in humans for any and all indications, excluding the Veterinary Field-of-Use, but including in combination with a medical device.

 

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

 

“Governmental Authority” means any supranational, international, national, federal, state, provincial or local court, government, department, commission, board, bureau,

 

6

 

agency, official or other regulatory, administrative or governmental authority, including the New York Stock Exchange and any similar self-regulatory body under applicable securities Laws.

 

“Improvement” means any pharmaceutical product containing the same active moiety (but not in combination with a therapeutically meaningful amount of a different active moiety) and intended for the same indication as a Special Product as of the Effective Time, including any product with (i) an improvement, enhancement or modification to (a) the manufacturing process or specifications, or (b) any components of a Special Product, or (ii) any new or modified formulation, dosage form, dosage amount, delivery and administration mode or labeled condition of use.

 

“IND” means an Investigational New Drug Application filed with the FDA or a similar application filed with an applicable Governmental Authority outside of the United States such as a clinical trial application (CTA) or a clinical trial exemption (CTX).

 

“Indemnifying Party” has the meaning set forth in Section 10.03(a).

 

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

 

“Indemnity Payment” has the meaning set forth in Section 10.03(a).

 

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

 

“In-Licensed Intellectual Property” means any and all Patents, Know-How, Clinical Development Data and Trademarks that are licensed by a Third Party to Abbott or AbbVie or their respective Subsidiaries under an In-Licensed Intellectual Property Agreement.

 

“In-Licensed Intellectual Property Agreements” means those Third Party agreements which license the In-Licensed Intellectual Property.

 

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

 

“Interacting Party” has the meaning set forth in Section 9.02(a).

 

“Know-How” means all technical, scientific and other know-how, trade secrets, knowledge, technology, means, methods, processes, practices, formulas, instructions, skills,

 

7

 

techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications and data (other than Clinical Development Data), results and other material, including drug discovery and development technology, assays and any other methodology, manufacturing procedures, test procedures and purification and isolation techniques, (whether or not confidential, proprietary, patented or patentable) whether in written, electronic or any other form now known or hereafter developed.

 

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

 

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

 

“Manufacture” and “Manufacturing” means, with respect to a product or compound, the manufacturing, processing, formulating, packaging, labeling, holding, quality control testing and batch release, importing and exporting of such product or compound.

 

“Manufacturing Party” has the meaning set forth in Section 8.01.

 

“Major Jurisdictions” means the United States, each country or region of the European Union, as constituted from time to time, Japan, Canada, Brazil, India, China, Russia, Singapore, Australia, Turkey, Mexico and Indonesia.

 

“New Product” means any pharmaceutical product containing (i) the same active moiety as a Special Product in combination with a therapeutically meaningful amount of a different active moiety (including an active moiety contained in another Special Product) or (ii) the same active moiety as a Special Product but intended for a different indication than such Special Product.  New Product is not a Special Product.

 

“Non-Clinical Development” means test method development and stability testing, formulation development, dosage form development, delivery and administration mode or indication development, process development, manufacturing scale-up, analytical method

 

8

 

validation, manufacturing process validation, cleaning validation, scale-up and related statistical analysis.

 

“Notice” means any written notice, request demand or other communication specifically referencing this Agreement and given in accordance with Section 14.05.

 

“Parties” means the parties to this Agreement.

 

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

 

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

 

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

 

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

 

“Recall” has the meaning set forth in Section 9.07(a).

 

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“Regulatory Approval” means all approvals (including, where applicable, pricing and reimbursement approval and schedule classifications), product and/or establishment licenses, registrations or authorizations of any Governmental Authority, necessary for the manufacture, use, storage, import, export, transport, offer for sale, or sale of a pharmaceutical product in a regulatory jurisdiction.

 

“Regulatory Documentation” means any and all applications, registrations, licenses, authorizations and approvals (including all Regulatory Approvals), and non-clinical and clinical study authorization applications or notifications prepared for submission to a Governmental Authority or research ethics committee with a view to the granting of any Regulatory Approval, and any correspondence to or with any Governmental Authority with respect to the Special Products, Improvements and New Products, including all INDs, Drug Approval Applications, adverse event files, complaint files and Manufacturing records.

 

“Regulatory Submission” has the meaning set forth in Section 9.02(b).

 

“Representative” has the meaning set forth in Section 11.01(a).

 

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

 

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

 

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

 

“Special Products” means each of: (i) AndroGel®; (ii) Marinol®; (iii) Biaxin®/Klacid®; (iv) Mavik®; (v) Tarka®; (vi) Teveten®; (vii) Tricor®/TRILIPIX®; (viii) Depakote®; (ix) Synthroid®; (x) Niaspan®; (xi) Creon®; (xii) Luvox®; (xiii) Advicor®; and (xiv) Simcor®, as each such Special Product is more specifically detailed and defined in a Special Products Ancillary Agreement, including such Special Product’s formulations, dosage forms, delivery and administration modes and indications as of the Effective Time, and all Improvements for each such Special Product to the extent included pursuant to Section 6.02(e).

 

“Special Products Ancillary Agreements” means any agreement which the Parties may enter into from time to time with respect to a Special Product.

 

“Special Products Know-How” means any Know-How that is (i) directly related to the research, Development, Manufacture, use, or Commercialization of a Special Product and (ii) is either (A) in existence as of the Effective Time, or (B) developed, created, conceived or invented by or on behalf of Abbott or Abbott Subsidiaries or by or on behalf of AbbVie or AbbVie Subsidiaries or jointly by the Parties in the course of conducting activities under a manufacturing agreement.

 

“Special Products Know-How Patents” means any Patents covering Special Products Know-How that are neither Abbott Special Products Patents nor AbbVie Special Products Patents.

 

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

 

“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 (as defined in the Separation Agreement).

 

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

 

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

 

“Third Party Claim” has the meaning set forth in Section 10.04(a).

 

“Third Party License Agreements” has the meaning set forth in Section 3.06(a).

 

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

 

“Transferred Entities” has the meaning set forth in the Separation Agreement.

 

“Transition Committee” has the meaning set forth in the Separation Agreement.

 

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

 

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

 

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ARTICLE II
 ABBVIE SPECIAL PRODUCTS ASSETS

 

Section 2.01          AbbVie Special Products Assets.  The Parties acknowledge and agree that the following Assets (the “AbbVie Special Products Assets”) shall be considered AbbVie Assets pursuant to the terms of the Separation Agreement and shall be conveyed, assigned, transferred or made available by Abbott or an Abbott Subsidiary to AbbVie or an AbbVie Subsidiary in accordance with the terms and conditions of the Separation Agreement:

 

(a)           the Patents listed on Schedule 2.01(a);

 

(b)           the Trademarks listed on Scheduled 2.01(b);

 

(c)           the Regulatory Approvals listed on Schedule 2.01(c);

 

(d)           the Clinical Development Data that was in existence as of the Effective Time and was generated in direct support of obtaining a Regulatory Approval for a Special Product in the AbbVie Territory;

 

(e)           the Regulatory Documentation that was in existence as of the Effective Time and was generated, filed or produced for a Special Product for use in the AbbVie Territory; and

 

(f)            an undivided interest (with Abbott and the Abbott Subsidiaries) of all Special Products Know-How in existence as of the Effective Time.

 

Section 2.02          Liabilities.  The Parties acknowledge and agree that the AbbVie Special Products Liabilities and the Abbott Special Products Liabilities shall be AbbVie Liabilities or Abbott Liabilities, respectively, for purposes of the Separation as set forth in the Separation Agreement and for the transfer, acceptance, assignment, assumption, discharge and novation of such Liabilities pursuant to Article II of the Separation Agreement; provided that a Party’s indemnification obligations with respect to either the AbbVie Special Products Liabilities or the Abbott Special Products Liabilities shall be subject to the provisions of Article X of this Agreement.

 

Section 2.03          Disclaimer of Representations and Warranties.

 

(a)           Disclaimer.  EACH OF ABBOTT (ON BEHALF OF ITSELF AND EACH OF THE ABBOTT SUBSIDIARIES) AND ABBVIE (ON BEHALF OF ITSELF AND EACH OF THE ABBVIE SUBSIDIARIES) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY SPECIAL PRODUCTS ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY SPECIAL PRODUCTS ANCILLARY AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING TO ANY OTHER PARTY HERETO OR THERETO IN ANY WAY WITH RESPECT TO SPECIAL PRODUCTS OR NEW PRODUCTS, AS TO ANY APPROVALS OR

 

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NOTIFICATIONS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, THE SPECIAL PRODUCTS.

 

(b)           Provisions Prevail.  Each of Abbott (on behalf of itself and each of the Abbott Subsidiaries) and AbbVie (on behalf of itself and each of the AbbVie Subsidiaries) further understands and agrees that if the disclaimer of express or implied representations and warranties contained in Section 2.03(a) is held unenforceable or is unavailable for any reason, under the Laws of any jurisdiction outside the United States or if, under the Laws of a jurisdiction outside the United States, both Abbott or any of the Abbott Subsidiaries, on the one hand, and AbbVie or any of the AbbVie Subsidiaries, on the other hand, are jointly or severally liable for any AbbVie Special Products Liability or any Abbott Special Products Liability, respectively, then, the Parties intend that, notwithstanding any provision to the contrary under the Laws of such foreign jurisdictions, the provisions of this Agreement and the Special Products Ancillary Agreements (including the disclaimer of all representations and warranties, allocation of Liabilities among the Parties and their respective Subsidiaries, releases, indemnification and contribution of Liabilities) shall prevail for any and all purposes among the Parties and their respective Subsidiaries.

 

Section 2.04          Further Assurances.

 

(a)           Additional Actions.  In addition to the actions specifically provided for elsewhere in this Agreement, each Party shall, and shall cause each of its respective Subsidiaries to, use commercially reasonable efforts, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary or advisable under applicable Laws and agreements to consummate the transactions contemplated by this Agreement and the Special Products Ancillary Agreements; provided, however, that neither Abbott nor AbbVie (nor any of their respective Subsidiaries) shall be obligated under this Section 2.04(a) to pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees paid to a Governmental Authority.

 

(b)           Cooperation.  Without limiting the foregoing, each Party shall, and shall cause each of its Subsidiaries to, cooperate with the other Party without any further consideration to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all documents in furtherance of this Agreement and to make all filings with, and to obtain all Consents of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Consents), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Special Products Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Special Products Ancillary Agreements and the transactions contemplated hereby and thereby.

 

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ARTICLE III
 GRANT OF RIGHTS

 

Section 3.01          Grant of Rights to Abbott.

 

(a)           Grant of Rights for Commercialization.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, AbbVie, on behalf of itself and the AbbVie Subsidiaries, to the extent each such Business Entity has rights, hereby grants to Abbott and the Abbott Subsidiaries under the AbbVie Special Products Patents, AbbVie In-Licensed Intellectual Property, AbbVie Special Products Clinical Development Data, and AbbVie’s and the AbbVie Subsidiaries’ ownership interest in the Special Products Know-How, the following:

 

(i)            an exclusive (including with regard to AbbVie and the AbbVie Subsidiaries), perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, solely for purposes of Commercializing Special Products in the Abbott Territory; and

 

(ii)           a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, solely for purposes of Commercializing New Products in the Abbott Territory.

 

(b)           Grant of Rights for Development.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, AbbVie, on behalf of itself and the AbbVie Subsidiaries, to the extent each such Business Entity has rights, hereby grants to Abbott and the Abbott Subsidiaries under the AbbVie Special Products Patents, AbbVie In-Licensed Intellectual Property and AbbVie Special Products Clinical Development Data, the following:

 

(i)            a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Develop Special Products anywhere in the world solely for the purpose of securing Regulatory Approvals for the Commercialization of Special Products in the Abbott Territory; and

 

(ii)           a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Develop New Products anywhere in the world solely for the purpose of securing Regulatory Approvals for the Commercialization of New Products in the Abbott Territory.

 

(c)           Grant of Rights for Manufacturing.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, AbbVie, on behalf of itself and the AbbVie Subsidiaries, to the extent each such Business Entity has rights, hereby grants to Abbott and the Abbott Subsidiaries under the AbbVie Special Products Patents, AbbVie In-Licensed Intellectual Property and AbbVie Special Products Clinical Development Data, the following:

 

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(i)            a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Manufacture and have Manufactured Special Products anywhere in the world solely for the purpose of Commercializing Special Products in the Abbott Territory and for the purpose of Abbott fulfilling its obligations under a manufacturing agreement to manufacture a Special Product; and

 

(ii)           a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Manufacture and have Manufactured (including the right to import and export) New Products anywhere in the world solely for the purpose of Commercializing New Products in the Abbott Territory.

 

(d)           Right to Access, Reference or Cross-Reference.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, AbbVie, on behalf of itself and the AbbVie Subsidiaries, to the extent each such Business Entity has rights, hereby grants to Abbott and the Abbott Subsidiaries the exclusive right to access, reference or cross-reference the AbbVie Special Products Regulatory Documentation and Clinical Development Data to support Abbott’s Regulatory Approval applications for the Special Products in the Abbott Territory and solely for the purpose of Developing, Manufacturing, using and Commercializing the Special Products in accordance with the foregoing license grants in this Section 3.01.

 

(e)           No Rights to AbbVie New Products Intellectual Property.  The Parties acknowledge and agree that neither this Agreement nor any Special Products Ancillary Agreement grants to Abbott or any of its Subsidiaries any rights under the AbbVie New Product Patents or AbbVie New Product Know-How.  AbbVie shall solely own all rights to such Assets.

 

Section 3.02          Grant of Rights to AbbVie.

 

(a)           Grant of Rights for Commercialization.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, Abbott, on behalf of itself and the Abbott Subsidiaries, to the extent each such Business Entity has rights, hereby grants to AbbVie and the AbbVie Subsidiaries, under the Abbott Special Products Patents, Abbott In-Licensed Intellectual Property, Abbott Special Products Clinical Development Data, and Abbott’s and the Abbott Subsidiaries’ ownership interest in the Special Products Know-How, the following:

 

(i)            an exclusive (including with regard to Abbott and the Abbott Subsidiaries), perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, solely for purposes of Commercializing Special Products in the Field-of-Use in the AbbVie Territory; and

 

(ii)           a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, solely for purposes of Commercializing New Products in the Field-of-Use in the AbbVie Territory.

 

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(b)           Grant of Rights for Development.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, Abbott, on behalf of itself and the Abbott Subsidiaries, to the extent each such Business Entity has rights, hereby grants to AbbVie and the AbbVie Subsidiaries under the Abbott Special Products Patents, Abbott In-Licensed Intellectual Property and Abbott Special Products Clinical Development Data, the following:

 

(i)            a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Develop Special Products anywhere in the world solely for the purpose of securing Regulatory Approvals for the Commercialization of Special Products in the Field-of-Use in the AbbVie Territory; and

 

(ii)           a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Develop New Products in the Field-of-Use anywhere in the world solely for the purpose of securing Regulatory Approvals for the Commercialization of New Products in the Field-of-Use in the AbbVie Territory.

 

(c)           Grant of Rights for Manufacturing.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, Abbott, on behalf of itself and the Abbott Subsidiaries, to the extent each such Business Entity has rights, hereby grants to AbbVie and the AbbVie Subsidiaries under the Abbott Special Products Patents, Abbott In-Licensed Intellectual Property and Abbott Special Products Clinical Development Data, the following:

 

(i)            a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Manufacture and have Manufactured Special Products anywhere in the world solely for the purpose of Commercializing Special Products in the Field-of-Use in the AbbVie Territory and for the purpose of AbbVie fulfilling its obligations under a manufacturing agreement to manufacture a Special Product; and

 

(ii)           a non-exclusive, perpetual, irrevocable, fully paid and royalty-free right and license, or sublicense as applicable, to Manufacture and have Manufactured New Products anywhere in the world solely for the purpose of Commercializing New Products in the Field-of-Use in the AbbVie Territory.

 

(d)           Right to Access, Reference or Cross-Reference.  Subject to the terms of this Agreement and, if applicable, any Special Products Ancillary Agreements or In-Licensed Intellectual Property Agreements, Abbott, on behalf of itself and the Abbott Subsidiaries, to the extent each such Business Entity has rights, hereby grants to AbbVie and the AbbVie Subsidiaries the exclusive right to access, reference or cross-reference the Abbott Special Products Regulatory Documentation and Clinical Development Data to support AbbVie’s Regulatory Approval applications for the Special Products in the AbbVie Territory and solely for the purpose of Developing, Manufacturing, using and Commercializing the Special Products in accordance with the foregoing license grants in this Section 3.02.

 

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(e)                                  No Rights to Abbott New Products Intellectual Property.  The Parties acknowledge and agree that neither this Agreement nor any Special Products Ancillary Agreement grants to AbbVie or any of its Subsidiaries any rights under the Abbott New Product Patents or Abbott New Product Know-How.  Abbott shall solely own all rights to such Assets.

 

Section 3.03                             Sublicense Rights.  Subject to the terms of the In-Licensed Intellectual Property Agreements, either Party may grant sublicenses (or further rights to access, reference or cross-reference) under the licenses in Section 3.01 and Section 3.02; provided that any such sublicenses shall be consistent with the terms and conditions of this Agreement and any applicable In-Licensed Intellectual Property Agreement; provided further that (a) within ten (10) business days after execution, such Party shall provide the other Party with a copy of each sublicense agreement (as may be redacted for confidentiality obligations), and (b) each sublicense granted by a Party pursuant to this Section 3.03 shall be subject and subordinate to the terms and conditions of this Agreement, the applicable Special Products Ancillary Agreements and the applicable In-Licensed Intellectual Property Agreements, including, that both during the term of the sublicense and thereafter, the sublicensee shall be bound by a confidentiality obligation substantially similar to that by which a Party is bound under this Agreement.  The sublicensing Party hereby guarantees and shall be liable for the performance of its sublicensees with respect to its obligations under this Agreement.

 

Section 3.04                             Obligation with Respect to Affiliates and Subsidiaries.  To the extent that any Affiliate or Subsidiary of any Party exercises any rights or obligations of such Party under this Agreement or any Special Products Ancillary Agreement, such Party shall ensure that such Affiliate or Subsidiary exercises such rights and obligations in a manner consistent with, and subject to the applicable provisions of, this Agreement and the applicable Special Products Ancillary Agreement(s).

 

Section 3.05                             In-Licensed Intellectual Property.  The terms of the licenses in Article III and additional provisions and restrictions with respect to the In-Licensed Intellectual Property are set forth in this Agreement and any Special Products Ancillary Agreements, including reporting obligations to the licensor, audit rights and calculation of royalties, if any.  Each Party covenants that it shall comply with the terms of each In-Licensed Intellectual Property Agreement applicable to such Party.

 

Section 3.06                             Third Party License Agreements.

 

(a)                                 Notification.  In the event that Abbott or AbbVie, as the case may be, after a good faith analysis, determines that one or more licenses to Patents, Trademarks, Know-How or Clinical Development Data of a Third Party (other than as may already be licensed under an In-Licensed Intellectual Property Agreement) may be required in order to Develop, Manufacture, use or Commercialize a Special Product (“Third Party License Agreements”), it shall promptly notify the other, and the Parties shall meet to discuss the basis for such determination.

 

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(b)                                 Negotiation Responsibility.

 

(i)                                     Subject to Section 3.06(b)(iii), Abbott shall be responsible for negotiating and entering into any Third Party License Agreements regarding Patents, Trademarks, Know-How or Clinical Development Data that could be relevant, useful or necessary to Develop, Manufacture, use or Commercialize any Special Product in the Abbott Territory.

 

(ii)                                  Subject to Section 3.06(b)(iii), AbbVie shall be responsible for negotiating and entering into any Third Party License Agreements regarding Patents, Trademarks, Know-How or Clinical Development Data that could be relevant, useful or necessary to Develop, Manufacture, use or Commercialize any Special Product in the AbbVie Territory.

 

(iii)                               Notwithstanding the foregoing, if a Third Party License Agreement regarding any Patents, Trademarks, Know-How or Clinical Development Data could be relevant, necessary or useful to Develop, Manufacture, use or Commercialize any Special Product both in the Abbott Territory and the AbbVie Territory, in each case, the Parties shall jointly agree which Party shall be primarily responsible for negotiating and entering into any such Third Party License Agreement.  Any Third Party License Agreement entered into pursuant to this Section 3.06(b)(iii) shall ensure that the Development, Manufacture, use and Commercialization of such Special Product in both the Abbott Territory and the AbbVie Territory, in each case, shall be licensed or otherwise protected from a claim of infringement to the applicable Third Party Patents, Trademarks, Know-How and Clinical Development Data; provided, however, if the Parties are unable to jointly agree on the terms of any such Third Party License Agreement, (A) either Party shall be free to enter into a license agreement with such Third Party solely with respect to such Party’s territory, provided such agreement does not diminish the value of the other Party’s grant of rights pursuant to Section 3.01 or Section 3.02, as the case may be, (B) such Party shall have no obligation to sublicense such Patents, Trademarks, Know-How or Clinical Development Data of such Third Party to the other Party, and (C) such Patents, Trademarks, Know-How and Clinical Development Data of such Third Party shall not be deemed to be “Controlled” by such Party for purposes of the applicable license grants in this Agreement.

 

(c)                                  Responsibility for Payments to Third Parties.  Abbott shall be solely responsible for any royalties, fees or other payments due under any Third Party License Agreement to the extent solely related to Commercialization of any Special Product in the Abbott Territory.  AbbVie shall be solely responsible for any royalties, fees or other payments due under any Third Party License Agreement to the extent solely related to Commercialization of any Special Products in the AbbVie Territory.  The Parties shall mutually agree how to allocate responsibility for royalties, fees or other payments due under any Third Party License Agreement to the extent not solely allocable to either the Abbott Territory or the AbbVie Territory.

 

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ARTICLE IV
 INTELLECTUAL PROPERTY RIGHTS

 

Section 4.01                             Disclosure of Improvements and Special Products Know-How.  Subject to Article XI, each Party shall disclose to the other Party Improvements and Special Products Know-How (a) as part of a technology transfer under manufacturing agreements for Special Products and (b) with respect to Development activity in accordance with Section 6.02(a). Further, all disclosures under this Section 4.01 shall be made at least sixty (60) days prior to any public disclosure of such Improvement or Special Products Know-How or any required submission to Governmental Authorities in compliance with the requirements of government supported research.  The filing of a patent application is not intended to constitute a “public disclosure” for purposes of the immediately preceding sentence.

 

Section 4.02                             Ownership.

 

(a)                                 Improvements.  Except as set forth in Section 4.02(b), Improvements (and all intellectual property rights related thereto) created or developed by or on behalf of Abbott or any Abbott Subsidiary shall be solely owned by Abbott and Improvements (and all intellectual property rights related thereto) created or developed by or on behalf of AbbVie or any AbbVie Subsidiary shall be solely owned by AbbVie.

 

(b)                                 Special Products Know-How.  Subject to Section 6.02(a), any and all Special Products Know-How shall be jointly owned.  In the event of a Dispute as to whether something constitutes Special Products Know-How, Abbott and AbbVie shall resolve such Dispute in accordance with the terms of Article XII.  The Parties acknowledge that the ownership rights set forth in this Section 4.02(b) are subject to the licenses granted pursuant to this Agreement, any Special Products Ancillary Agreement and the In-Licensed Intellectual Property Agreements.  Subject to the licenses granted pursuant to this Agreement and any Special Products Ancillary Agreement and subject to Section 3.03, each Party shall be free to use and exploit (which shall include the right to grant licenses under) the Special Products Know-How, without any duty of accounting to the other Party.  Each Party shall be exclusively responsible for any compensation payable to any of its employees, subcontractors and sublicensees in respect of any Special Products Know-How.  To the extent that any right, title or interest in or to any Special Products Know-How vests in a Party by operation of applicable Law or otherwise, in a manner contrary to the agreed upon ownership as set forth in this Agreement, such Party shall, and hereby does, irrevocably assign to the other Party joint right, title and interest throughout the world in and to such Special Products Know-How without the need for any further action by any Party.

 

Section 4.03                             Prosecution of Patent Rights.

 

(a)                                 Prosecution by Abbott.  Except as otherwise set forth in this Agreement or any Special Products Ancillary Agreement, Abbott shall have the sole right to prepare, file, prosecute and maintain the Abbott Special Products Patents and the Abbott New Product Patents.  If, during the term of this Agreement, Abbott intends to allow any Abbott Special Products Patent to expire or intends to otherwise abandon any such Abbott Special Products Patent,

 

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Abbott shall notify AbbVie of such intention at least sixty (60) days prior to the date upon which such patent shall expire or be abandoned, and, subject to the terms of any In-Licensed Intellectual Property Agreement, AbbVie shall thereupon have the right, but not the obligation, to assume responsibility for the preparation, filing, prosecution or maintenance thereof.  To the extent AbbVie elects to assume such responsibility, Abbott shall promptly assign to AbbVie, without compensation, all of Abbott’s right, title and interest in and to such abandoned Abbott Special Products Patents.

 

(b)                                 Prosecution by AbbVie.  Except as otherwise set forth in this Agreement or any Special Products Ancillary Agreement, AbbVie shall have the sole right to prepare, file, prosecute and maintain the AbbVie Special Products Patents and the AbbVie New Product Patents.  If, during the term of this Agreement, AbbVie intends to allow any AbbVie Special Products Patent to expire or intends to otherwise abandon any such AbbVie Special Products Patent, AbbVie shall notify Abbott of such intention at least sixty (60) days prior to the date upon which such patent shall expire or be abandoned, and, subject to the terms of any In-Licensed Intellectual Property Agreement, Abbott shall thereupon have the right, but not the obligation, to assume responsibility for the preparation, filing, prosecution or maintenance thereof.  To the extent Abbott elects to assume such responsibility, AbbVie shall promptly assign to Abbott, without compensation, all of AbbVie’s right, title and interest in and to such abandoned AbbVie Special Products Patents.

 

(c)                                  Prosecution of Patents Covering Special Products Know-How.  Abbott shall be the owner of Special Products Know-How Patents in the Abbott Territory and AbbVie shall be the owner of Special Products Know-How Patents in the AbbVie Territory.  To the extent that any right, title or interest in or to any Special Products Know-How Patent vests in a Party by operation of applicable Law or otherwise, in a manner contrary to the agreed upon ownership as set forth in the preceding sentence, such Party shall, and hereby does, irrevocably assign to the other Party joint right, title and interest throughout the world in and to such Special Products Know-How Patent without the need for any further action by any Party.  Abbott shall have the primary right to prepare, file, prosecute and maintain Special Products Know-How Patents in the Abbott Territory.  AbbVie shall have the primary right to prepare, file, prosecute and maintain Special Products Know-How Patents in the AbbVie Territory.

 

(d)                                 No Disclosure of Confidential Information.  Neither Party shall have the right to disclose Confidential Information belonging solely to the other Party when preparing, filing, prosecuting or maintaining any AbbVie Special Products Patent, AbbVie New Product Patent, Abbott Special Products Patent, Abbott New Product Patent, or Special Products Know-How Patent, as applicable, without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed.

 

Section 4.04                             Prosecution Costs.

 

(a)                                 Except as otherwise set forth in this Agreement or any Special Products Ancillary Agreement, Abbott shall be responsible for all costs or expenses incurred by it in the course of preparing, filing, prosecuting and maintaining all (i) Abbott Special Products Patents

 

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and Abbott New Product Patents and (ii) Special Products Know-How Patents in the Abbott Territory.

 

(b)                                 Except as otherwise set forth in this Agreement or any Special Products Ancillary Agreement, AbbVie shall be responsible for all costs or expenses incurred by it in the course of preparing, filing, prosecuting and maintaining all (i) AbbVie Special Products Patents and AbbVie New Product Patents and (ii) Special Products Know-How Patents in the AbbVie Territory.

 

(c)                                  In the event that a Party does not want to support, or continue to support, the preparation, filing, prosecution or maintenance of any Special Products Know-How Patent in a particular country in such Party’s territory, it shall so notify the other Party in writing and it shall not be obligated to pay for any costs or expenses relating to the preparation, filing, prosecution or maintenance of such Special Products Know-How Patent which are incurred following delivery of such notification.  In the event a Party notifies the other Party of its election not to support the preparation, filing, prosecution or maintenance of a Special Products Know-How Patent in a particular country in such Party’s territory pursuant to the provisions of this Section 4.04, then it shall, upon the request of the other, assign to the other, without compensation to the assignor, but at the expense of the assignee, all of the notifying Party’s right, title and interest in and to such Special Products Know-How Patent in such country, and such Special Products Know-How Patent shall thereafter be owned by AbbVie or Abbott, as applicable.

 

Section 4.05                             Prosecution Cooperation.  Each of Abbott and AbbVie shall make available to the other (or to the other’s authorized attorneys, agents or representatives) its employees, agents or consultants to the extent necessary or reasonable to enable the requesting Party to prepare, file, prosecute and maintain all Special Products Know-How Patents filed by the Parties, and for periods of time sufficient for such Party to obtain the necessary assistance from such personnel.  In addition, where appropriate, each of Abbott and AbbVie shall perform such commercially reasonable acts (including signing or causing to have signed all documents necessary) for the appropriate Party to prepare, file, prosecute and maintain all such Special Products Know-How Patents.  Any costs of cooperation under this Section 4.05 shall be at the expense of the requesting Party.

 

Section 4.06                             Notice of Issuance.  Abbott shall keep AbbVie informed with regard to the status of all Abbott Special Products Patents in the Major Jurisdictions that are related to AbbVie’s Manufacture, Development, use or Commercialization activities with respect to a Special Product and the Special Products Know-How Patents in the Major Jurisdictions for which it is the prosecuting Party, and AbbVie shall keep Abbott informed with regard to the status of all AbbVie Special Products Patents in the Major Jurisdictions that are related to Abbott’s Manufacture, Development, use or Commercialization activities with respect to a Special Product or any Special Products Know-How Patents in the Major Jurisdictions for which it is the prosecuting Party.  Abbott shall deliver or have delivered to AbbVie in a timely manner copies of all patent applications, amendments, related correspondence, and other documents reasonably requested by AbbVie concerning all Abbott Special Products Patents in the Major Jurisdictions that are related to the AbbVie’s Manufacture, Development, use or

 

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Commercialization activities with respect to a Special Product and the Special Products Know-How Patents in the Major Jurisdictions for which Abbott is the prosecuting Party.  AbbVie shall deliver or have delivered to Abbott in a timely manner copies of all patent applications, amendments, related correspondence, and other documents reasonably requested by Abbott concerning all AbbVie Special Products Patents in the Major Jurisdictions that are related to Abbott’s Manufacture, Development, use or Commercialization activities with respect to a Special Product and the Special Products Know-How Patents in the Major Jurisdictions for which AbbVie is the prosecuting Party.

 

Section 4.07                             Matters Involving Infringement.  In the event that a Third Party infringes, or is reasonably likely to infringe, Abbott Special Products Patents, AbbVie Special Products Patents or Special Products Know-How Patents with respect to the applicable Special Product and, to the extent there is a Proceeding and/or recovery resulting from such infringement, the Parties may agree from time to time regarding their respective rights and responsibilities in connection with such Proceeding and/or recovery.

 

Section 4.08                             Third Party Infringement Suit.  In the event that a Third Party brings a Proceeding against AbbVie, Abbott or any of their respective Subsidiaries alleging that the Manufacture, use or Commercialization of a Special Product infringes such Third Party’s intellectual property rights, including Patents and Trademarks, then Abbott and AbbVie shall defend such Proceeding pursuant to their indemnification obligations set forth in Section 10.01 or Section 10.02, as applicable.

 

ARTICLE V
 GOVERNANCE

 

Pursuant to the Separation Agreement, the Parties shall establish the Transition Committee.  The Transition Committee shall have the authority to establish one or more subcommittees from time to time as it deems appropriate to address disputes arising out of or resulting from this Agreement.

 

ARTICLE VI
 DEVELOPMENT MATTERS

 

Section 6.01                             Development Rights and Responsibilities.  Subject to the provisions of Article III, this Article VI and, if applicable, any Special Products Ancillary Agreements, each Party shall have the right to conduct further Development of Special Products and to Develop New Products.

 

Section 6.02                             Development Activities for Special Products.

 

(a)                                 Proposal and Opt-In.  If, during the term of the applicable manufacturing agreement, a Party desires to further Develop a Special Product, and the estimated Development costs are expected to be in excess of three million United States Dollars ($3,000,000), then such Party shall submit to the other Party its proposal for such Development.  The non-proposing Party shall have the right to opt-in and participate in any such Development, such right to be

 

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exercised within sixty (60) days after receipt of such proposal.  In the event that the estimated costs for such Development is expected to be in excess of three million United States Dollars ($3,000,000) and the non-proposing Party does not elect to opt-in and participate in the Development thereof (including sharing in the costs and expenses thereof), then all intellectual property rights arising from such Development shall be excluded from the license grant in Section 3.01 or Section 3.02, as applicable, any Know-How created or developed in the course of such Development shall be solely owned by the proposing Party and shall not be considered Special Products Know-How, and the non-proposing Party shall have no rights to Manufacture, use or Commercialize such further Developed Special Product.

 

(b)                                 Other Development Requiring Disclosure.  Except as otherwise provided in Section 6.02(a), if, during the term of this Agreement, a Party desires to further Develop a Special Product, and such Development either (i) involves Clinical Development, or (ii) could reasonably be expected to require the other Party to have to amend or update its Regulatory Approvals for the applicable Special Product, then the Party planning such Development shall submit to the other Party a copy of the plan for such Development.

 

(c)                                  Contents of Proposal.  For Development that is subject to Section 6.02(a), all such proposals shall contain, at a minimum, information supporting the rationale for further Developing such Special Product from a scientific, regulatory and commercial standpoint, as well as an estimate of the timeframe for and cost of such Development.

 

(d)                                 Development Plans.  With respect to Development activities for which the non-proposing Party has elected to participate pursuant to Section 6.02(a), the Parties shall enter into a development agreement and prepare a development plan (each, a “Development Plan”) that shall, among other things:

 

(i)                                     identify all major Development tasks remaining to be accomplished prior to submission of filings for major regulatory milestones and Regulatory Approvals;

 

(ii)                                  identify key Development objectives, expected associated resources, risk factors, timelines, Go/No Go decision points and relevant decision criteria and, where appropriate, decision trees;

 

(iii)                               indicate how resources are expected to be provided by Abbott and AbbVie to support the Development for such Special Product;

 

(iv)                              include a reasonably detailed description and estimated budget for the Development activities that are expected to be performed by Abbott and AbbVie under the Development Plan; and

 

(v)                                 specify the manner in which the Development costs and expenses (including any costs and expenses incurred prior to the finalization of the applicable Development Plan) with respect to such activities shall be allocated between the AbbVie Territory and the Abbott Territory.

 

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(e)                                  Included Improvements.  If, during the term of the applicable manufacturing agreement, a Party Develops a Special Product, and either (i) the other Party opted into the Development pursuant to Section 6.02(a) or (ii) the estimated Development costs were not expected to be in excess of three million United States Dollars ($3,000,000), then any Improvements shall be included in the definition of Special Products for purposes of this Agreement, all intellectual property rights arising from such Development shall be included in the license grant in Section 3.01 or Section 3.02, as applicable, any Know-How created or developed in the course of such Development shall be considered Special Products Know-How and jointly owned, and any Improvement shall be included in the technology transfer to the other Party at the expiration of the applicable manufacturing agreement in accordance with the terms of such manufacturing agreement.

 

Section 6.03                             Development Activities for New Products.  Either Party shall be free to Develop New Products.  Except as otherwise set forth in this Agreement or a Special Products Ancillary Agreement, neither Party shall have the right to opt-in to the Development activities of the other Party with respect to the Development of a New Product.  However, if a Party desires to conduct Clinical Development with respect to a New Product and at such time, the other Party is Commercializing the Special Product corresponding to such Clinical Development, then the Party planning such Clinical Development shall submit to the other Party a copy of the plan for such Clinical Development.

 

ARTICLE VII
 COMMERCIALIZATION MATTERS

 

Section 7.01                             Abbott Territory.

 

(a)                                 Responsibility for Commercialization in Abbott Territory.  Subject to the terms and conditions of any applicable In-Licensed Intellectual Property Agreement, Abbott shall:

 

(i)                                     be solely responsible, at its own cost and expense, for Commercializing Special Products in the Abbott Territory and for referring all compassionate use, patient name or similar program requests for Special Products to AbbVie for processing pursuant to Section 7.02(a)(i);

 

(ii)                                  have the sole right to establish and modify conditions of sale of Special Products in the Abbott Territory, including the price or prices at which the Special Products in the Abbott Territory shall be sold, any discount applicable to payments or receivables, and similar matters;

 

(iii)                               invoice and book all sales of Special Products in the Abbott Territory; and

 

(iv)                              be exclusively responsible for accepting and filling purchase orders, billing, and returns with respect to Special Products in the Abbott Territory.  If AbbVie

 

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receives an order for Special Products for the Abbott Territory, it shall promptly transmit such order to Abbott.

 

(b)                                 No Sales by Abbott Outside Abbott Territory.  Abbott shall not engage in advertising specifically targeted outside the Abbott Territory for Special Products and Abbott shall not, directly or indirectly, Commercialize, or cause to be Commercialized, Special Products outside of the Abbott Territory, including through distributors, sub-distributors, sales representatives or otherwise or by assisting Third Parties to Commercialize Special Products outside of the Abbott Territory.  Abbott shall promptly advise AbbVie of any knowledge it has of Special Products intended for sale in the Abbott Territory being transported out of the Abbott Territory.

 

(c)                                  No Sales for Distribution into AbbVie Territory.  To the extent not prohibited by applicable Law, Abbott shall ensure that its employees, contractors or agents do not, directly or indirectly Commercialize any Special Products to any Third Party in circumstances where there is reasonable reason to believe that such Special Products shall be distributed or redistributed within the AbbVie Territory.  If Abbott receives notice from AbbVie that any Third Party is violating any terms of this Section 7.01(c), Abbott shall promptly take such steps or initiate Proceedings as may be commercially reasonable to stop such distribution or redistribution, including, to the extent not prohibited by applicable Law, terminating sales of all Special Products to any such Third Party.

 

(d)                                 Use of Third Parties.  Subject to the terms and conditions of any applicable In-Licensed Intellectual Property Agreement and the licenses granted herein, Abbott shall be free to utilize Third Parties to Commercialize Special Products in the Abbott Territory.

 

Section 7.02                             AbbVie Territory.

 

(a)                                 Responsibility for Commercialization in AbbVie Territory.  Subject to the terms and conditions of any applicable In-Licensed Intellectual Property Agreement, AbbVie shall:

 

(i)                                     be solely responsible, at its own cost and expense, for Commercializing Special Products in the AbbVie Territory and for providing Special Products for compassionate use, patient name or similar programs in both the AbbVie Territory and the Abbott Territory for requests received directly or from Abbott;

 

(ii)                                  have the sole right to establish and modify conditions of sale of Special Products in the AbbVie Territory, including the price or prices at which the Special Products in the AbbVie Territory shall be sold, any discount applicable to payments or receivables, and similar matters;

 

(iii)                               invoice and book all sales of Special Products in the AbbVie Territory; and

 

(iv)                              be exclusively responsible for accepting and filling purchase orders, billing, and returns with respect to Special Products in the AbbVie Territory.  If Abbott

 

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receives an order for Special Products for the AbbVie Territory, it shall promptly transmit such order to AbbVie.

 

(b)                                 No Sales by AbbVie Outside AbbVie Territory.  AbbVie shall not engage in advertising specifically targeted outside the AbbVie Territory Special Products and AbbVie shall not, directly or indirectly, Commercialize, or cause to be Commercialized, Special Products outside of the AbbVie Territory, including through distributors, sub-distributors, sales representatives or otherwise or by assisting Third Parties to Commercialize Special Products outside of the AbbVie Territory.  AbbVie shall promptly advise Abbott of any knowledge it has of Special Products intended for sale in the AbbVie Territory being transported out of the AbbVie Territory.

 

(c)                                  No Sales for Distribution into Abbott Territory.  To the extent not prohibited by applicable Law, AbbVie shall ensure that its employees, contractors or agents do not, directly or indirectly Commercialize any Special Products to any Third Party in circumstances where there is reasonable reason to believe that such Special Products shall be distributed or redistributed within the Abbott Territory.  If AbbVie receives notice from Abbott that any Third Party is violating any terms of this Section 7.02(b), AbbVie shall promptly take such steps or initiate Proceedings as may be commercially reasonable to stop such distribution or redistribution, including, to the extent not prohibited by applicable Law, terminating sales of all Special Products to any such Third Party.

 

(d)                                 Use of Third Parties.  Subject to the terms and conditions of any applicable In-Licensed Intellectual Property Agreement and the licenses granted herein, AbbVie shall be free to utilize Third Parties to Commercialize Special Products in the AbbVie Territory.

 

ARTICLE VIII
 MANUFACTURING MATTERS

 

Section 8.01                             Supply.  In accordance with and subject to the terms of a manufacturing agreement, the Parties shall agree upon which Party shall be responsible for the Manufacture of each Special Product (in each case, the “Manufacturing Party”); provided that supply may be from one Party, or the other Party, or both Parties, depending on the supply chain for each Special Product or formulation thereof, and may span more than one manufacturing agreement.  During the term of a manufacturing agreement, the non-Manufacturing Party shall purchase the Special Product from the Manufacturing Party and the Manufacturing Party shall Manufacture and supply the Special Product to the non-Manufacturing Party in accordance with this Article VIII and the more detailed terms of the particular manufacturing agreement.

 

Section 8.02                             Cooperation.  Abbott and AbbVie shall each reasonably and in good faith cooperate with the other to resolve any operational issues (e.g., issues related to forecasting, ordering, batch review, acceptance and rejection of Special Products, and allocation of supply) that arise with respect to the Manufacture of Special Products supplied pursuant to a manufacturing agreement.

 

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ARTICLE IX
 REGULATORY MATTERS

 

Section 9.01                             Ownership of Regulatory Approvals.  All Regulatory Documentation for the Special Products to be Commercialized in the Abbott Territory shall be filed in the name of and owned by Abbott, an Abbott Subsidiary or their respective designees.  All Regulatory Documentation for the Special Products to be Commercialized in the AbbVie Territory shall be filed in the name of and owned by AbbVie, an AbbVie Subsidiary or their respective designees.  In the event a Party seeks to withdraw a Regulatory Approval of a Special Product in its territory, such Party shall so notify the other Party in writing not less than ninety (90) days prior to seeking such withdrawal.

 

Section 9.02                             Allocation of Regulatory Responsibilities.  The Parties agree to the following allocation of responsibilities with respect to regulatory matters related to the Special Products:

 

(a)                                 Interactions with Governmental Authorities.  Except as set forth in any Special Products Ancillary Agreement or In-Licensed Intellectual Property Agreement and subject to the provisions of Section 9.03, each Party shall be responsible for interfacing, corresponding and meeting with Governmental Authorities with respect to all issues primarily related to the Special Products in its territory (each, respectively, the “Interacting Party”). The Interacting Party shall provide the other Party in a timely manner with written meeting minutes or a summary of significant meetings with any Governmental Authority in any of the Major Jurisdictions with respect to a Special Product.  Subject to the provisions of Section 9.03, the other Party shall not, without the prior written consent (which consent shall not be unreasonably withheld or delayed) of the Interacting Party or unless so required by Law (and then only pursuant to the terms of this Section 9.02(a)), correspond or communicate with any Governmental Authority in the Interacting Party’s territory concerning a Special Product.  If the other Party is advised by its legal counsel that it is required by Law to communicate with any such Governmental Authority, then the other Party shall so advise the Interacting Party in writing as soon as practicable and, unless the Law prohibits, provide the Interacting Party, to the extent practicable, in advance with a copy of any proposed written communication with such Governmental Authority and reasonably comply with any and all reasonable direction of the Interacting Party concerning any meeting or written or oral communication with such Governmental Authority in the Interacting Party’s territory concerning a Special Product.

 

(b)                                 Submissions to Governmental Authorities.  Except as set forth in a Special Products Ancillary Agreement or In-License Intellectual Property Agreement and subject to the provisions of Section 9.03, the Interacting Party shall be responsible for (i) preparing and submitting to the applicable Governmental Authority (A) all annual and other periodic updates to the Regulatory Approvals for the Special Products that are required in its territory and (B) all supplements and amendments to any Regulatory Approvals with respect to Special Products in its territory (collectively and individually the items set forth in (A) and (B) above shall be referred to as “Regulatory Submission”), and (ii) taking all other actions that are necessary to maintain the Regulatory Approvals for the Special Products in its territory in accordance with applicable Laws.  Upon request, the other Party shall provide in a timely manner data it holds

 

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regarding Regulatory Approvals in its territory that may be required by the Interacting Party to prepare and submit Regulatory Submissions in the Interacting Party’s territory.  In the event Governmental Authorities require that a single, common Regulatory Submission be submitted in both the Abbott Territory and the AbbVie Territory, the Parties shall discuss and determine the proper allocation of responsibilities with respect to preparing such Regulatory Submissions.

 

Section 9.03                             Sharing of Correspondence with Governmental Authorities.  Each Party shall promptly provide to the other copies of any documents or correspondence received from a Governmental Authority pertaining to a Special Product (including any meeting minutes) to the extent such documents and correspondence have a reasonable potential to impact the labeling, or to materially impact the Commercialization of a Special Product in the other Party’s territory.

 

Section 9.04                             Pharmacovigilance and Medical Inquiries.

 

(a)                                 Pharmacovigilance.  Each Party agrees to share relevant information it receives (either directly or indirectly) with the other Party in a timely manner so as to allow the responsible Party to comply with its responsibility to process pharmacovigilance information.  Pursuant to the terms of a pharmacovigilance agreement, the maintaining Party shall provide the other Party access to such data for each Special Product.

 

(b)                                 Medical Inquiries.  AbbVie shall be ultimately responsible for handling all medical questions or inquiries in the AbbVie Territory with regard to the Special Products.  Abbott shall forward all medical questions or inquiries made to Abbott from members of the medical and paramedical professions and consumers regarding the Special Products in the AbbVie Territory in accordance with a pharmacovigilance agreement.  Abbott shall be ultimately responsible for handling all medical questions or inquiries in the Abbott Territory with regard to the Special Products.  AbbVie shall forward all medical questions or inquiries made to AbbVie from members of the medical and paramedical professions and consumers regarding the Special Products in the Abbott Territory in accordance with a pharmacovigilance agreement.

 

Section 9.05                             Labeling Changes.  In the event either Party seeks to change a label and/or package insert for a Special Product due to safety or efficacy concerns, the Party seeking to make the change shall notify the other Party and provide the other Party with applicable data for its review and evaluation.  The Parties may discuss in good faith and endeavor to agree upon all proposed significant safety or efficacy changes to the labeling and/or package inserts for Special Products.  Each Party agrees to consider all comments of the other in good faith. Notwithstanding any good faith discussions, Abbott shall have the right to file for such labeling change as it reasonably deems appropriate in the Abbott Territory and AbbVie shall have the right to file for such labeling change as it reasonably deems appropriate in the AbbVie Territory, as applicable.

 

Section 9.06                             Notification or Information.  Each Party shall promptly inform the other Party of any notification of any action by, or notification or other information which it receives (directly or indirectly) from, any Governmental Authority in the AbbVie Territory or Abbott Territory or from any other Person (together with copies of correspondence related thereto), which (a) raises any material concerns regarding the safety or efficacy of any Special Product,

 

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(b) indicates or suggests a potential material Liability for either Party to any Third Party arising in connection with any Special Product, or (c) indicates a reasonable potential for a Recall of any Special Product; provided, however, that neither Party shall be obliged to disclose information in breach of any contractual restriction which it could not reasonably have avoided.  Information that shall be disclosed pursuant to this Section 9.06 (to the extent such information otherwise satisfies the requirements set forth in the preceding sentence) shall include:  (i) receipt of a warning letter, untitled letter or any other related Governmental Authority action relating to any Special Product and any responses related thereto; and (ii) an initiation of any Governmental Authority Proceeding, detention, seizure or injunction concerning any Special Product.

 

Section 9.07                             Recalls.

 

(a)                                 Notification.  Each Party shall within one (1) business day notify the other Party in writing if it determines that any event, incident or circumstance has occurred which may result in the need for a recall, market withdrawal or field alert (each, a “Recall”) with respect to a Special Product.

 

(b)                                 Recalls in the Respective Territories.  Each Party shall determine whether to implement a Recall of a Special Product in its territory and upon what terms and conditions the Special Product shall be subject to a Recall; provided, however, that, prior to any implementation of a Recall of a Special Product in its territory, to the extent practicable, the Party conducting the Recall shall consult with the other Party and consider in good faith any comments such Party may have with respect to such implementation.  Each Party shall be responsible for discussions with any Governmental Authority in its territory regarding all aspects of a Recall.

 

(c)                                  Costs and Expenses of Recalls.  All costs and expenses associated with implementing any Recall of a Special Product shall be allocated between Abbott and AbbVie as follows:

 

(i)                                     In the event, and to the extent, that the Recall arises out of (A) the negligence or willful misconduct of AbbVie, or (B) a material breach of this Agreement or the applicable manufacturing Agreement by AbbVie, AbbVie shall bear the costs and expenses for the Recall (including any out-of-pocket expenses reasonably incurred by Abbott in conducting such Recall), up to one hundred percent (100%) thereof.

 

(ii)                                  In the event, and to the extent, that the Recall arises out of (A) the negligence or willful misconduct of Abbott, or (B) a material breach of this Agreement or the applicable manufacturing agreement by Abbott, Abbott shall bear the costs and expenses for the Recall (including any out-of-pocket expenses reasonably incurred by AbbVie in conducting such Recall), up to one hundred percent (100%) thereof.

 

(iii)                               In the event, and to the extent, that the Recall arises out of any event other than those set forth in Section 9.07(c)(i) or Section 9.07(c)(ii), Abbott shall bear the costs and expenses for the Recall in the Abbott Territory and AbbVie shall bear the costs and expenses for the Recall in the AbbVie Territory.

 

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ARTICLE X
 INDEMNIFICATION

 

Section 10.01                      Indemnification by AbbVie.  Except as otherwise specifically set forth in any provision of this Agreement or of any Special Products Ancillary Agreement, AbbVie and each of the AbbVie Subsidiaries shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless each of the Abbott Indemnitees from and against all AbbVie Indemnity Obligations, except to the extent any such Liability is the result of a breach by Abbott or an Abbott Subsidiary of this Agreement or any Special Products Ancillary Agreement or the negligence or willful misconduct or omission by Abbott or an Abbott Subsidiary under this Agreement or any Special Products Ancillary Agreement; provided, however, that the indemnity in this Section 10.01 for AbbVie Special Products Liabilities shall not extend to a former director, officer, employee or agent of AbbVie or an AbbVie Subsidiary to the extent such Person would not be eligible for indemnification under the terms of (i) Abbott’s certificate of incorporation or bylaws in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter; or (ii) the directors’ and officers’ insurance policy of Abbott would not cover such Person in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter.

 

Section 10.02                      Indemnification by Abbott.  Except as otherwise specifically set forth in any provision of this Agreement or of any Special Products Ancillary Agreement, Abbott and each of the Abbott Subsidiaries shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless each of the AbbVie Indemnitees from and against all Abbott Indemnity Obligations, except to the extent any such Liability is the result of a breach by AbbVie or an AbbVie Subsidiary of this Agreement or any Special Products Ancillary Agreement or the negligence or willful misconduct or omission by AbbVie or an AbbVie Subsidiary under this Agreement or any Special Products Ancillary Agreement; provided, however, that the indemnity in this Section 10.02 for Abbott Special Products Liabilities shall not extend to a former director, officer, employee or agent of Abbott or an Abbott Subsidiary to the extent such Person would not be eligible for indemnification under the terms of (i) AbbVie’s certificate of incorporation or bylaws in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter; or (ii) the directors’ and officers’ insurance policy of AbbVie would not cover such Person in connection with the matter for which indemnification is sought due to action or inaction by such Person in connection with such matter.

 

Section 10.03                      Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

 

(a)                                 Insurance Proceeds and Other Amounts.  The Parties intend that any Liability subject to indemnification or contribution pursuant to this Agreement or any Special Products Ancillary Agreement:  (i) shall be reduced by any Insurance Proceeds or other amounts actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of any indemnifiable Liability; (ii) shall not be increased to take into account any Tax costs incurred by the Indemnitee arising from

 

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

 

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

 

Section 10.04                      Procedures for Indemnification of Third Party Claims.

 

(a)                                 Notice of Claims.  If, at or following the date of this Agreement, an Indemnitee receives notice or otherwise learns of the assertion or commencement by a Third Party of any Proceeding against the Indemnitee with respect to which the Indemnitee believes that AbbVie (in the case of an Abbott Indemnitee) or Abbott (in the case of an AbbVie Indemnitee) is obligated to provide indemnification to such Indemnitee pursuant to this Agreement or any Special Products Ancillary Agreement (collectively, a “Third Party Claim”), such Indemnitee shall give such Indemnifying Party Notice thereof within ten (10) days (or sooner if the nature of the Third Party Claim so requires) after becoming aware of such Third Party Claim.  The Notice must describe the Third Party Claim in reasonable detail or, in the alternative, include copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.  Notwithstanding the foregoing, the failure of any

 

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Indemnitee to give the Notice as provided in this Section 10.04(a) shall not relieve the related Indemnifying Party of its obligations under this Article X, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give the Notice in accordance with this Section 10.04(a).

 

(b)                                 Control of Defense.  An Indemnifying Party may elect to defend (and seek to settle or compromise), at its own expense and with its own counsel, any Third Party Claim.  Within thirty (30) days after the receipt of a Notice from an Indemnitee in accordance with Section 10.04(a) (or sooner, if the nature of the Third Party Claim so requires), the Indemnifying Party shall provide a Notice to the Indemnitee indicating whether the Indemnifying Party shall assume responsibility for defending the Third Party Claim and specifying any reservations or exceptions to its defense.  If an Indemnifying Party elects not to assume responsibility for defending any Third Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a Notice from an Indemnitee as provided in Section 10.04(a), then the Indemnitee that is the subject of such Third Party Claim shall be entitled to continue to conduct and control the defense of such Third Party Claim.

 

(c)                                  Allocation of Defense Costs.  If an Indemnifying Party has elected to assume the defense of a Third Party Claim, whether with or without any reservations or exceptions with respect to such defense, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnitee for any such fees or expenses incurred during the course of its defense of such Third Party Claim, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense.  If an Indemnifying Party elects not to assume responsibility for defending any Third Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a Notice from an Indemnitee as provided in Section 10.04(a), and the Indemnitee conducts and controls the defense of such Third Party Claim, then the Indemnifying Party shall be liable for all reasonable fees and expenses incurred by the Indemnitee in connection with the defense of such Third Party Claim.

 

(d)                                 Right to Monitor and Participate.  An Indemnitee that does not conduct and control the defense of any Third Party Claim, or an Indemnifying Party that has failed to elect to defend any Third Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as necessary) of its own choosing to monitor and participate in (but not control) the defense of any Third Party Claim for which it is a potential Indemnitee or Indemnifying Party, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnifying Party, as the case may be, and the provisions of Section 10.04(c) shall not apply to such fees and expenses.  Notwithstanding the foregoing, such Party shall cooperate with the Party entitled to conduct and control the defense of such Third Party Claim in such defense and make available to the controlling Party, at the non-controlling Party’s expense, all witnesses, information and materials in such Party’s possession or under such Party’s control relating thereto as are reasonably required by the controlling Party.  In addition to the foregoing, if any Indemnitee shall in good faith determine that such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnitee shall have the

 

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right to employ separate counsel (including local counsel as necessary) and to participate in (but not control) the defense, compromise, or settlement thereof, and the Indemnifying Party shall bear the reasonable fees and expenses of such counsel for all Indemnitees.

 

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

 

(f)                                   Pending Third Party Claims.  The provisions of this Article X shall apply to Third Party Claims that are already pending or asserted as well as Third Party Claims brought or asserted after the date of this Agreement.  There shall be no requirement under this Section 10.04 to give a Notice with respect to any Third Party Claims that exist as of the Effective Time.

 

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

 

Section 10.05                      Additional Matters.

 

(a)                                 Timing of Payments.  Indemnity Payments or contribution payments in respect of any Liabilities for which an Indemnitee is entitled to indemnification or contribution under this Article X shall be paid reasonably promptly (but in any event within sixty (60) days of the final determination of the amount that the Indemnitee is entitled to indemnification or contribution under this Article X) by the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such Indemnity Payments or contribution payments, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities.  The indemnity and contribution provisions contained in this Article X shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; and (ii) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification or contribution hereunder.

 

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(b)                                 Notice of Direct Claims.  Any claim for indemnification under this Agreement or any Special Products Ancillary Agreement which does not result from a Third Party Claim (a “Direct Claim”) must be asserted by a Notice given by the Indemnitee to the applicable Indemnifying Party; provided, that the failure by an Indemnitee to so assert any such Direct Claim shall not prejudice the ability of the Indemnitee to do so at a later time except to the extent (if any) that the Indemnifying Party is prejudiced thereby.  Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such Notice within which to respond thereto.  If such Indemnifying Party does not respond within such thirty (30)-day period, such Direct Claim specified in such Notice shall be conclusively deemed a Liability of the Indemnifying Party under this Section 10.05(b) or, in the case of any Notice in which the amount of the Direct Claim (or any portion thereof) is estimated, on such later date, when the amount of such Direct Claim (or such portion thereof) becomes finally determined.  If such Indemnifying Party does not respond within such thirty (30)-day period or rejects such Direct Claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such Indemnitee as contemplated by this Agreement or the Special Products Ancillary Agreements, as applicable, without prejudice to its continuing rights to pursue indemnification or contribution hereunder.

 

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

 

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

 

(e)                                  Substitution.  In any Proceeding in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party for the named defendant if they conclude that substitution is desirable and practicable.  If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Proceeding as set forth in Section 10.04 and this Section 10.05, and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Proceeding (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement, and the cost of any interest or penalties relating to any judgment or settlement.

 

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Section 10.06                      Right of Contribution.

 

(a)                                 Contribution.  If any right of indemnification contained in Section 10.01 or Section 10.02 is held unenforceable or is unavailable for any reason, or is insufficient, to hold harmless an Indemnitee in respect of any Liability for which such Indemnitee is entitled to indemnification hereunder, then the Indemnifying Party shall contribute to the amounts paid or payable by the Indemnitees as a result of such Liability (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and its Subsidiaries, on the one hand, and the Indemnitees entitled to contribution, on the other hand, as well as any other relevant equitable considerations.

 

(b)                                 Contribution Procedures.  The provisions of Section 10.03 through Section 10.05 shall govern any contribution claims.

 

Section 10.07                      Remedies Cumulative.  The remedies provided in this Article X shall be cumulative and, subject to the provisions of Section 10.09 and Section 12.01, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

 

Section 10.08                      Survival of Indemnities.  The rights and obligations of each of the Parties and their respective Indemnitees under this Article X shall survive (a) the sale or other transfer by either Party or any of its respective Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities; or (b) any merger, consolidation, business combination, sale of all or substantially all of the Assets, restructuring, recapitalization, reorganization or similar transaction involving either Party or any of its respective Subsidiaries.

 

Section 10.09                      Covenant Not to Sue.  Each Party hereby covenants and agrees that none of it, its Subsidiaries or any Person claiming through it shall bring suit or otherwise assert any claim against any Indemnitee, or assert a defense against any claim asserted by any Indemnitee, before any court, arbitrator, neutral mediator or administrative agency anywhere in the world, alleging that:  (a) the assumption of any AbbVie Special Products Liabilities by AbbVie and the AbbVie Subsidiaries on the terms and conditions set forth in this Agreement and the Special Products Ancillary Agreements is void or unenforceable for any reason; (b) the retention of any Abbott Special Products Liabilities by Abbott and the Abbott Subsidiaries on the terms and conditions set forth in this Agreement and the Special Products Ancillary Agreements is void or unenforceable for any reason; or (c) the provisions of this Article X are void or unenforceable for any reason.

 

ARTICLE XI
 CONFIDENTIALITY

 

Section 11.01                      Confidentiality.

 

(a)                                 Confidentiality.  Subject to Section 12.02 and except as contemplated by or otherwise provided in this Agreement or any Special Products Ancillary Agreement, Abbott, on behalf of itself and each of the Abbott Subsidiaries, and AbbVie, on behalf of itself and each

 

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of the AbbVie Subsidiaries, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives (each, a “Representative”) to hold, in strict confidence, with at least the same degree of care that applies to Abbott’s confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential and proprietary Information concerning the other Party (or its business) and the other Party’s Subsidiaries (or their respective businesses) that is either in its possession (including confidential and proprietary Information in its possession prior to the Effective Time) or furnished by the other Party or the other Party’s Subsidiaries or their respective Representatives at any time pursuant to this Agreement or any Special Products Ancillary Agreement (“Confidential Information”), and shall not use any such Confidential Information other than for such purposes as may be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Confidential Information has been:  (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or any of their respective Representatives in violation of this Agreement; (ii) later lawfully acquired from other sources by such Party or any of its Subsidiaries, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary Information; or (iii) independently developed or generated without reference to or use of the respective proprietary or confidential Information of the other Party or any of its Subsidiaries.  If any Confidential Information of one Party or any of its Subsidiaries is disclosed to another Party or any of its Subsidiaries in connection with providing services to such first Party or any of its Subsidiaries under this Agreement or any Special Products Ancillary Agreement, then such disclosed Confidential Information shall be used only as required to perform such services.

 

(b)                                 No Release; Return or Destruction.  Each Party agrees not to release or disclose, or permit to be released or disclosed, any Confidential Information addressed in Section 11.01(a) to any other Person, except its Representatives who need to know such Confidential Information in their capacities as such, and except in compliance with Section 11.02.  Without limiting the foregoing, when any Confidential Information furnished by the other Party after the Effective Time pursuant to this Agreement or any Special Products Ancillary Agreement is no longer needed for the purposes contemplated by this Agreement or any Special Products Ancillary Agreement, each Party shall, at the disclosing Party’s option, promptly after receiving a Notice from the disclosing Party, either return to the disclosing Party all such Confidential Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the disclosing Party that it has destroyed such Confidential Information (and such copies thereof and such notes, extracts or summaries based thereon).

 

(c)                                  Third-Party Information; Privacy or Data Protection Laws.  Each Party acknowledges that it and its respective Subsidiaries may presently have and following the Effective Time may gain access to or possession of confidential or proprietary Information of, or personal Information relating to, Third Parties (i) that was received under confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or the other Party’s Subsidiaries, on the other hand, prior to the Effective Time; or (ii) that, as between the two Parties, was originally collected by the other Party or the other Party’s Subsidiaries and that may be subject to and protected by privacy, data protection or other applicable Laws.  As may be provided in more detail in any applicable Special Products

 

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Ancillary Agreement, each Party agrees that it shall hold, protect and use, and shall cause its Subsidiaries and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary Information of, or personal Information relating to, Third Parties in accordance with privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into prior to the Effective Time or affirmative commitments or representations that were made prior to the Effective Time by, between or among the other Party or the other Party’s Subsidiaries, on the one hand, and such Third Parties, on the other hand.

 

Section 11.02                      Protective Arrangements.  In the event that either Party or any of its Subsidiaries is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any Governmental Authority or pursuant to applicable Law to disclose or provide any Confidential Information of the other Party, as applicable, that is subject to the confidentiality provisions hereof, such Party shall provide the other Party with Notice of such request or demand as promptly as practicable under the circumstances so that such other Party shall have an opportunity to seek an appropriate protective order, at such other Party’s cost and expense.  In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such Confidential Information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide Confidential Information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority.

 

Section 11.03                      Other Permitted Disclosures.  Each  Party may disclose the other Party’s Confidential Information to the extent that such disclosure is:

 

(a)                                 made by or on behalf of the Party making a disclosure to the Regulatory Authorities as required in connection with any filing, application or request for Regulatory Approval in accordance with the terms of this Agreement; provided, however, that reasonable measures shall be taken to assure confidential treatment of such Confidential Information to the extent practicable and consistent with applicable Law;

 

(b)                                 made by or on behalf of the Party making a disclosure to a patent authority as may be reasonably necessary or useful for purposes of obtaining, defending or enforcing a Patent in accordance with the terms of this Agreement; provided, however, that reasonable measures shall be taken to assure confidential treatment of such Confidential Information, to the extent such protection is available;

 

(c)                                  made by the Party making the disclosure to its and its Subsidiaries’ financial and legal advisors who have a need to know such disclosing Party’s Confidential Information and are either under professional codes of conduct giving rise to expectations of confidentiality and non-use or under written agreements of confidentiality and non-use, in each case, at least as restrictive as those set forth in this Agreement; provided that the Party making the disclosure under this Section 11.03(c) shall remain responsible for any failure by such

 

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financial and legal advisors, to treat such Confidential Information as required under this Article XI;

 

(d)                                 made by the Party (or its Subsidiaries) making the disclosure to potential or actual investors or acquirers as may be necessary in connection with their evaluation of such potential or actual investment or acquisition; provided, however, that such Third Parties shall be subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the Party pursuant to this Article XI (with a duration of confidentiality and non-use obligations as appropriate that is no less than ten (10) years from the date of disclosure); or

 

(e)                                  made by the Party (or its Subsidiaries or sublicensees) making the disclosure to its or their advisors, consultants, clinicians, vendors, service providers, contractors, existing or prospective collaboration partners, licensees, sublicensees, or other Third Parties as may be necessary or useful in connection with the performance of its obligations or exercise of its rights as contemplated by this Agreement; provided, however, that such Third Parties shall be subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the receiving Party pursuant to this Article  (with a duration of confidentiality and non-use obligations as appropriate that is no less than five (5) years from the date of disclosure for advisors, consultants, clinicians, vendors, service providers, contractors).

 

ARTICLE XII
 DISPUTE RESOLUTION

 

Section 12.01                      Disputes.

 

(a)                                 Alternative Dispute Resolution Procedures.  The Parties acknowledge that, from time to time after the Effective Time, a controversy, dispute or claim (a “Dispute”) may arise relating to either Party’s rights or obligations under this Agreement or any Special Products Ancillary Agreement.  The Parties agree that any such Dispute (whether arising in contract, tort or otherwise) arising out of or relating in any way to this Agreement or any Special Products Ancillary Agreement (including regarding whether any Assets are AbbVie Assets, any Liabilities are AbbVie Liabilities or the interpretation or validity of this Agreement) shall be resolved by the Alternative Dispute Resolution (“ADR”) provisions set forth in this Section 12.01 and in Schedule 12.01, the result of which shall be binding upon the Parties.

 

(i)                                     Notice.  Prior to initiating an ADR proceeding, a Party first must send Notice to the other Party (A) describing the Dispute; and (B) requesting attempted resolution of the Dispute by good faith negotiations in accordance with Section 12.01(a)(ii).

 

(ii)                                  Negotiations.  The CEOs or Presidents of each Party shall designate a group of no more than three individuals (with representatives of each Party’s respective counsel not counting against such three individual limit), to participate in good faith negotiations with a like group designated by the other Party aimed at resolving the Dispute.  The respective groups shall meet in person to conduct good faith negotiations during the twenty one

 

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(21) day period following receipt of the Notice.  By mutual written consent, the Parties may extend the twenty one (21)-day period for conducting such negotiations.  If the Parties fail to resolve the Dispute within the twenty one (21)-day period or the Parties fail to meet during such period, and the period is not extended by mutual written agreement, either Party may initiate an ADR proceeding as provided in Schedule 12.01.

 

(b)                                 Continuation of Services and Commitments.  Unless otherwise agreed in writing, the Parties shall, and shall cause their respective Subsidiaries to, continue to honor all commitments under this Agreement and each Special Products Ancillary Agreement to the extent required by such Agreements during the course of dispute resolution pursuant to the provisions of this Article XII with respect to all matters related to such Dispute.

 

ARTICLE XIII
 TERM

 

Section 13.01                      Term.  This Agreement shall be effective as of the Effective Time and shall continue in full force and effect until terminated by an agreement in writing signed by each of the Parties.

 

Section 13.02                      Expiration.  On a Special Product-by-Special Product basis, in the event a Party, including all sublicensees of such Party with respect to a Special Product, elects to discontinue all Commercialization activities for such Special Product, then the electing Party shall notify the other Party, the Transition Committee, or a subcommittee established thereby, of such election.  Upon receipt of the foregoing notice, subject to Section 13.03, (a) this Agreement shall expire with respect to the Special Product identified in such notice and (b) each Party’s obligations hereunder shall expire with respect to such Special Product.

 

Section 13.03                      Survival.  Except as expressly set forth in this Agreement or any Special Products Ancillary Agreement, the licenses, covenants and other agreements contained in Section 2.01, Section 2.02, Section 2.03, Section 3.01, Section 3.02, Section 3.03, Section 3.04, Section 3.05, Section 4.02, Article X, Article XI, Article XII and Article XIV and Liability for the breach of any obligations contained herein or therein, shall survive the expiration of this Agreement with respect to such Special Product and shall remain in full force and effect thereafter.  In addition, if the Party that is discontinuing Commercialization activities with respect to a Special Product (or its Subsidiaries) still Controls a Patent that is relevant to the continuing Party’s Manufacture, Development, use or Commercialization activities with respect to such Special Product, then the covenants and other agreements contained in Article IIV with respect to the preparation, filing, prosecution, maintenance and/or enforcement of such Patent shall survive the expiration of this Agreement until the expiration or invalidation of the last valid claim of such Patent covering such Special Product.

 

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ARTICLE XIV
 MISCELLANEOUS

 

Section 14.01                      Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures.

 

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

 

(b)                                 Entire Agreement.  This Agreement, the Special Products Ancillary Agreements, if any, the Separation Agreement and the exhibits, schedules and annexes hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.  Notwithstanding any other provisions in this Agreement 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 Separation Agreement, the provisions of this Agreement shall control with respect to Special Products.  Further, in the event and to the extent there are any inconsistencies or conflicts between this Agreement and a Special Products Ancillary Agreement, if any, the terms of the particular Special Products Ancillary Agreement shall govern, unless otherwise agreed to in writing by the Parties; provided that, in the event there are any inconsistencies or conflicts between this Agreement, a Special Products Ancillary Agreement and an applicable In-Licensed Intellectual Property Agreement, the terms of the particular In-Licensed Intellectual Property Agreement shall govern.

 

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

 

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

 

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

 

(d)                                 Signatures and Delivery.  Each Party acknowledges that it and the other Party may execute this Agreement and any Special Products Ancillary Agreement by manual, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement or any Special Products Ancillary Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF)

 

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

 

Section 14.02                      Governing Law.  This Agreement and, unless expressly provided therein, each Special Products Ancillary Agreement, shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of Laws and principles of the State of Delaware, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

 

Section 14.03                      Assignability.  Except as set forth in any Special Products Ancillary Agreement or In-Licensed Intellectual Property Agreement, (a) this Agreement and each Special Products Ancillary Agreement shall be binding upon and inure to the benefit of the Parties and the parties thereto, respectively, and their respective successors and permitted assigns and (b) either Party may assign its rights or delegate its obligations under this Agreement or any Special Products Ancillary Agreement without the express prior written consent of the other Party hereto or the other parties thereto; provided, however, unless the assignment of rights or delegation of obligations is to an Affiliate or Subsidiary of the Party seeking such assignment or delegation, then such Party must first provide the other Party with prior written notice of such intention and afford such other Party a sixty (60) day right of first negotiation.  If the Parties are not able to reach an agreement after good faith negotiations during such sixty (60)-day period, then the Party intending to assign its rights or delegate its obligations under this Agreement or any Special Products Ancillary Agreement shall be free to do so; provided, however, any Person taking assignment shall assume 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; and nothing herein is intended to, or shall be construed to, prohibit either Party or any of its Subsidiaries from being party to or undertaking a merger, consolidation or sale.

 

Section 14.04                      Third Party Beneficiaries.  Except for the indemnification rights under this Agreement of an Abbott Indemnitee or AbbVie Indemnitee in their respective capacities as such under Article X, (a) the provisions of this Agreement and each Special Products Ancillary Agreement are solely for the benefit of the Parties and their respective Subsidiaries, and their permitted successors and assigns, and are not intended to confer upon any Person except the Parties and their respective Subsidiaries, and their permitted successors and assigns, any rights or remedies hereunder; and (b) there are no other Third Party beneficiaries of this Agreement or any Special Products Ancillary Agreement and neither this Agreement nor any Special Products Ancillary Agreement shall provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Special Products Ancillary Agreement.

 

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Section 14.05                      Notices.  All Notices and, to the extent applicable and unless otherwise provided therein, under each of the Special Products Ancillary Agreements shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a Notice):

 

If to Abbott, to:

 

Abbott Laboratories

100 Abbott Park Road

Building AP6D,Dept. 364

Abbott Park, Illinois  60064-6020

Attn:  General Counsel

Facsimile:  (847) 938-6277

 

If to AbbVie to:

 

AbbVie Inc.

1 North Waukegan Road

North Chicago, Illinois 60064

Attn:  General Counsel

Facsimile:  [·]

 

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

 

Section 14.06                      Severability.  In the event that any one or more of the terms or provisions of this Agreement or any Special Products Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or any Special Products Ancillary Agreement, or the application of such term or provision to Persons or circumstances or in jurisdictions other than those as to which it has been determined to be invalid, illegal or unenforceable, and the Parties shall use their commercially reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into this Agreement (or the applicable Special Products Ancillary Agreement) which, insofar as practicable, implement the purposes and intent of the Parties.  Any term or provision of this Agreement or any Special Products Ancillary Agreement held invalid or unenforceable only in part, degree or within certain jurisdictions shall remain in full force and effect to the extent not held invalid or unenforceable to the extent consistent with the intent of the parties as reflected by this Agreement.  To the extent permitted by applicable Law, each party waives any term or provision of Law which renders any term or provision of this Agreement to be invalid, illegal or unenforceable in any respect.

 

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Section 14.07                      Force Majeure.  Neither Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Special Products Ancillary Agreement for failure to fulfill any obligation so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.  A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide Notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement or any Special Products Ancillary Agreement as soon as reasonably practicable.

 

Section 14.08                      No Set Off.  Except as set forth in any Special Products Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, neither Party nor any of its Subsidiaries shall have any right of set off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or any Special Products Ancillary Agreement; or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement or any Special Products Ancillary Agreement.

 

Section 14.09                      Responsibility for Expenses.

 

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

 

(b)                                 Expenses Incurred or Accrued After the Effective Time.  Except as otherwise expressly set forth in this Agreement or any Special Products Ancillary Agreement, or as otherwise agreed to in writing by the Parties, each Party shall bear its own costs and expenses incurred or accrued after the Effective Time.

 

Section 14.10                      Headings.  The Article, Section and Paragraph headings contained in this Agreement and in the Special Products Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Special Products Ancillary Agreement.

 

Section 14.11                      Subsidiaries.  Abbott shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by an Abbott Subsidiary and AbbVie shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by an AbbVie Subsidiary.

 

Section 14.12                      Waivers of Default.  Waiver by either Party of any default by the other Party of any provision of this Agreement or any Special Products Ancillary Agreement shall not

 

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be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party.

 

Section 14.13                      Amendments.  No provisions of this Agreement or any Special Products Ancillary Agreement shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of both Parties or their relevant Subsidiaries, as the case may be.  No provisions of this Agreement or any Special Products Ancillary Agreement shall be deemed waived unless such waiver is in writing and signed by the authorized representative of the Party or relevant Subsidiary against whom it is sought to be enforced.

 

Section 14.14                      Interpretation.  Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires.  The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto and thereto) and not to any particular provision of this Agreement.  Article, Section, Exhibit and Schedule references are to the Articles, Sections, Exhibits, and Schedules to this Agreement unless otherwise specified.  Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement.  The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified.  The word “or” shall not be exclusive.  Unless otherwise specified in a particular case, the word “days” refers to calendar days.  References herein to this Agreement or any Special Products Ancillary Agreement shall be deemed to refer to this Agreement or such Special Products Ancillary 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. If the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.

 

Section 14.15                      Public Announcements.  From and after the Effective Time, Abbott and AbbVie shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement and the Special Products Ancillary Agreements, and shall not issue any such press release or make any such public statement prior to such consultation, except (a) as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system; or (b) as otherwise set forth on Schedule 9.16 of the Separation Agreement.

 

Section 14.16                      Specific Performance.  Subject to the provisions of Article XII, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Special Products Ancillary Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement or the Special Products Ancillary Agreements, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that

 

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the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any Proceeding for specific performance that a remedy at Law would be adequate is waived.

 

Section 14.17                      Mutual Drafting.  This Agreement and the Special Products Ancillary Agreements shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

 

* * * * *

 

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

 

 

	
ABBOTT LABORATORIES
    	
 
    	
ABBVIE INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
Name:
    
	
Title:
    	
 
    	
Title:

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