Exhibit 10.4
TAX SHARING AGREEMENT
between
XXXXXX LABORATORIES
on behalf of itself
and the ABBOTT AFFILIATES
and
HOSPIRA, INC.
on behalf of itself
and the HOSPIRA AFFILIATES
TAX SHARING AGREEMENT
This Tax Sharing Agreement (the "Agreement") is entered into as of the
_________ day of _________, 2004, between Xxxxxx Laboratories ("Abbott"), an
Illinois corporation, and Hospira, Inc. ("Hospira"), a Delaware corporation.
R E C I T A L S:
WHEREAS, the board of directors of Abbott has determined that it is
appropriate and advisable to: (i) separate Xxxxxx'x core hospital business from
Xxxxxx'x remaining businesses (the "Separation"), which will include the
transfer of the assets (including interests in intangible assets and stock of
subsidiaries) used in connection with the core hospital business to Hospira (the
"Contribution"); and (ii) following the Separation, make a distribution, on a
pro rata basis, to holders of common shares, without par value, of Abbott
(together with the associated preferred stock purchase rights) of all of the
outstanding shares of common stock, par value $0.01 per share, of Hospira
(together with the associated preferred stock purchase rights), owned by Abbott
(the "Distribution") (the date of such Distribution, the "Distribution Date");
and
WHEREAS, Abbott and Hospira intend that the Contribution and
Distribution and certain other transactions effected as part of the Separation
qualify as Tax-free under Sections 355 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 Hospira, that has elected
to file consolidated U.S. federal income Tax Returns and, as a result of the
Distribution, neither Hospira nor any of its Affiliates will be a member of such
group after the close of the Distribution Date;
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WHEREAS, Abbott and Hospira desire to allocate the responsibilities for
various Taxes and to provide for certain additional Tax matters;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, Abbott and Hospira (each on behalf of
itself, each of its Affiliates as of the Effective Time, and its future
Affiliates) hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01 Definitions. Reference is made to Section 5.13 regarding the
interpretation of certain words and phrases used in this Agreement. In addition,
for the purpose of this Agreement, the following terms shall have the meanings
set forth below.
"Abbott" has the meaning set forth in the Preamble.
"Abbott Group" means Abbott and all Affiliates of Abbott other than any member
of the Hospira Group.
"Affiliate" means any entity that is directly or indirectly under the Control of
the entity in question.
"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.
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"Agreement" has the meaning set forth in the Preamble.
"Bahamian Distribution" has the meaning ascribed to such term in Section
3.01(a).
"Closing Date" means, for any country, the date the TMDS Agreement for that
country terminates.
"Code" has the meaning ascribed to such term in the second WHEREAS clause
hereof.
"Contribution" has the meaning ascribed to such term in the first WHEREAS clause
hereof.
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity, whether
through ownership of voting securities, by contract or otherwise.
"Corresponding Portion of the Tax Detriment" means the product of the Tax
Detriment and a fraction the numerator of which is the amount of the related Tax
Benefit for a taxable period and the denominator of which is the sum of the
related Tax Benefits for all of the relevant taxable periods.
"Covered Transaction Tax" has the meaning ascribed to such term in
Section 3.01(a).
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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.
"Distribution" has the meaning ascribed to such term in the first WHEREAS clause
hereof.
"Distribution Agreement" means the Separation and Distribution Agreement entered
into by and between Abbott and Hospira as the same may be amended.
"Distribution Date" has the meaning ascribed to such term in the first WHEREAS
clause hereof.
"EBA" means the Employee Benefits Agreement entered into by and between Abbott
and Hospira as the same may be amended.
"Effective Time" means 11:59 p.m. Eastern Time on the Distribution Date.
"Employment Taxes" means withholding, payroll, social security, workers
compensation, unemployment, disability, and other similar taxes imposed by any
Tax Authority, and any
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interest, penalties, additions to tax, or additional amounts with respect to the
foregoing imposed on any taxpayer or consolidated, combined, or unitary group of
taxpayers.
"Governmental Authority" means any supranational, international, national,
federal, state, or local court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority, including The New York Stock Exchange, Inc. and any similar
self-regulatory body under applicable securities laws or regulations.
"Hospira" has the meaning set forth in the Preamble.
"Hospira Change of Control" means with respect to Hospira: (i) the acquisition
by a Third Party of thirty percent (30%) or more of the combined voting power of
the then outstanding voting securities of Hospira entitled to vote generally in
the election of directors; (ii) over any twenty-four (24) month period,
individuals who constitute the board of directors of Hospira as of the beginning
of the period (the "INCUMBENT BOARD") cease for any reason to constitute at
least a majority thereof, provided that any Person becoming a director during
such period whose election or nomination for election by Hospira's stockholders
was approved in advance by a vote of at least a majority of the Incumbent Board
(either by a specific vote or by approval of the proxy statement of Hospira in
which such Person is named as a nominee for director without objection of
nomination) will be, for purposes of this clause (ii), considered as though such
Person were a member of the Incumbent Board; (iii) the sale or transfer of all
or a substantial portion of the assets of Hospira that are related to Hospira's
performance pursuant to this Agreement (including a divestiture of Hospira's
rights to the Products sold in the Territory),
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directly or indirectly through the sale or transfer of ownership interests in
the assets or the entity owning such assets; or (iv) a merger or combination as
a result of which Hospira's stockholders cease to own at least sixty percent
(60%) of the equity voting power of the merged or combined enterprise.
"Hospira Group" means Hospira and all Affiliates of Hospira.
"ICO Agreement" means the International Commercial Operations Agreement entered
into by and between Abbott and Hospira as the same may be amended.
"Indemnified Party" has the meaning ascribed to such term in Section 5.17(a).
"Indemnifying Party" has the meaning ascribed to such term in Section 5.17(a).
"Internal Distribution" has the meaning ascribed to such term in Section
3.01(b).
"IRS" means the United States Internal Revenue Service.
"Local Closing" means the transactions that occur on the Closing Date.
"Parties" means the parties to this Agreement.
"Person" means an individual, a general or limited partnership, a corporation, a
trust, a joint
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venture, an unincorporated organization, a limited liability entity, any other
entity and any Governmental Authority.
"Post-Distribution Period" means any taxable period or portion of a taxable
period beginning after the Distribution Date.
"Pre-Distribution Period" means any taxable period or portion of a taxable
period ending on or before the Distribution Date.
"Prime Rate" means the rate which Citibank N.A. (or its successors or another
major money center commercial bank agreed to by the parties) announces from time
to time as its prime lending rate, as in effect from time to time.
"Private Letter Ruling" means the private letter ruling issued by the IRS on
December 4, 2003, in connection with the Contribution, Distribution, and related
transactions, including the request for such rulings together with all
supplemental filings and exhibits thereto submitted to the IRS on behalf of
Abbott or its subsidiaries in connection therewith.
"Puerto Rican Ruling" means the ruling, if any, issued by the Treasury
Department of Puerto Rico pursuant to the ruling request filed on behalf of
Abbott, Xxxxxx Laboratories de Puerto Rico, Inc., Hospira, and Hospira Puerto
Rico LLC on ___________, 2004 with respect to the Puerto Rican Transaction,
together with all supplemental filings and exhibits thereto.
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"Puerto Rican Transaction" has the meaning ascribed to such term in Section
3.01(a).
"Remitting Party" has the meaning ascribed to such term in Section 5.17(b).
"Responsible Party" has the meaning ascribed to such term in Section 5.17(b).
"Section 355(e) Event" has the meaning ascribed to such term in Section 3.01(b).
"Separation" has the meaning ascribed to such term in the first WHEREAS clause
hereof.
"Specified Action" has the meaning ascribed to such term in Section 4.02(b).
"Straddle Period" means any taxable period beginning on or before the
Distribution Date and ending after the Distribution Date.
"Tax" means: (i) any income, net income, gross income, gross receipts, profits,
capital stock, franchise, property, ad valorem, stamp, excise, severance,
occupation, service, sales, use, license, lease, transfer, import, export,
customs duties, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment, or other charge in the nature of or in lieu of
any tax) imposed by any Tax Authority, and any interest, penalties, additions to
tax or additional amounts with respect to the foregoing imposed on any taxpayer
or consolidated, combined or unitary group of taxpayers; and (ii) any Employment
Tax.
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"Tax Authority" means, with respect to any Tax, the governmental entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.
"Tax Benefit" means the reduction in Tax that should result from any item of
loss, deduction, or credit (or any other item), whether or not an actual
reduction in Tax occurs, including any interest with respect thereto or interest
that would have been payable but for such item, net of any Tax on such interest.
For purposes of calculating the amount of any Tax Benefit, the maximum statutory
rate (or rates, in the case of an item that affects more than one Tax)
applicable to each item of income, gain, loss, deduction, or credit (or any
other item) shall be used.
"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.
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"Tax Package" means the information and documents in the possession of the
Hospira Group that are reasonably necessary for the preparation of a Tax Return
of the Abbott Group with respect to a Pre-Distribution Period, assembled in all
material respects in accordance with the standards that Abbott has heretofore
applied to divisions and Affiliates.
"Tax Records" means all records relating to any Tax, including without
limitation Tax Returns, journal vouchers, cash vouchers, general ledgers,
material contracts, Tax Return workpapers and schedules, appraisal reports,
authorizations for expenditures, and documents relating to rulings or other
Determinations by any Tax Authority.
"Tax Return" means any report of Tax due, any claims for refund of Tax paid, any
information return with respect to Tax, any election made with respect to Tax,
or any other similar report, statement, declaration, or document required to be
filed under the Code or other law with respect to Tax, including any
attachments, exhibits, or other materials submitted with any of the foregoing,
and including any amendments or supplements to any of the foregoing for any
taxpayer or consolidated, combined, or unitary group of taxpayers.
"TMDS Agreement" means any of the Transition Marketing and Distribution Services
Agreements by and between Hospira and a non-U.S. Affiliate of Abbott as the same
may be amended.
"Third Party" means any Person other than Abbott, any Abbott Affiliate, Hospira
and any Hospira Affiliate.
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"Transition Period Tax" has the meaning ascribed to such term in Section 3.02.
"U.S. Transferred Employee" has the meaning set forth in the Employee Benefits
Agreement by and between Abbott and Hospira.
ARTICLE II. RESPONSIBILITY FOR TAX
Section 2.01 Responsibility for Tax.
(a) Except as specifically provided in any of the agreements contemplated by
the Distribution Agreement, including the EBA with respect to Employment
Taxes, Abbott shall be responsible for, and shall indemnify and hold
harmless the Hospira Group from any liability for (i) any Tax imposed by
any Tax Authority on Abbott or an Abbott Affiliate, including Hospira
and all Hospira Affiliates, for any Pre-Distribution Period, except any
Covered Transaction Tax for which Hospira is responsible under Section
3.01(b); and (ii) any Tax imposed by any Tax Authority on any member of
the Abbott Group for any Post-Distribution Period, except any Transition
Period Tax for which Hospira is responsible under Section 3.02.
(b) Except as specifically provided in any of the agreements contemplated by
the Distribution Agreement, including the EBA with respect to Employment
Taxes, Hospira shall be responsible for, and shall indemnify and hold
harmless the Abbott Group from any liability for (i) any Tax imposed by
any Tax Authority on Hospira or a Hospira Affiliate for any
Post-Distribution Period; (ii) any Covered Transaction Tax for which
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Hospira is responsible under Section 3.01(b); and (iii) any Transition
Period Tax for which Hospira is responsible under Section 3.02.
(c) The responsibility for any Tax incurred in a Straddle Period by any
member of the Hospira Group shall be allocated between the
Pre-Distribution Period and the Post-Distribution Period as if such
member closed its financial accounting records as of the Effective Time
and determined the Tax attributable to the Pre-Distribution Period by
applying the method of tax accounting that has historically been used
for the business of such member.
Section 2.02 Refunds, Tax Benefits, and Other Allocations
(a) Refunds and Carrybacks.
(i) Abbott Refunds. Except as provided in Section 2.02(a)(iv) below,
Abbott shall be entitled to all refunds (including refunds paid
by means of a credit against other or future Tax liabilities)
and credits with respect to any Tax for which Abbott is
responsible under Section 2.01(a).
(ii) Hospira Refunds. Hospira shall be entitled to all refunds
(including refunds paid by means of a credit against other or
future Tax liabilities) and credits with respect to any Tax for
which Hospira is responsible under Section 2.01(b).
(iii) Payment of Refunds. Except as provided in Section 2.02(a)(iv),
Hospira shall forward to Abbott, or reimburse Abbott for, any
refunds due Abbott (pursuant to the terms of this Section
2.02(a)) after receipt thereof (less any Tax Detriment
attributable to such refunds), and Abbott shall forward to
Hospira, or reimburse
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Hospira for, any refunds due Hospira (pursuant to the terms of
this Section 2.02(a)) after receipt thereof (less any Tax
Detriment attributable to such refunds). In the case of a refund
received in the form of a credit against other or future Tax
liabilities, reimbursement with respect to such refund shall be
due in each case on the due date for payment of the Tax against
which such refund has been credited. Any payment required to be
made pursuant to this Section 2.02(a)(iii) shall be made within
thirty (30) days of the receipt of the refund. If Abbott
reasonably so requests, Hospira, at Xxxxxx'x expense, shall file
for and pursue any refund to which Abbott is entitled under this
Section 2.02(a). If Hospira reasonably so requests, Abbott, at
Hospira's expense, shall file for and pursue any refund to which
Hospira is entitled under this Section 2.02(a). The Party making
a payment pursuant to this Section 2.02(a)(iii) must deliver
with the payment a statement describing in reasonable detail the
basis for the calculation of the amount being paid.
(iv) Carrybacks.
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1) The Hospira Group shall be entitled to any refund of Xxxxxx'x
Tax for a Pre-Distribution Period resulting from carrying back
any item of loss, deduction or credit that arises in any
Post-Distribution Period of Hospira only to the extent that (A)
Abbott has no item of loss, deduction, or credit that can be
carried back to such taxable period and (B) such carryback does
not have a material adverse impact on Abbott, as reasonably
determined by Abbott. If Abbott receives any such refund, it
shall pay the portion thereof to which Hospira is entitled
within thirty (30) days of the later of (C) a Determination with
respect to Xxxxxx'x Tax for such Pre-Distribution Period or (D)
a Determination with respect to Hospira's Tax for the
Post-Distribution Period that gave rise to the refund received
by Abbott; PROVIDED, HOWEVER, that if Hospira provides Abbott
with a letter of credit in a form reasonably acceptable to
Abbott and issued by a major money center commercial bank
reasonably acceptable to Abbott not expiring before the later of
clause (C) or (D) of this Section 2.02(a)(iv)(1), then Abbott
shall pay to Hospira that portion of the refund covered by the
letter of credit no later than thirty (30) days after receipt of
the refund or of the letter of credit, whichever is later.
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2) If Hospira has a loss or other Tax attribute for any
Post-Distribution Period that is to be carried back to any
Pre-Distribution Period, Hospira shall notify Abbott that such
item should be carried back. Such notification shall include a
description in reasonable detail of the grounds for the refund
and the amount thereof, and a certification by an appropriate
officer of Hospira setting forth Hospira's belief, based on a
thorough examination of the facts and Tax law relating to the
Tax treatment of such item, that the Tax treatment of such item
is supported by "substantial authority" within the meaning of
Section 6662 of the Code (and the Treasury Regulations
thereunder) or, where applicable, any analogous provision of
state or local law. Abbott, at Hospira's expense, shall
cooperate with Hospira in connection with the filing and
processing of any Hospira carryback and shall provide Hospira
with copies of all correspondence related thereto.
3) If Abbott pays any amount to Hospira under Section
2.02(a)(iv)(1) and, as a result of a subsequent Determination,
Hospira is not entitled to all or any part of such amount,
Abbott shall notify Hospira of the amount to be repaid to Abbott
and provide a description in reasonable detail of the manner in
which such amount was calculated. Hospira shall pay such amount
to Abbott within thirty (30) days of such notification.
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4) Any payment required to be made by Abbott pursuant to this
Section 2.02(a)(iv) shall bear interest at the Prime Rate plus
two percent from the date a refund is received by Abbott. Any
payment required to be made by Hospira pursuant to this Section
2.02(a)(iv) shall bear interest at the Prime Rate plus two
percent beginning thirty (30) days after Abbott notifies Hospira
of the amount to be repaid. Such interest shall be paid at the
same time as the payment to which it relates.
(b) Effect of Audit Adjustments.
Notwithstanding Section 2.01 --
(i) Payments by Hospira to Abbott. Except as provided in Sections
3.01(b) and 3.02, if as a result of a Determination, any
adjustment shall be made to any Tax Return relating, in whole or
in part, to Tax for which any member of the Abbott Group is
responsible, and if such adjustment results in both (x) a Tax
Detriment to any member of the Abbott Group for any taxable
period and (y) a Tax Benefit to any member of the Hospira Group
for any Post-Distribution Period, then Hospira shall pay to
Abbott an amount equal to the lesser of the Tax Benefit for each
taxable period and the Corresponding Portion of the Tax
Detriment.
(ii) Payments by Abbott to Hospira. If as a result of a
Determination, any adjustment shall be made to any Tax Return
relating, in whole or in part, to Tax for which the Hospira
Group is responsible, and if such adjustment results in both (x)
a Tax Detriment to any member of the Hospira Group for any
Post-Distribution Period and (y) a Tax Benefit to any member of
the Abbott Group for any taxable period,
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then Abbott shall pay to Hospira an amount equal to the lesser
of the Tax Benefit for such taxable period and the Corresponding
Portion of the Tax Detriment.
(iii) Timing of Payments. Any payment required to be made pursuant to
this Section 2.02(b), shall be made the later of (x) thirty (30)
days after the Determination that results in such payment
pursuant to this Section 2.02(b) and (y) the due date of the Tax
Return that includes the Tax Benefit that gives rise to the
requirement for such payment.
(c) Other Allocations
(i) Research and Experimentation Credit Base Period. Abbott shall
reasonably make the allocations to Hospira required under
Section 41(f)(3) of the Code. Hospira agrees that it shall not
file any Tax Return that is inconsistent with the amount of
qualified research expenditures and gross receipts allocated to
it by Abbott.
(ii) Allocation of Earnings and Profits. The allocation of earnings
and profits between Abbott and Hospira shall be reasonably
determined by Abbott pursuant to Section 312(h) of the Code and
the Treasury Regulations thereunder. A preliminary allocation of
earnings and profits through December 31, 2002, shall be
provided no later than forty-five (45) days after Abbott
receives the allocation from the public accounting firm that
prepares such allocation, but no later than September 30, 2004.
The allocation of earnings and profits from January 1, 2003,
through the Distribution Date shall be provided no later than
December 31, 2005.
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(iii) Revised Allocations. The allocations made under this Section
2.02(c) shall be revised by Abbott to reflect each subsequent
Determination that affects such allocations for any
Pre-Distribution Period. Each revised calculation shall be
provided to Hospira within 120 days of the Determination to
which the revision relates.
(iv) Review of Allocations. Hospira shall have the right to review
the accuracy, but not the methodology, of any allocation made
under this Section 2.02(c). Hospira shall notify Abbott of any
disagreement within forty-five (45) days of being notified of
any allocation. Any dispute shall be resolved pursuant to the
procedures provided by this Agreement.
Section 2.03 Option Deductions.
(a) Except as provided in Section 2.03(b), upon the exercise of any option
to purchase Abbott stock, Abbott shall claim any Tax deduction
attributable to such exercise on its Tax Returns and Hospira shall not
claim such deduction on its Tax Returns. On the exercise of any option
to purchase Hospira stock, Hospira shall claim any Tax deduction
attributable to such exercise on its Tax Returns and Abbott shall not
claim such deduction on its Tax Returns.
(b) Abbott and Hospira agree to file all Tax Returns on the basis that (i)
any Abbott restricted stock and (ii) any option to purchase Abbott stock
held by an employee of Hospira was granted to such individual by Abbott
in connection with the performance of services for Abbott. To the extent
any Tax deduction claimed by Abbott attributable to the exercise of such
options is disallowed to Abbott, and a Tax Authority makes a
Determination that
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Hospira is entitled to such deduction, Abbott shall notify Hospira of
the receipt of such Determination, promptly after receipt thereof, and
Hospira shall pay to Abbott the lesser of the amount of its Tax Benefit
and the amount of the corresponding Tax Detriment in accordance with
Section 2.02(b). To the extent any Tax deduction claimed by Hospira
attributable to the exercise of an option to purchase Hospira stock is
disallowed to Hospira, and a Tax Authority makes a Determination that
Abbott is entitled to such deduction, Hospira shall notify Abbott of the
receipt of such Determination, promptly after receipt thereof, and
Abbott shall pay to Hospira the lesser of the amount of its Tax Benefit
and the amount of the corresponding Tax Detriment in accordance with
Section 2.02(b). The provisions of this Section 2.03 shall apply MUTATIS
MUTANDIS to restricted shares, disqualifying dispositions to which
Section 421(c) of the Code applies, and other equity based compensation.
Section 2.04 Tax Returns.
(a) Abbott shall prepare and timely file all Tax Returns for
Pre-Distribution Periods for Abbott and all of its Affiliates, including
Hospira and all of its Affiliates, and all Tax Returns for Straddle
Periods for all members of the Abbott Group. In connection with each
federal, state, local, and foreign Tax Return that is required under
this Agreement to be filed by Abbott for taxable periods ending in 2004,
Hospira shall provide Abbott, no later than November 30, 2004, with a
Tax Package for the purpose of preparing such Tax Return. Hospira shall
provide a supplemental Tax Package with respect to each such Tax Return,
if necessary, no later than January 31, 2005, and Hospira shall timely
furnish to Abbott additional Tax information and documents as Abbott may
reasonably request. With respect to any information required to be
provided by Hospira pursuant to this
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Section 2.04(a), (i) Abbott shall utilize such information in the
preparation of the appropriate Tax Returns as provided by Hospira,
except to the extent (a) Hospira provides its prior written consent to
change any such information, or (b) Abbott determines in good faith that
such information is inaccurate or incomplete in a material respect, and
(ii) Hospira agrees to indemnify and hold harmless Abbott and its
Affiliates from and against any cost, fine, penalty, or other expense of
any kind attributable to the misconduct or negligence of Hospira or any
of its Affiliates in supplying Abbott with inaccurate or incomplete
information. An appropriate officer of Hospira shall provide a
certification that, to such officer's best knowledge and belief, any and
all information provided pursuant to this Section 2.04(a) is accurate
and complete. If Hospira fails to provide any information required by
this Section 2.04(a) within the time period specified, Abbott may file
the applicable Tax Returns based on the information available at the
time such Tax Returns are due and Hospira shall indemnify and hold
harmless Abbott and its Affiliates from Taxes or other costs imposed on
Abbott or any of its Affiliates but only to the extent resulting from
Hospira's failure to provide such information in a timely manner. In
addition, Hospira shall provide Abbott with all documents and
information, and make available employees and officers of Hospira and
Hospira Affiliates as Abbott reasonably requests to prepare and file any
Tax Return for any Pre-Distribution Period (including any claims for
refunds described in Section 2.02(a)) or to conduct any Tax Contest with
respect to any such Tax Return.
(b) Hospira shall prepare and timely file all Tax Returns for Straddle
Periods for all members of the Hospira Group. If Abbott is responsible
under Section 2.01(a) for a portion of any Tax reported on a Straddle
Period Tax Return for any member of the Hospira Group,
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Hospira shall provide Abbott with a copy of such Tax Return at least
thirty (30) days prior to its due date. Abbott shall notify Hospira of
any disagreement within 20 days of Xxxxxx'x receipt of such Tax Return.
Any dispute shall be resolved pursuant to the procedures provided by
this Agreement.
(c) Hospira shall not file (or allow any member of the Hospira Group to
file) any amended Tax Return for any Pre-Distribution Period.
(d) Abbott shall provide Hospira with notice of any Tax election that Abbott
intends to file for any member of the Hospira Group on any Tax Return
for any Pre-Distribution Period within forty-five (45) days before such
Tax Return will be filed. Hospira shall have the right to review such
elections and request, within 15 days of such notice, that an
alternative election be made. If Abbott reasonably determines that such
alternative election will not result in any increased Tax liability or
reduced Tax attribute of Abbott or any Abbott Affiliate, Abbott shall
comply with such request.
Section 2.05 Cooperation, Exchange of Information, and Tax Records.
(a) Cooperation and Exchange of Information. Each Party shall provide to the
other such cooperation and information as reasonably may be requested in
connection with (i) filing any Tax Return, amended return or claim for
refund, (ii) determining a liability for Tax or a right to a refund of
Tax, or (iii) participating in or conducting any Tax Contest. Such
cooperation and information shall include providing copies of relevant
Tax Records. Each Party shall devote the personnel and resources
necessary in order to carry out this Section 2.05(a) and shall make its
employees available on a mutually convenient basis to
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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 Xxxxxx'x confidential and proprietary information pursuant to
policies in effect as of the Effective Time, except as otherwise may be
necessary in connection with the filing of Tax Returns or claims for
refund or in conducting an audit or other proceeding. Hospira shall
execute all necessary or appropriate forms, including powers of
attorney, reasonably requested by Abbott in connection with any action
taken by Abbott pursuant to this Agreement.
(b) Record Retention. Each of Abbott and Hospira shall retain all Tax
Records in its possession as of the Effective Time relating to any
Pre-Distribution Period that are relevant to the other Party for
purposes described in Section 2.05(a) until such time as the other Party
shall consent to the disposition of such Tax Records, which consent
shall not be withheld unreasonably.
Section 2.06 Tax Contests.
(a) Notice. Each Party shall provide prompt notice to the other Party of any
pending or threatened Tax audit, assessment, or proceeding, or other Tax
Contest, of which it becomes aware, related to Tax for which it is
indemnified by the other Party hereunder. Such notice shall contain
factual information (to the extent known) describing any 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
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matters. If an Indemnified Party has knowledge of an asserted Tax
liability with respect to a matter for which it is to be indemnified
hereunder and such Party fails to give the Indemnifying Party prompt
notice of such asserted Tax liability, then (i) if the Indemnifying
Party is precluded from contesting the asserted Tax liability in any
forum as a result of the failure to give prompt notice, the Indemnifying
Party shall have no obligation to indemnify the Indemnified Party for
any Tax resulting from such assertion of Tax liability, and (ii) if the
Indemnifying Party is not precluded from contesting the asserted Tax
liability in any forum, but such failure to give prompt notice results
in a monetary detriment to the Indemnifying Party, then any amount that
the Indemnifying Party is otherwise required to pay the Indemnified
Party pursuant to this Agreement shall be reduced by the amount of such
detriment.
(b) Control of Tax Contests.
(i) Hospira. Hospira shall have full responsibility and discretion
in conducting, including settling, any Tax Contest involving a
Tax for which it is responsible under Section 2.01(b), except
for any Tax Contest involving any Covered Transaction Tax for
which Hospira is responsible under Section 3.01(b) and any
Transition Period Tax for which Hospira is responsible under
Section 3.02.
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(ii) Abbott. Abbott shall have full responsibility and discretion in
conducting, including settling, any Tax Contest involving (x)
any Tax for which it is responsible under Section 2.01(a), (y)
any Covered Transaction Tax for which Hospira is responsible
under Section 3.01(b), except as provided in paragraph (iii),
below and (z) any Transition Period Tax for which Hospira is
responsible under Section 3.02. Abbott shall consult in good
faith with Hospira in connection with any Tax Contest described
in clauses (y) or (z) of this Section 2.06(b)(ii).
(iii) Covered Transaction Taxes. Hospira shall have the right to
participate in the conduct of a Tax Contest related to Covered
Transactions Taxes as a result of the application of Section
355(e) of the Code if, and only if, (x) Hospira has acknowledged
in writing its liability for such Covered Transaction Tax, (y)
Hospira shall have provided Abbott with a letter of credit in a
form reasonably acceptable to Abbott and issued by a major money
center commercial bank reasonably acceptable to Abbott, not
expiring before a Determination has occurred with respect to
Xxxxxx'x 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 Hospira is held open as a
result of such Tax Contest. Abbott shall not settle any Tax
Contest described in this paragraph (iii) without the consent of
Hospira, which consent shall not be unreasonably withheld.
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ARTICLE III. TRANSACTIONS TAX
Section 3.01 Transactions Tax.
(a) General. Except as otherwise provided in Section 3.01(b), Abbott shall
be responsible for, and shall indemnify and hold harmless the Hospira
Group from any and all (i) liabilities sustained by Abbott or Hospira as
a result of the Distribution failing to qualify as Tax-free to the
Abbott shareholders pursuant to Section 355(a) of the Code, and (ii)
federal, state, local, and foreign Tax imposed by any Tax Authority on
Abbott or any Abbott Affiliate as a result of (w) the failure of any of
the transactions described in the Private Letter Ruling to be treated as
provided in such ruling; (x) the failure of the distribution of the
stock of Hospira Ltd., a Bahamas corporation, (the "Bahamian
Distribution") to qualify for Tax-free treatment under Sections 355 and
361 of the Code; (y) the failure of any of the transactions described in
the Puerto Rican Ruling (the "Puerto Rican Transaction") to be treated
as provided in such ruling; and (z) the inclusion, or taking into
account, of any income or gain by Abbott or its Affiliates (including
any member of the Hospira Group) under Treasury Regulations Section
1.1502-13 or 1.1502-19 (or any corresponding provisions of other
applicable Tax laws) as a result of the Distribution (collectively
"Covered Transaction Tax").
(b) Inconsistent Acts and Events. Hospira shall be responsible for, and
shall indemnify and hold harmless the Abbott Group from and against any
liability for, any Covered Transaction Tax (including without limitation
reasonable attorney fees and other costs incurred in connection
therewith) resulting from (i) any breach by any member of the
- 25 -
Hospira Group of any of the representations or covenants under Article
IV hereof, (ii) any Specified Action performed by any member of the
Hospira Group (whether or not Section 4.02(e) is complied with), and
(iii) any Section 355(e) Event with respect to Hospira (whether or not
such Section 355(e) Event is caused by a Specified Action). A Section
355(e) Event with respect to Hospira means any event, involving the
stock of Hospira or a Hospira Affiliate or assets of any member of the
Hospira Group, that causes the Distribution, the distribution described
in the Private Letter Ruling by Xxxxxx Laboratories, Inc. of the stock
of Hospira Worldwide, Inc. (the "Internal Distribution"), or the
Bahamian Distribution to be a taxable event to any member of the Abbott
Group as the result of the application of Section 355(e) of the Code.
Section 3.02 Transition Period Tax. Notwithstanding Section 2.02(b)(i),
if, as a result of a Determination, any member of the Abbott Group incurs a
Tax Detriment for a Post-Distribution Period with respect to any transaction
undertaken pursuant to any of the TMDS Agreements or the ICO Agreement, other
than a transaction to effect a Local Closing, Hospira shall be responsible
for, and shall indemnify and hold harmless the Abbott Group from and against
any liability for, an amount equal to 50 percent of the sum of such Tax
Detriment, reasonable attorney fees, and other costs incurred therewith (the
"Transition Period Tax") whether or not any Tax Benefit results to any member
of the Hospira Group; PROVIDED, HOWEVER, that Hospira shall indemnify Abbott
for 100 percent of any Transition Period Tax if there is: (i) a merger or
consolidation of Hospira; (ii) the sale of all or substantially all of the
assets of Hospira; or (iii) the acquisition by a Third Party of at least 30%
of the combined voting power of the then-outstanding securities of Hospira
entitled to vote generally in the election of directors, in each case so long
as the resulting, surviving or transferee person assumes all the obligations
of the assignor hereunder by operation of law or pursuant to an agreement in
form and substance reasonably satisfactory to Abbott and Abbott agrees to
waive this proviso (which agreement shall not be unreasonably withheld,
delayed, or conditioned). It shall not be deemed to be unreasonable for Abbott
to withhold consent to such an assignment on the basis that the proposed
assignee is a competitor of Abbott.
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ARTICLE IV. REPRESENTATIONS AND COVENANTS
Section 4.01 Representations.
(a) Abbott represents that, as of the date of this Agreement, neither it nor
any of its Affiliates knows of any fact that would jeopardize the Tax
treatment of the transactions provided by the Private Letter Ruling or
the Puerto Rican Ruling, or that otherwise would result in a Covered
Transaction Tax.
(b) Hospira represents that, as of the date of this Agreement, neither it
nor any of its Affiliates knows of any fact that would jeopardize the
Tax treatment of the transactions provided by the Private Letter Ruling
or the Puerto Rican Ruling, or that otherwise would result in a Covered
Transaction Tax.
(c) Abbott represents that, as of the date of this Agreement, neither it nor
any of its Affiliates has any plan or intention to take any action that
is inconsistent with the Tax treatment of the transactions provided by
the Private Letter Ruling or the Puerto Rican Ruling, or that otherwise
would result in a Covered Transaction Tax.
(d) Hospira represents that, as of the date of this Agreement, neither it
nor any of its Affiliates has any plan or intention to take any action
that is inconsistent with the Tax treatment of the transactions provided
by the Private Letter Ruling or the Puerto Rican Ruling, or that
otherwise would result in a Covered Transaction Tax.
(e) Hospira represents that, as of the date of this Agreement, neither it
nor any of its Affiliates has entered into any agreement, understanding,
arrangement, or substantial negotiation with respect to any transaction
or event (including stock issuances, option
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grants, capital contributions, acquisitions, and changes in the voting
power of any of its stock), that may cause Section 355(e) of the Code to
apply to the Distribution, the Internal Distribution, or the Bahamian
Distribution.
Section 4.02 Covenants.
(a) Successor Employer. In connection with the Distribution, Abbott and
Hospira covenant and agree to treat Hospira as a "successor employer"
pursuant to the alternate procedures in Revenue Procedure 96-60 for
payroll Tax reporting purposes. Hospira shall assume reporting
responsibilities for filing Forms W-2 and other payroll Tax forms for
the U.S. Transferred Employees for the entire 2004 calendar year. Abbott
covenants and agrees to cooperate in the administration and
implementation of the alternate procedures for successor payroll
processing provided by Revenue Procedure 96-60 and not to report such
compensation on any basis inconsistent therewith to any governmental
authority. Hospira covenants and agrees to indemnify and reimburse
Abbott for any costs of responding to any notices received from any
governmental authority, the costs of defending the position that Hospira
qualifies as a "successor employer" before any governmental agency, and
any additional Taxes, fines, penalties, and/or interest imposed on
Abbott if such position ultimately is found to be incorrect.
(b) Conduct. Hospira covenants and agrees that it shall not take, and it
shall cause its Affiliates to refrain from taking, any action that
reasonably may be expected to result in any increased Tax liability or
reduced Tax attribute of any member of the Abbott Group. This includes
taking any action that is inconsistent with the Tax treatment of the
transactions provided by the Private Letter Ruling or the Puerto Rican
Ruling (any such
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action, including any action referred to in Section 4.02(b)(i) through
(iii), is referred to in this Agreement as a "Specified Action").
Without limiting the foregoing:
(i) Specified Actions. Any time before the second anniversary of the
Distribution Date, Hospira shall not (and shall cause its
Affiliates to not) (A) liquidate, merge, or consolidate with or
into any corporation that was not already wholly owned by
Hospira or by a wholly owned subsidiary of Hospira prior to such
transaction; (B) issue any of its capital stock in one or more
transactions, other than (i) issuances to employees, directors,
or independent contractors in connection with the performance of
services for Hospira (that are not excessive by reference to the
services performed) which issuances either (x) are with respect
to the exercise of options of Hospira that are substituted for
Abbott options or (y) satisfy the requirements of Treasury
Regulations Section 1.355-7T(d)(6) to not be treated for
purposes of Section 355(e) of the Code to be part of a plan or
series of related transactions that includes the Distribution,
the Internal Distribution, or the Bahamian Distribution, or (ii)
issuances of stock to a retirement plan qualified under Section
401(a) or 403(a) of the Code in a transaction that satisfies the
requirements of Treasury Regulations Section 1.355-7T(d)(7); (C)
redeem, purchase, or otherwise reacquire any of its capital
stock in one or more transactions; (D) change the voting rights
of any of its stock; (E) issue any options to acquire Hospira
Shares other than options that satisfy the requirements of
Treasury Regulations Section 1.355-7T(e)(3)(ii); (F) sell,
exchange, distribute, or otherwise dispose of, other than in the
ordinary course of business, all or a substantial part of the
assets of any of the trades or businesses relied on to satisfy
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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 Hospira (as defined
in Sections 355(d)(4) and 355(e) of the Code).
(ii) No Inconsistent Actions. Regardless of any change in
circumstances, Hospira covenants and agrees that it shall not
take any action (and it shall cause its Affiliates to refrain
from taking any action) that is inconsistent with any factual
statements or representations in the Private Letter Ruling or
the Puerto Rican Ruling on or before the second anniversary of
the Distribution Date other than as permitted in this Section
4.02. For this purpose an action is considered inconsistent with
a representation if the representation states that there is no
plan or intention to take such action.
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(iii) Section 355(e). Without in any manner limiting paragraph (i) or
(ii) of Section 4.02(b), Hospira covenants and agrees that,
through the second anniversary of the Distribution Date, it
shall refrain from entering into (and it shall cause its
Affiliates to refrain from entering into) any agreement,
understanding, arrangement, or substantial negotiation with
respect to any transaction or event (including stock issuances,
option grants, capital contributions, acquisitions, or changes
in the voting power of any of its stock), that could reasonably
be expected to cause Section 355(e) of the Code to apply to the
Distribution, the Internal Distribution, or the Bahamian
Distribution.
(c) Amended or Supplemental Rulings. Hospira covenants and agrees that it
shall refrain from filing, and it shall cause its Affiliates to refrain
from filing, a request for any amendment or supplement to the Private
Letter Ruling or the Puerto Rican Ruling subsequent to the Distribution
Date without the consent of Abbott, which consent shall not be withheld
unreasonably.
(d) Tax Returns. Each of Abbott and Hospira covenants and agrees that it
shall refrain from taking, and it shall cause its Affiliates to refrain
from taking, any position on a Tax Return that is inconsistent with (i)
the Tax treatment of the transactions provided by the Private Letter
Ruling, (ii) the Contribution qualifying for Tax-free treatment under
Section 361, (iii) the Tax treatment of the transactions provided by the
Puerto Rican Ruling, (iv) the pricing provisions of the TMDS Agreements
and the ICO Agreement, (v) the allocation of the benefits and burdens of
Hospira assets and liabilities pursuant to Section 2.03 of the
Distribution Agreement and Sections 2.2 and 3.1 of the ICO Agreement, or
(vi) the documents effecting any transaction undertaken in connection
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with the Separation that is not addressed by the Private Letter Ruling.
(e) Exception. Notwithstanding the foregoing, Hospira shall be permitted to
take an action inconsistent with Section 4.02(b), if, prior to taking
such action, Hospira provides notification to Abbott of its plans with
respect to such action and promptly responds to any inquiries by Abbott
following such notification, and (unless Abbott agrees otherwise in
writing) either:
(i) In the case of the Distribution or the Internal Distribution,
Hospira obtains a supplemental ruling with respect to the action
from the Internal Revenue Service that is reasonably
satisfactory to Abbott (except that Hospira shall not submit any
supplemental ruling request if Abbott determines in good faith
that filing such request could have a materially adverse effect
on Abbott), on the basis of facts and representations consistent
with the facts at the time of such action, that such action will
not affect the Tax treatment of the transactions provided by the
Private Letter Ruling,
(ii) In case of the Distribution, the Internal Distribution, or the
Bahamian Distribution, Hospira obtains an opinion, reasonably
acceptable to Abbott, of an independent nationally recognized
Tax counsel, reasonably acceptable to Abbott, on the basis of
facts and representations consistent with the facts at the time
of such action, that such action will not affect the Tax
treatment of the transactions provided by the Private Letter
Ruling or the intended Tax treatment of the Bahamian
Distribution, or
(iii) In case of the Puerto Rican Transaction, Hospira obtains:
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(a) a supplemental ruling with respect to the action from the
Puerto Rican Tax Authority that is reasonably satisfactory
to Abbott (except that Hospira shall not submit any
supplemental ruling request if Abbott determines in good
faith that filing such request could have a materially
adverse effect on Abbott or any of its Affiliates), or
(b) an opinion, reasonably acceptable to Abbott, of an
independent Tax counsel, reasonably acceptable to Abbott,
on the basis of facts and representations consistent with the facts
at the time of such action, that such action will not affect the Tax
treatment of the transactions provided by the Puerto Rican Ruling.
Notwithstanding anything to the contrary in this Agreement, Hospira
shall be responsible for, and shall indemnify Abbott and hold Abbott harmless
from, any Covered Transaction Tax resulting from a Specified Action of Hospira
or any of Hospira's Affiliates, regardless of whether the exception of this
Section 4.02(e) is satisfied with respect to such act.
Section 4.03 No Continuing Liability for Former Members.
(a) Abbott Affiliates. If an Abbott Affiliate ceases to be a member of the
Abbott Group as a result of a sale or exchange of all of the stock of
such member, other than an exchange for which the consideration received
by Abbott is the stock of Abbott or an Abbott Affiliate, the departing
Abbott Affiliate shall be released from its obligations under this
Agreement upon its departure from the Abbott Group.
- 33 -
(b) Hospira Affiliates. If a Hospira Affiliate ceases to be a member of the
Hospira Group as a result of a sale or exchange of all of the stock of
such member, other than an exchange for which the consideration received
by Hospira is the stock of Hospira or a Hospira Affiliate, the departing
Hospira Affiliate shall be released from its obligations under this
Agreement upon its departure from the Hospira Group; provided, however,
that no member of the Hospira Group shall be released from any
obligations under Section 2.01(b)(ii) hereof unless approved in writing
by Abbott, which approval shall not be unreasonably withheld.
ARTICLE V. MISCELLANEOUS PROVISIONS
Section 5.01 Counterparts; Entire Agreement; Corporate Power; Facsimile
Signatures.
(a) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement.
(b) Entire Agreement. This Agreement and the exhibits hereto contain the
entire agreement between the Parties with respect to the subject matter
hereof, supersede all previous agreements, negotiations, discussions,
writings, understandings, commitments and conversations with respect to
such subject matter and there are no agreements or understandings
between the Parties other than those set forth or referred to herein.
Notwithstanding any other provisions in the Distribution Agreement or
any other agreement entered into in connection with the Distribution
(except the EBA) to the contrary, in the event and to the extent that
there is a conflict between the provisions of this Agreement and the
provisions of the Distribution Agreement or any other agreement
- 34 -
entered into in connection with the Distribution (except the EBA), the
provisions of this Agreement shall control.
(c) Corporate Power. Abbott represents on behalf of itself and, to the
extent applicable, each Abbott Affiliate and Hospira represents on
behalf of itself and, to the extent applicable, each Hospira Affiliate
as follows:
(i) each such Person has the requisite corporate or other power and
authority and has taken all corporate or other action necessary
in order to execute, deliver and perform this Agreement to which
it is a Party and to consummate the transactions contemplated
hereby and thereby; and
(ii) this Agreement to which it is a Party has been duly executed and
delivered by it and constitutes a valid and binding agreement of
it enforceable in accordance with the terms thereof.
(d) Facsimile Signatures. Each Party acknowledges that it and the other
Party may execute this Agreement or amendment hereto by facsimile, stamp
or mechanical signature. Each Party expressly adopts and confirms each
such facsimile, stamp or mechanical signature made in its respective
name as if it were a manual signature, agrees that it shall not assert
that any such signature is not adequate to bind such Party to the same
extent as if it were signed manually and agrees that at the reasonable
request of the other Party at any time it shall as promptly as
reasonably practicable cause this Agreement or any amendment hereto to
be manually executed (any such execution to be as of the date of the
initial date thereof).
Section 5.02 Governing Law. This Agreement shall be governed by and construed
and
- 35 -
interpreted in accordance with the laws of the State of Illinois irrespective of
the choice of laws principles of the State of Illinois, as to all matters,
including matters of validity, construction, effect, enforceability, performance
and remedies.
Section 5.03 Assignability. This Agreement shall be binding upon and inure
to the benefit of the Parties, respectively, and their respective successors and
permitted assigns; PROVIDED, HOWEVER, that neither Party may assign its rights
or delegate its obligations under this Agreement without the express prior
written consent of the other Party hereto. Notwithstanding the foregoing, this
Agreement shall be assignable in whole in connection with a merger or
consolidation or the sale of all or substantially all of the assets of a Party
so long as the resulting, surviving or transferee Person assumes all the
obligations of the relevant Party thereto by operation of law or pursuant to an
agreement in form and substance reasonably satisfactory to the other Party.
Section 5.04 Third Party Beneficiaries. The provisions of this Agreement are
solely for the benefit of the Parties and their respective Affiliates, after
giving effect to the Distribution, and are not intended to confer upon any
Person except the Parties and their respective Affiliates, after giving effect
to the Distribution, any rights or remedies hereunder; and (b) there are no
other third party beneficiaries of this Agreement and this Agreement shall not
provide any other third party with any remedy, claim, liability, reimbursement,
claim of action or other right in excess of those existing without reference to
this Agreement.
Section 5.05 Notice. All notices or other communications under this
Agreement must be in writing and shall be deemed to be duly given: (a) when
delivered in person; (b) upon transmission via confirmed facsimile transmission,
provided that such transmission is followed
- 36 -
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:
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
X-000 XX0X
Xxxxxx Xxxx, XX 00000-0000
Facsimile:
Attention: General Counsel
With a copy to:
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
X-000 XX0X
Xxxxxx Xxxx, XX 00000-0000
Facsimile:
Attention: Vice President-Tax
If to Hospira, to:
Hospira, Inc.
000 X. Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
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Facsimile:
Attention: General Counsel
With a copy to:
Hospira Inc.
Hospira, Inc.
000 X. Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Facsimile:
Attention: Vice President - Tax.
Any Party may, by notice to the other Party, change the address to which such
notices are to be given.
Section 5.06 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof or thereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any Party. Upon such
determination, the Parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable provision to effect the original intent of the
Parties.
Section 5.07 Force Majeure. Neither Party shall be deemed in default of this
Agreement to the
- 38 -
extent that any delay or failure in the performance of its obligations under
this Agreement results from any cause beyond its reasonable control and without
its fault or negligence, such as acts of God, acts of Governmental Authority,
embargoes, epidemics, war, riots, insurrections, acts of terrorism, fires,
explosions, earthquakes, floods, unusually severe weather conditions, labor
problems or unavailability of parts, or, in the case of computer systems, any
failure in electrical or air conditioning equipment. In the event of any such
excused delay, the time for performance shall be extended for a period equal to
the time lost by reason of the delay.
Section 5.08 Headings. The article, section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 5.09 Survival of Covenants. The covenants, releases, indemnities,
representations and warranties contained in this Agreement, and liability for
the breach of any obligations contained herein, shall survive the Effective Time
and shall remain in full force and effect thereafter.
Section 5.10 Affiliates. Abbott shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth
herein to be performed by any member of the Abbott Group and Hospira shall cause
to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any member of the
Hospira Group.
Section 5.11 Waivers of Default. Waiver by either Party of any default by
the other Party of any provision of this Agreement shall not be deemed a waiver
by the waiving Party of any subsequent or other default, nor shall it prejudice
the rights of the other Party.
- 39 -
Section 5.12 Amendments. No provisions of this Agreement shall be deemed
amended, supplemented or modified unless such amendment, supplement or
modification is in writing and signed by an authorized representative of both
Parties. No provisions of this Agreement shall be deemed waived unless such
waiver is in writing and signed by the authorized representative of the Party
against whom it is sought to be enforced.
Section 5.13 Interpretation. Words in the singular shall be deemed to
include the plural and vice versa and words of one gender shall be deemed to
include the other genders as the context requires. The terms "hereof," "herein,"
and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Exhibits
hereto) and not to any particular provision of this Agreement. Article, Section,
and Exhibit references are to the Articles, Sections, and Exhibits to this
Agreement unless otherwise specified. Unless otherwise stated, all references to
any agreement shall be deemed to include the exhibits to such agreement. The
word "including" and words of similar import when used in this Agreement shall
mean "including, without limitation," unless the context otherwise requires or
unless otherwise specified. The word "or" shall not be exclusive. Unless
otherwise specified in a particular case, the word "days" refers to calendar
days. References herein to this Agreement shall be deemed to refer to this
Agreement as of the Effective Time and as it may be amended thereafter, unless
otherwise specified. References to the performance, discharge or fulfillment of
any liability in accordance with its terms shall have meaning only to the extent
such liability has terms.
Section 5.14 Advisors. Abbott may select any Tax Counsel in connection with
the Distribution, which may include Mayer, Brown, Xxxx & Maw LLP, Xxxxx &
XxXxxxxx and XxXxxxxxx, Will & Xxxxx. Hospira acknowledges, for itself and each
Hospira Affiliate, that
- 40 -
Mayer, Brown, Xxxx & Maw LLP, Xxxxx & XxXxxxxx and XxXxxxxxx, Will & Xxxxx have
acted only in the capacity as counsel to Abbott, and not as counsel to Hospira
or any Hospira Affiliate, in connection with this Agreement and the provisions
contemplated herein.
Section 5.15 Mutual Drafting. This Agreement shall be deemed to be the joint
work product of the Parties and any rule of construction that a document shall
be interpreted or construed against a drafter of such document shall not be
applicable.
Section 5.16 Dispute Resolution. Any and all disputes between Abbott and
Hospira arising out of any provision of this Agreement shall be resolved through
the procedures provided in the Master ADR Agreement attached hereto as Exhibit
1.
Section 5.17 Payments.
(a) Procedure for Requesting and Making Indemnification Payments. On the
occurrence of an event for which a Party is entitled to receive
indemnification hereunder, such Party (the "Indemnified Party") shall
send the other Party (the "Indemnifying Party") an invoice requesting
payment accompanied by a statement describing in reasonable detail the
amount owed and the particulars relating thereto. Unless a provision in
this Agreement specifically provides a different time for payment, the
Indemnifying Party shall pay to the Indemnified Party any payment it
owes to the Indemnified Party under this Agreement within thirty (30)
days after the receipt of the invoice for such payment.
(b) Procedure for Making Other Payments. If a Party is responsible for any
Tax under Section 2.01 (the "Responsible Party") and such Tax must be
remitted by the other Party (the "Remitting Party"), the Remitting Party
shall send the Responsible Party an invoice
- 41 -
requesting payment accompanied by a statement describing in reasonable
detail the amount owed and the particulars relating thereto. Unless a
provision in this Agreement specifically provides a different time for
payment, the Responsible Party shall pay to the Remitting Party any
payment it owes to the Remitting Party under this Agreement no later
than thirty (30) days before the Remitting Party must remit the Tax to
the appropriate Tax Authority.
(c) Character of Payments. For Tax purposes, the Parties agree to treat any
payment pursuant to this Agreement in the same manner as a capital
contribution by Abbott to Hospira or an adjustment to the Contribution
made in the last taxable period beginning before the Distribution and,
accordingly, as not includible in the gross income of the recipient and
not deductible by the payor. If pursuant to a Determination it is
determined that the receipt or accrual of any payment made under this
Agreement is subject to any Tax, the Party making such payment shall be
responsible for the After-Tax Amount with respect to such payment. The
failure of a Party to include an After-Tax Amount in a demand for
payment pursuant to this Agreement shall not be deemed a waiver by the
Party of its right to receive an After-Tax Amount with respect to such
payment.
(d) Interest on Late Payments. Unless a provision in this Agreement
specifically provides otherwise, any payment required to be made
pursuant to this Agreement that is not made on or before the due date
for such payment shall bear interest from the date after the due 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.
Xxxxxx Laboratories
By:
-------------------------
Title
Hospira, Inc.
By:
-------------------------
Title
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