abbott laboratories 2009 tax ruling

7/25/2019 Abbott Laboratories 2009 Tax Ruling

1/66

CLASSIFICATION SHEET

This document relates to the follow

in

g request:

Novembcr

25, 2009

References: VCO/ROIM/LTTY Q57090ISM-GYVN

Abbott lnv

est

ments Luxembourg S. r.l. 2009/24/022081

Abbott International Luxembourg S. r .l. [2009/24/09547)

1 Key topics: Conve rtible Preferred

Eq

uity

Ce

rtificatcs

2. Name

of

_ e

advisor :

PwC

:: _

3. Corpora te group s name, or fund sponsor: Abbott

BUREAU D IMPOSITION S 6

ENTRE

5 NOV

2 9

N a m e o f

~ ~ ~ ~ ~

_

S

Amount intcnded to be invcsted: Approx.

US

D 3,698 Mio

1 6. Date of implementation: Last quarter 2009

5

NOV

2 9


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3/66


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A.2 Restrocturing

4. Abbott lnvestments Luxembourg S. r.l envisages redeeming up to 85% of the

outstanding shares held

by

Abbott International Luxembourg S. r.l in

exchange for Convertible Preferred Equity Certificates (referred as "CPECs")

amounting to around USD 3,698 Mio.

5. ln addition, Abbott Investments Luxembomg S. r.l, Abbott International

Luxembourg S. r.l and Abbott Overseas Luxembourg S. r.l contemplate

forming a Luxembomg fiscal unity as from the fmancial year starting 1 t

December 2010. Abbott International Luxembow-g S. r.l would be the parent

company. Jn this respect, a separate letter requesting for the application of the

tax unity regime between the above-mentioned companies will be sent to you.

6. For your infonnation, you will find attached in Enclosure 2 to this letter,

a simplified organization chart upon completion of hese restmcturings.

B

Tax analysis

B.l Luxembourg tax treatment of the CPECs to be issued by Abbott

lnvestmcnts

Luxembourg

S. r l

7. Based on the charactetistics of the CPEC agreement (a draft version

is

attached

in

Enclosure

3

to

this letter)

to

be concluded

by

Abbott International

Luxembourg S. r 1 and Abbott lnvestments Luxembourg S. r.l. , the CPECs

will be treated as debt for Luxembourg corporate income tax, municipal

business tax, and net wealth tax pml)oses. Thcrefore, the intcrest cxpenscs will

be fully tax deductible at the level of Abbott Jnvcstments Luxembourg S. r.l

and not be subject to withholding tax (see our technical analysis on the debt

charactcrization

of

the CPECs instrument provided in

Enclosure

4).

8

Howcvcr, interest expenses on the CPECs directly linked to Abbott

lnvestments Luxembourg S. r.l

s

participations exempt in application of

Atticlc 166 of the Luxcmbow-g Income Tax Law (rcfcn-ed as "LITL") and the

Grand Ducal Regulation

of

21

December 2001 for the application of Article

166

of the LITL will be subject to the recapture mechanism.

9. Interest incomc on the CPECs to be received

by

Abbott International

Luxembow-g S. r.l will be taxable, but will be offset using available cm-rent

year and can-y forward osses.

(2)


5/66

We remain at your disposai should you need any further information

and

would like to

thank

yo

u

for

the attention that you wi ll give to our rcqucst.

Yours sincerely,

Va ry Civilio

Partncr

Enclosures:

Enclosure :

Enclosure

:

Enclosure :

Enclosure 4:

1 /l

Razvan Bruno Ifrim

Senior Manager

Advance Tax Agreement dated May

13

, 2009

Simplified organization chart upon completion

Draft version of the CPEC agreement

Luxembourg tax treatment of the CPECs to be issued by Abbott

Investments Luxembourg S.

r l

77rl l l ~ r uguemell/ rs ba.sed 0 t h ~ fa4'1.1

s

presmred to P r i C I l l ' a t e r l o u s ~ o o p e r s Srl

s

at the d a t ~ the athlc.t was

gi1e11

17w

agretmem ls

depl lldem 11 spcqfic facts a11d

c:ircumsta11CI's

and

m y

110tlx appropna to IIIIOtlrer pari) thm

/he

om for

which

l

na

prepared. f7us tar agreeme

nt w11.\

preparetl with on/y the lnteresrs of Abboll group in mind. a11d

was

not plmul 'd

ur

carried out ln

come

mplarlrm of

emy use by till) orher party. PricewaterlwuseC oopers Srl, Ils porlllers. employees ami or agems, neuher owe nor

aCCI fJI

t ill l dury ofcore or any nsponsibilify

to

any other party. wlrether in contra('/ or in tort (including withoutllmt totioll.

neRiiRI'IICI

or brl'tlclr uf

Sl1111110ry

dllly) houtvrr arrsmg, andshall not lx ilablf ln respect

o

ny loss. tlamagt> or r p e m ~ Q{wluacl'l'r nawre

whclt

causctlto an.yotlter party

3)


6/66


7/66

Enclosure 1

Advance Tax Agreement dated May 13, 2009

4)


8/66


9/66

CLASSIFICATION SHEET

This document relates to the following request:

May 13,2009

References: VCO/ROJM/

LTTY

/Q5709003M-GYVN

Abbott Jnvestmcnts Luxembourg S. r.l. -

Tax

number

in

process

Abbott International Luxembourg S. r.l. Tax number in process

Abbott Overscas Luxembourg S. r.l. - Tax number n process

Abbott Holding Subsidiar-y (Gibraltar) Limitcd Luxembourg S.C.S - Tax number

in process

r 1 Key topics: Mastcr Facility Agreement, spread, permanent establishment, priority allocation, fiscal

uni

N a m e o f t h e a d ~

~

~ ~ ~ ~ ~ ~ C

~

_3.

Corporate group

s

namc

,

or fund sponsor: Abbott

4. Namc ofthc pro ect:

S Amount intended

to be

invcsted: 50

Bio

~ ~ ~ ~ ~ ~ ~

6 Date of

im

lemcntation:

~ ~ ~


10/66

For the attention ofMr Marius Kohl

Administration des Contributions Directes

Bureau d'Imposition des socits VI

18, rue du fort Wcdcll

L - 2982 Luxembourg

May13 , 2009

Referenc

es:

VCO/ROIM/LTIY Q5709003M-GYVN

Abbott lnvcstmcnts Luxembourg S.r.l. - Tax

number

in proccss

Abbott International Luxemb

our

g S.r.l. -

Tax

numbcr in

pr

occss

Abbott Overseas Luxembourg S.r.l. - Tax number in process

PriccwaterhouscCoopers

Socit responsabilit limite

Rviseur d

e

ntreprises

400, route


11/66

A.2 Rcstructuring

3. Prior to the reorganization, the Abbott group did not have any Luxembourg

entities.

4 For your information, you will find attached in Enclosure 1 to this lettcr,

a simplified organization chart summarizing the structure prior to this

rcorganization

5. The relevant restructuring steps from a Luxembourg income tax perspective,

as weil as a simp

li

fied organizational chart upon completion

of

the

rcorgani:tation are attachcd in Enclosure 2 to this lctter.

B Tax analys is

B

l Luxembourg

tax

residency of

Abbott

Invcstmcnts Luxembourg S. r.l, Abbott

International Luxembourg S.r.l

and

Abbott Overscas Luxembourg S.

r J

6. According to article 159 of the Luxembourg Income

Tax

Law ( LITL ),

capital comparues that have either their registered office

or

their place

of

central administration in Luxembourg are subject to corporate income tax on

their profits. Article 159 LITL providcs that a limited liability company

(socit responsabilit limite - referred as S. r.l ) qualifies as a capital

company.

7. Abbott lnvestments Luxembourg

S.

r l, Abbott International Luxembourg

S. r.l and Abbott Overseas Luxembourg S.r.l (referred as Lux S. r.ls' ') will

be

S. r.ls, and will have their statutory scats locatcd in Luxembourg.

8. Moreover, the Lux S. r.ls will have their place

of

central administration

in

Luxembourg to the extcnt thal their sharcholders' meetings and their board

meetings will be held in Luxembourg, that the main management decisions will

be effectively taken

in

Luxembourg and that their accounting will be done

in

Luxembourg.

9. As a result, the Lux S. r.ls will

be

considered as fully taxable

Luxembourg-resident capital

com

panies

Tax

residency ccrtificates will

be

issued upon request.

1

O

Copies of the articles

of

association

of

the Lux S. r.ls arc attached m

Enclosure 3 to this Ietter.

(2)


12/66

8.2 Tax treatment of Abbott Holding Subsidiary (Gibraltar) Limitcd

Lux

embourg

S.C.S and its partners

I l

Given its tax transparent character, Abbott Holding Subsidiary (Gibraltar)

Limited Luxembourg S.C.S (refen ed as "Lux S.C.S") will not be subject to

corporatc income tax or net wealth tax in its own namc (article 175 L TL and

article 1 1

bi

s Loi d'Adaptation).

12

.

The two

partners

of

Lux S.C.S, i.e. Abbott Holding (Gibraltar) Limitcd and

Abbott Holding Subsidiary (Gibraltar) Limited (both incorporated under the

law

of

Gibraltar - refened respectively as "GibCo 1" and "GibCo2'') , will not

be

tax resident n Luxembourg and will not hold their interest in Lux S.C.S

tl1rough a pennanent establishment n Luxembourg.

13

As

Lux S.C.S will not exploit a commercial enterprise in Luxembourg, ncither

Lux S.C.S nor its par

ine

rs wi

ll

be subject to corporate income tax (referred as

"CIT"), municipal business tax (r

efened

as

MBT )

, or net wealth tax (referred

as "NWT"), in Luxembourg.

14 The

analysis

of

the tax trcatment

of

Lux S.C.S and

of

its partners is detailed in

Enclosure 4.

15. A copy

of

the articles

of

association

of

Lux S.C.S is attached in Enclosure lo

this letter.

8

3

Withholding tax on dividends payments made by Abbott

Inte

rnational

Luxembourg S.r.l

to Lu

x S.C.S

16.

Duc

to the tax transparency

of

Lux S.C.S, dividend payments made by Abbott

International Luxembourg S.

r.lto

Lux S.C.S will

be

regarded for Luxembourg

tax purposes as payments

made

directly to its non-resident partners Gibco 1

and Gibco 2.

17. Since the Gibraltar companies

are

falling under the application

of

the Council

Directive

90

/435/EEC, the dividend distribution that will

be canied

out by

Abbott International Luxembo

ur

g S.r.l wi

ll

not

be

subject to any Luxembourg

withholdi

ng

tax provided that

th

e Gibraltar

co

m

pa

nies comply with the

minimum tl1reshold and holding period rcquirement providcd

by

article 147

LJTL (dctailed

in

Enclosure 6).

18.

The

analysis

of

the

cl

igibi

li

ty

of

Gibraltar companics to the benefit

of

the

Council Directive 90/435/EEC

is

deta iled in Enclosw-e 7.

(3)


13/66

B.4 Master Facility Agreement (referred as MFA")

19. Further to Step 78 of the envisaged restructuring (please re fer to Enclosure 2),

a MFA will be

put

in place between Lux S.C.S and Abbott International

Luxembourg S. r.l.

20. A copy

of the

executed

MF

is attachee

in

Enclosure 8

to

this letter

.

8.4.1 Tax treatmcnt

of

the MFA

21.

The

MFA will

be

considercd debt for CIT,

MBT

and NWT purposes, and

interest thereon will

be

considered fully

tax

deductible (see Encloswe 9 for

a description of the MFA).

B.4.2 Financial on-lcnding activity

22. Taking into account the features

of the

financial on-lending activity covered in

the Tranche A and Bof he MFA, Abbott International Luxembourg S. r.l will

be

deemed to realize an appropriate and acceptable profit with respect to

Articles

56 of

the LITL and 164 (3)

of

the LITL if

it

rea1izes a margin (after

deduction

of

the charges incurred

by

Abbott International Luxembourg S. r.l)

in respect of this activity that will depend

on

the amount involved in the

financing operations (see Enclosure 9 for further details).

23. Tranche C of the MFA, which will

be

f1nancing participations held by Abbott

International Luxembourg S. r.l, will bear an

ann s

length interest rate of

7,6573%

on

the principal average amount allocated to this tranche (i.e.,

0.5 times the aggregate of (i) the Tranche C amount as

of

the first

day

of the

relevant accounting period and (ii) the Tranche C arnount as of the last

day

of

the relevant accounting period).

B.4.3

Treatmcnt

of

lntcrest

Payments

und

cr the MFA

24. Neither the payments

of

interest

(o

r

the

accruing

of

intercst), nor the

reimbursement

of

the principal amount of the

MF

A wi

Il be

treated as dividend

djstributions in the meaning

of

Articles 97 and 146 (1)-(3)

of

the LITL. Hcnce,

these payrnents (or accruals) will not be subject to withholding tax pursuant to

Luxembourg domestic law. Intcrest payments will be full y tax deductible at the

leve

of

Abbott International Luxembourg S. r.l..

4)


14/66

25. Only intcrest paid in conncction with Tranche C of the MPA (l.c., financing of

sharcholdings q

ual

ifying for the

Lu

xem bourg participation exemption regime)

may be subject to the rccapturc mcchanism providcd by Article 166(5) of the

LITL and article 1 (2) of the Grand-Ducal Decrcc of

21

Deccmber 2001

in

execution to Article 1 of the LITL

26. The Luxembourg thin capitalization rules will be respectcd

at

the lcvcl of

Abbott International Luxembourg S. r l since its shares held in Abbott

lnvestments Luxembourg S. r. l and Abbott Ovcrscas Luxembourg S.

r.l

will

be finanecd up to 85 by tranche C of the MFA.

8 4 4 Net wca

lth

ta x

27. For NWT purposes, the non-qualifying financi

al

assets (i.e.

ali

the assets at the

exclusion

of

the assets qualifying for the Luxembourg participation exemption

regime), in so far as they arc not financed by a specifie debt, will be deemcd to

be

financed

in

priority by Tranche A or Tranche B of the M A The equity of

Abbott International Luxembourg S. r.l will be dccmed to finance by priority

participations qualifying for the Luxembourg participation exemption regime.

28.

Finally, depending on the

add

itional invcstments that may be made during the

existence of the structur

e

the

MF

A could be amended to include new tranches.

Should it be the case, we will update you

on

this.

8 .5 T

ax

treatment

of the po

tential

reimbursement of

share

capital of

Abbott

l nvcstments Luxembourg S. r l

29. If undertaken, this rcimbursement of share capital should not trigger any

impact from a Luxembourg tax perspective.

30. The analysis of the tax treatmcnt of the reimburscmcnt of share capital of

Abbott lnvcstmcnts Luxembourg S. r.l should it arise is detailcd in

Enclosure 1O

B 6

F

inanciog

of Abbott

Jn

vestments

Lux

.cmbourg

S r l

31. For the sake of clarity and for simplification purposes at the level of Abbott

lnvestments Luxembourg S. r.l,

for

CIT, MBT and NWT purposcs, any

potcntial debts financing Abbott lnvestments Luxembourg S. r.l will be

dccmcd

to

finance in priority first other assets than participations qualifying for

the Luxembourg participa

ti

on exemption regime, then participations qualifying

for the Luxembourg participation exemption regime.

(5)


15/66

8 7 Application of the Luxembo

ur

g participation exemption to Lux S. r.ls

B.7.1 At the leve)

of

Abbott

Internat

ional Luxembourg S. r.l

32. Abbott International Luxembourg S. r.l will benefit from

the

Luxembourg

pmticipation exemption regime in Lu

xembourg

for its qualifying participations

in Abbott lnvestments Luxembourg S. r.l and Abbott Overseas Luxembourg

S. r.l with respect to dividcnds and capital gains derived in relation to thcir

qualifying participations, providcd Abbott lntemational Luxembourg S. r.l has

held or cornmits to hold a participati

on of

at east 10% (or with an acquisition

priee of at lcast EUR 1.2 M for dividends and EUR 6 million for capital gain)

in cach above mentioned company for an unintetTupted period of at east

12

months p

ur

suant to Article 1

66

of

the LITL

a11d

the

Grand Ducal Regulation

of21 Deccmber 2001 for the application ofArticle 166 of the LITL.

33. Expenses directly linked to Abbott International Luxembourg S. r.l's exempt

participations in Abbott

Lnvest

ments Luxembourg S.

r 1

and Abbott Overseas

Luxembourg S. r.l (ma

inJ

y intcrest expenses

on

Tranche C

of

the MFA) couJd

be sub

ject

to the recapture

mec

hm1ism. Please reter to Enclosure

11

for further

details

in

this

re

spect.

8

7

2 At

the levcl of Abbott Overseas Luxembourg S. r.l

34. Further

to

Stcp 4, Step 60A, Step 60B, and Step 62FF of the envisaged

restructuring (please refer to Enclosure 2), Abbott Overseas Luxembourg

S. r.l will hold a 100% participation (total y equity financcd) in

Abbott Ovcrscas Sub Holding (Cyprus) Limited.

35. Abbott Overseas Sub Holding (Cyprus) Limited has

one

of the forms listcd

under Art. 2

of

the Parent/Subsidiary Directi

ve

and will

be

subject to corporate

incarne

tax

in Cyprus.

36. Accordingly, Abbott Overseas Luxembourg S.r.l will benefit from the

Luxembourg participation exemption regime in Luxembourg for its

participation in Abbott Ovcrseas Sub Holding (Cyprus) Limited with respect to

dividcnds and capital gains detived therefrom, providcd Abbott Overscas

Luxembourg S.r. l h

as

he

ld or

commits to hold a participation

of

at east 10%

(or with an acquisiti

on

priee of at )east

EUR

1.2

M

for dividends and

EUR 6 million for capital gain) in the relevant above mentioned company for

an uninterrupted period of at east 12 months pursuant to Article 166 of the

LITL and the Grand Ducal Regulati

on of21

Decembcr 2001 for the application

ofArticle 166

ofthe

LITL.

37.

The

participati

on

in Abbott Ovcrseas Sub Holding (Cyprus) Limited being

flly equity financed at the lcvcl of Abbott Overseas Luxembourg S. r.l, the

recapture mechanism wi

ll

not apply

6)


16/66

38 Please refer to Enclosure fo r further details

in

this respect.

8 7 3 At

the

level

of

Abbott Iovestments Luxembourg S r.l

39. Further to Step 16 to Step 57 and Step

63

to Step

73

of the envisaged

restructuring (please refcr to Enclosure 2), Abbott lnvestments Luxembourg

S. r l will hold participation in CFCs.

40. Provided that conditions of Article 166 of the LTTL and the Grand

Ducal

Regulation of

21

December 2001 for the application of Article 166 of the LITL

are fulfilled, Abbott lnvestments Luxembourg S r l will

be

nefit from the

Luxembourg participation exemption regime in Luxembourg for its qualifying

pruiicipations in CFCs with respect to dividcnds and capitaJ gains derivcd in

relation to its qualifying

pru1

icipations.

41.

Expenscs directly linked t Abbott lnvcstmcnts Luxembourg S. r.l's exempt

participations

in

CFCs would be subject to the recapture mechanism.

42 . Pleasc rcfer to Enclosure l

fo

r further details in this respect.

8 .8 Dcbt-to-equity

rat

io of Lux S. r.ls for the financing of theil- participations

43. lt is

the

practice of

the

Lu

xe

mbourg tax authorities to accept

th

at participations

held by Luxembourg companics arc

fin

anccd by intra-group debt up to

85 .

Other asscts may be fully

finru1ced

by intra-group debt.

44. Please note that the Luxembourg thin capitalization ru lcs wi

ll

be respected at

the

levcl of

the Lux

S

r.ls.

8.9 Functional currcncy

45. The accounts and the share capital of the Lux S. r.ls will be denominated

in USD.

46. furthennore,

USD

w

ill

be the functional currency

of

the

Lux

S. r.ls for

tax

pwposcs

as

from the date

of

their incorporation for a period of at cast

10 years. This implies that their tax returns

will

be established on the basis

of

the ycarly net profits convet1ed into EU R by using the year-end market

EUR/USD rate.

(7)


17/66

Taking into account the importance of the above for our client, we would appreciate yo ur

written confirmation ofth above trcatment.

e

remain at yo ur entire disposai should yo u require any further information.

Wc

thank

yo

u in advance

for

the attention you will pay to

ou

r rcqucst.

Yours faithfully,

Valry Civi lio

Partner

En

cl

osures:

Enclosure

1:

Enclos

ur

e

2:

Enclosure 3:

Enclosure

4:

Enclosure 5:

Enclosure

6:

Enclos

ur

e

7:

Enclosure 8:

Enclosure 9:

Enclosure 10 :

Enclos

ur

e 11 :

Razvan Bruno lfrim

Manager

For approval

Le prpos du bureau d imposition Socits V

Marius Ko

hl

Luxembourg,

2009

Simplified existing structure

Proposed restructuring steps and simplified final structure

Articles

of

association

of

Abbott lnvcstments Luxembourg S.r.l,

Abbott Internation

al

Luxembourg S.r.l and Abbott Ovcrscas

Luxembourg S.r.l

Analysis

of

the tax treatment

of Lux S.

C.S and ofits partners

Articles ofassociation ofAbbott Holding Subsidiary Gibraltar) Limi

tcd

Luxembourg S.C.S

Article 147 LITL

Status of the Gibraltar compa:nies

Mastcr Facility Agreement

Tax treatment of the Mast rFacility Agreement

Tax treatment

of

the reimbursement

of

share capital

of

Abbott

Investments Luxembourg S.

r.l

Luxembourg participation exemption regime

71ris

1ax agrel.'meru ls based on 1re fac/s as presemed 10 PrlcewaU rltouseCoopers Sr/ as at t

he

dme 1u: a d ~ t c e was gi1e11 17w

agreemenl

u depndenl

on specifiefocLJ and circumslonces

a1rd

may nol be appropria/e 1 mwther pany han

1/w

one for

h il ldt l t w ~ t ~

prepared This /eiX

a11,reemenl

IHIJ prepared

will

on/y tire interes/J ofAbbo11 group in mind, and was

1101

p/anned or carried ou1 m

toniCmplalion

ofwry

use by

emy

ot

lr

er pany.

Pr

i

cewalerlto

useCoopers

Srl.

Ils

par/ners, emp

loyees and or

agents,

neilher

owe

nor

accep1

any dmy of

cure

or any r

espo

nslbillty

1 em

y aliter

parly,

wlre

lh

er in con

roc

/ or in tort {lnc

lt

tding wlil

ro

w

1/

m

ilalio

n, nexligen

or

breaclr of

/ahtlory

duty)

however

arising.

and sha/1 nol

be li

m r

i Spect of

MY

loss. damage or expeJISI ofwlralel'er na em

wh/dt

is caused to any otlter party,

8)


18/66

Enclosure 1

Simplified pre reorganisation structure

Abbott Laboratories

US)

1 1

Abbou 1 eal

h

Abbou Univcrsal Lld.

CF

Cs

-

Products [

ne.

Delaware)

Delaware)

l

~

Abbotl ospitals

~ 7

imitcd Baha

mas

tbcria CFCs

r-

l

1

9)


19/66

Enclosure 2

Restructuring steps and simptificd final

structure

A

Restructuring steps

The relevant steps

from

a Luxembourg

tax

perspective arc the following:

Stcp 2: Abbott Labs will incorporate Abbott Jnvestmcnts Luxembourg S. r.l

Step 3: Abbott Health Products lnc. will incorporate Abbott Overseas Luxembourg S.

r.l

Step 4: Abbott Overseas Luxembourg S.r

l will

inco

rp

orate Abbott Ovcrseas Sub Holding

(Cyprus) Limited.

Step 6: Abbott Universal Ltd . wil l fonn Abbott Holding (Gibraltar) Limitcd.

Stcp 7: Abbott Holding (Gibraltar) Limited will

form

Abbott Holding Subsidiary

(Gibraltar) Limited

Step 9: Abbott llolding (Gibraltar) Limited and Abbott Holding Subsidiary (Gibraltar)

Lirnited will

forrn

Abbott Holding Subsidiary (Gibraltar) Limited Luxembourg S.C.S.

Step

11:

Abbott

Ho1< 1ing

Subsidiary (Gibraltar) Limited Luxembourg S.C.S

will

form

Abbott International Luxembourg S.

r l

Step

14:

Abbott Labs will contribute Abbott Universal Ltd to Abbott HeaJth Products lnc.

Step

16

to Stcp 57: Abbott Labs will cont

ri

b

ut

e E.U/non

E U

entities (rcferrcd

as

CFCs )

to Abbott lnvestments Luxembourg S. r l

in

exchangc for shares.

Step 58: Abbott Labs

will

contribute Abbott Invcstmcnts Luxembourg S.

r

l

to

Abbott

Health Products lnc

Step

59

A: Abbott Hcalth Products 1nc will contribute Abbott Hospitals Limited to Abbott

Overscas Luxembourg

S

r.l

Stcp

98:

Abbott HeaJth Products ln

c

wil

1contribute Abbott Diagnostics International

Limited to Abbott Ovcrseas Luxembourg S.

r l

10)


20/66

Stcp

60A: Abbott Ovcrseas Luxembourg S. r.l will contribute Abbott Hospitals Limitcd

to Abbott Overseas Sub Holding (Cyprus) Limited.

Stcp 608: Abbott Overseas Luxembourg S. r.l will contribute Abbott Diagnostics

Intemational Lim ited to Abbott Overscas Sub Holding

(Cypr

us) Limited.

S

tcp

61

:

Abbott Health Produets ln

e will

contributc Abbott Overscas Luxembourg S. r.l

and Abbott lnvcstments Luxembourg S.

r

l to Abbott Universal Ltd.

Stcp 62CC: Abbott Universal Ltd. will contribute Abbott C.V. to Abbott Ovcrscas

Luxembourg S.

r.l

Stcp 62FF

: Abbott Overseas Luxembourg S. r.l will contribute Abbott C.V. to Abbott

Ovcrseas Sub Holding (Cyprus) Limited.

Step

63

to

Step

73: Abbott Universal Ltd. will contribute others CFCs to Abbott

ln

vcstments Luxembourg S.r.l in exchange for shares.

Stcp

74: Abbott Univcrsal Ltd. will contribute Abbott Investments Luxembourg S. r.l and

Abbott Ovcrseas Luxembourg S. r.l to Abbott Holding (Gibraltar) Limited.

Stcp 75: Abbott Holding (Gibraltar) Limited will contribute 1

of

Abbott Investments

Luxembourg S. r.l and Abbott Overseas

Luxemb

ourg S. r.l to Abbott

1

olding Subsidiary

(Gibraltar) Limited.

Stcp

76: Abbott Holding Subsidiary (Gibraltar) Limitcd will contributc

1 of

Abbott

lnvcstments Luxembourg S. r.l and Abbott Overseas Luxembourg S.

r l

to

Abbott Holding Subsidiary (Gibraltar) Limitcd Luxembourg S.C.S.

S

tcp

77: Abbott Holding (Gibraltar) Limitcd wi

ll

contribute 99

of

Abbott vestments

Luxembourg S. r.l and Abbott Overseas

Luxemb

ourg S. r.l to Abbott l Iolding Subsidiary

(Gibraltar) Limited Luxembourg S.C.S.

S

tcp

78: Abbott Holding Subsidiary (Gibraltar/US) Lirnitcd Luxembourg S.C.S. will

contribute 15 and sell

85

of Abbott

ln

vestments Luxembourg S.r.l and Abbott

Ovcrseas Luxembourg S. r.l to Abbott International Luxembourg S.r.l in exchange for

sharcs and a note payable issued

w1d

er a Master Facility Agreement.

Stcp

79: Abbott Investmcnts Luxembourg S. r.l, Abbott International Luxembourg S. r

l

and Abbott Overseas Luxembo

ur

g

S. r.l

may

fo

nn

a Luxembourg fiscal unity. Abbott

International Luxembourg S. r.l will be the parent company.

(li)


21/66

At a Jater stage, Abbott Investments Luxembourg S. r.l may rcdeem part of the

outstanding shares hcld by Abbott International Luxembourg S. r l in cxchange for

(Convertible) Preferred Equity Certificates (refeiTed as (C)PECs ) or Preferred Equity

Certificates (referred as PECs ). Should

it e

the case, we will revert to you on the

applicable tax trcatment

of

such instruments.

Finally, at the same moment as the above mentioned share redemption note that Abbott

lnvestments Luxembourg S. r.l could also grant intra-group loans and therefore would

hold receivablcs towa

rd

s its subsidiarics.

(12)


22/66

B implified proposed structure o the group

Fiscal Unity

Abbott Laboratories

US)

Abbott IIcalth

Products lnc.

Delaware)

Abbott Universal Ltd.

Delaware)

Abbott Holding

Gibraltar Ltd.

Gibraltar)

99

Abbott Holding

Subsidiary Gibraltar Ltd

Gibraltar)

MFA

---------,

Tranche

:

Tranche B:

1

Tranche C:

C ) P E C P E ~ s

contcmplated)

Abbott Overseas

Luxembourg Sarl

Luxembourg)

Abbott Overscas Sub

Holding Cyprus) Lld

Cyprus)

Abbott Diagnostics

International Ltd

Abbott Hospitals

Limited Bahamas)

Abbott lnvestments

Luxembourg Sarl

Luxembourg)

Receivablcs

co

ntemplated)

(1

3)


23/66

Enclosure 3

rt

icles

of

association

of

Abbott Invcstments Luxembourg S. r.l,

Abb

ott

International

Lux

embourg S. r.l

and b

bott Overseas Luxembourg S. r.l

14)


24/66


25/66

Enclosure 4

Analysis

o

the tax treatment

o

Lux SC S and of its partners

Pursuant to Article 175 o the LITL and to article

11

bis Loi d'Adaptation, a Socit en

Commandite Simple (he

rc

after S.C.S ) is not deemed to have a separate tax personality

from that o its partner and is hence considered

as

transparent fo r tax purposes

in

Luxembourg.

An S.C.S is therefore not itself subject to CIT and NWT

in

Luxembourg, but its partncrs

arc personally subject to tax in respect

o t

heir part in the profits/unitary value o the S.C.S,

regardless ofwhether such profits are effective y distributed or not.

Given that

an

SCS is not subject to tax in Luxembourg, it will not be considered as a tax

resident for the purposcs o Article 159 o the LITL.

ln the case at hand, the partners o

Lux

S.C.S, i.e. GibCol and GibCo2 will be non

resident, th

us

their taxation in respect

o

their part

in Lux

S.C.S profits is

to

be detcrmincd

by following the rules provided

in

Article 156 o the LITL regarding the taxat

ion

o

non-

residents.

Absence

o

a permanent establishment

in

f tX

embourg -

ttX

SC S

activities

The partners o Lux S.C.S, i.e., GibCol and GibCo2 will not

be

Luxembourg corporations.

Therefore,

Lux

S.C.S will not fall within the scope o article 14-4 o the LITL nor o

article 2 o the M

un

icipal Business tax law.

Pursuant to Article 156 (1) (a) o the LITL, the commercial income realised by a non

resident through a permanent establishment located

in

Luxembourg is trcated as

Luxembourg-sourced incarne, subject

to

ClT

According to paragraph

16

o

the Luxembourg Adaptation Tax

Law

, a permanent

establishment is dcfined as a fixed place o business used with a certain degree o

permanence for the exercise o a commercial or industrial activity

in

Luxembourg.

ln the framework o the Abbott's group

rc

structuring, GibCo 1 and GibCo2 will contributc

the participations in Abbott Overseas Luxembourg S. r.l

and

Abbott lnvestrnents

Luxembourg S. r.l

to

Lux S.C.S, which in its tur wi

ll

sell these participations (in a short

time frame) to Abbott International Luxembourg S. r.l in exchange for shares and a note

payable issued under a MF A.

(15)


26/66

Accordingly, Lux S.C.S will hold, for a lirnited period of time, a participation in Abbott

Ovcrseas Luxembourg S. r l and Abbott Investments Luxembourg S. r.l. This will not

impact the analysis regarding the Luxembourg tax treatment both for CIT, MBT and

NWT)

of

the operations

of

the Lux S.C.S.

Further to the restructuring, Lux S.C.S will

have

an activity restricted to the mere holding

of

Abbott International Luxembourg S. r. l as weil as the mana

gement of

the MFA.

Lux S.C.S

cou

ld

s

hold a currcnt account with a Dutch entlty from the group

exclusivcly for the payment of the operational expenscs of ux S.C.S.

Lux S.C.S will n

ot

have any office spacc, equipment or a

ny other

tangible presence in

Luxembourg. t will have

no

employees.

GibCo

1 and GibCo2 will not be

eo

ns

idered

to h

ave

a

pennancnt

cstablislunent in

Luxembourg for the activities carried out by Lux S.C.S and tberefore will

not

be subject to

CIT, MBT and

NWT

in Luxembourg. Under the same cireumstances, Lux S.C.S. will not

be

deemed to exploit an enterprise in Luxembourg, and will therefore not be subject to

MBT

16)


27/66

Enclosure 5

Articles

of

association

of

Abbott Holding Subsidiary

Gibraltar

) Limited

Luxembourg S.C.S

17)


28/66


29/66

Enclosure

Article

4

7 LITL

Article

147 LITL

provides for a withholding tax exemption in Luxembourg

if

the

following conditions are

met:

The distributing company is:

- A Luxembourg resident

coll

ective entlty, wlch is fully taxable

and

takes one

of

the

fo

m1s Jisted in the Enclosure

to

the paragra

ph

10 ofarticle 166

LIT

L;

The entity receiving the dividends is:

- A collective entity falling u

nd

cr article 2

of

the amendcd version

of

the Council

directive

of

23 July

1990

on the common system of taxation applicable in the

case

of

parent compa

ni es

and su

bsidi

a

ries of

different Mcmber States

(90/435/EEC, hereafter the "Parent Subsidiary Directive"); or

- A

Luxe

mb

ourg r

es

ident joint-stock company, which is fully taxable

and

docs

no t take one of

1e

fonns listcd in the above-mentioncd Enclosure; or

A co

llective entity that is resident in a Statc with

wh

i

ch

Luxembourg has

concludcd a double tax treaty and which is fully lia.b le to

a

tax corresponding to

the Luxembourg corporate incomc tax, or a domestic permanent establishment

of

such an entity ; or

A Sw iss resident joint-stock company that is subject to Swiss corporate income

ta

x

wi th

out ben

efi

ting

from

any exemption; or

And

At th

e date on which the income is made

avai

l

ab

le, the bcneficiary has been holding or

undertakes

to

hold, dircctl

y,

for

an

uninterrupted period

of

at

e

ast 12 months,

a participation

of

at east

10

%,

or with

an

acquisition priee

of

at east

EUR 1.2

million

in

the share capital

of

the income debtor.

f

the pa rticipation is he ld through a tax-transparent

cntity falling

und

cr 1

of

article 1

75 UTL,

this will be regarded as a direct participation,

proportionally to the intcrest held in the tax-transparent enti

ty.

(18)


30/66

Enclosure

Status

of

the Gibraltar

o

mpanies

ln the case at hand, il needs to

be

determined if from a Luxembourg perspective,

a company incorporated under the law

of

Gibraltar

is

to be considered as falling under

Article 2 of the Parent/S ubsidiary Directive

and

thercfore if it can benefit from the

participation exemption providcd for by Articles 147 and 166 LITL.

Article 227(4)

of

the treaty establishing the European Eco nomie Communily (the Treaty'')

cx

pre

ssly providcs that the provisions

of

the Treaty shall apply to the European territ01ies

for

whosc externat relations a Member State is responsible.

The Govemment

of

the United Kingdom is responsiblc for Gibraltar's extemal relations.

Th us the

treaty should apply to Gibraltar, as establi

shed

at

the

t

me of

the accession

of

the

United :Kingdom

to

the European Economie Community on January 1

,

1973 .

Gibraltar was howevcr expressly excluded from the scope

of

application

of

European

Union

regulations rclating to agricultural matters, value added tax hannoniza tion and

custom union pursuant to article 28

of

the accession trealy. No othcr exclusion was

mentioned. Therefore, all other regulations from the

Eu

ropean Union should apply

to

Gibraltar.

ln a letter dated January 22, 1999 (a copy

of

which

is

also encloscd in this Enclosure 7),

the European Commission confinned that E-U directives

app

ly

to

Gibraltar:

/

confirm that

Gibraltar, according to tite provisions

o

article

7

paragraph 4 of the

EC

treaty, is

a European State whose foreign. reLations are asswned by the United Kingdom.

Accordingly,

l x

directives 90/434, 90/435, 69/335 and 85/303 are applicable t

it .

One could argue thal

in

addition

to

such confinnation it would be ncccssary

to

check

wbcther Gibraltar comparues are referrcd

to

under article 2

of

the Co uncil Directive

90/435/

EEC

dated July 23, 1990.

Gibraltar companies arc not expressly mcntioned

in

article 2 of the Council Directive

90/435/EEC dated July 23,

1990.

However,

we w1dcrstand

that they are eovered by the

provisions

of

the Directive, given the confinnation issued by the European Commission

and the following:

Article 2

of

the Council Directive 90/435/EEC refers to companies incoll>Orated

under the laws

of United

Kingdom ;

(19)


31/66

The United

K1ngdom

Foreign and Commonwealth Office issued on

November

17

, 1988 a lettcr rcgarding the status of the Gibraltar companies

vis--vis United Kingdom legislation (a copy has been included in this

Enclosure

7). n

such letter, it is expressly stated that nationals , nationals

of

member states or national of member states and overseas

cm

mtries and

territories whencvcr used in the BEC Treaty arc to be understood to refcr

to,

inter

alia, British Dependent Territories Citizcns who acquire citizenship

fiom

connection with Gibraltar;

The United Kingdom considers comparues incorporatcd

und

r the laws of Gibraltar

as incorporated under the l

aws

of the United Kingdom

for

the purpose of

article 2(a) of the Council Directive 90/435/EEC; and

The United Kingdom also recognizes that Gibraltar income tax is analogous to ilS

co

rp

oration tax for the purpose of article 2(c) of the

Co

uncil Directive

90/435/EEC

Thcrefore, GibCo and GibCo2 w

ill

be considered as covered by article 2

of

the

Council Directive 90/435/EEC dated July 23, 1990.

Plcasc note that pursuant to Article 2(b) of

the

Council Directive 90/435/EEC.

company of a Member State is in particular defined as a company, whicb

according

to the tax laws o a Mem er State is consideree/ to be resident in thar State for t x

pu

rposes and, under t e terms

of

a double taxation agreement conc/uded with a thire/

State, is not considereclto

e

a resident for tax purposes oulside the Community .

GibCo

and

GibCo2

will

meet the rcquirements established

in

the Directive, since they

will be residents in Gibraltar for tax purposes.

Under the Gibraltar incarne

tax

ordonance, a resident company is:

a. a company the management and control of whose business is exercised

from Gibraltar; or

b. a company which carries on business in Gibraltar and the management

nd

control of which is exercised outside Gibraltar by pcrsons ordinarily

resident w

ithi

n the meaning

of

the Ordonance.

The Commissioner

of

CIT will presume that a company incorporatcd in Gibraltar w

ill

be liable to taxation in Gibraltar unless it is either a tax exempt company or it

is

shown

th

at

management and control lies outside of Gibraltar (exercised by

non

Gibraltar

residents) , neither of which would be the case in the case

at

hand. Management and

control is

ju

dged in accordancc with UK precedent as decidcd in De Bccrs

Consolidated v Howe 1 906) (i.e. control lies with the head and mind of a company).

''EC corporale tax

law.

Commc

nt

ary on the EC Direct

Tax

Mcasun.:s

and

Mcmbcr States Implementation, 4,

Territorial scopc , Internat ional Bureau of Fiscal Documentati

on,

August 2006, page 4.16.

(20)


32/66

Therefore, based

on

the above and to the extent that GibCo1 and GibCo2 will be tax

residents in Gibraltar, the Council Directive 90/435 /EEC

will

be applicable to these

Gibraltar companies for the pU pose o Articles 47 and article 166 o the LITL.

21)


33/66


34/66

Enclosure 8

Master citity Agreement

22)


35/66

Enclos

ur

9

Tax treatment

of

the Master Facility Agreement

A Description

of

the

M

A

A MFA is a multi-purposc facility agreement under which funds are made availablc in

different tranches dcpcnding on the purpose for whch the funds will

be

used. As far as the

MFA bctween Luxembourg SCS and Abbott lnternational Luxembourg S..r.l is

concerned:

Tranche A will finance n priority the asscts ofAbbott International Luxembourg

S.r.l (borrower in the MFA) other than () the sharcholdings eligible for the

Luxembourg participation exemption (

ii

) the assets (Joan receivables) denominated

in a currency other than USD and which arc financed by Tranche

B

corTesponding

mainly to the USD ntra group receivables; and

Tranche B will finance the assets (loan receivables ) denominated in a curreney

other than USD,

Tranche C will finance the sharcholdings qual ifying for the Luxembourg

participation exemption held by Abbott International Luxembourg S..r.l as dcfincd

in article 166 LITL and the Grand-Ducal Dccree

of2

1 December 2001 in execution

to Article 166 of the LITL.

Since Abbott International Luxembourg S.r.l will be deemed to be in a financial on

lcnding activity with respect to Tranche A assets and Tranche B assets,

it

should derive a

net remuneration from thcse transactions. This net remuneration will rcduce the intercst

paid to

Lux

S.C.S under the MFA.

The Tranche C

of

the MFA will bear an

ann's

length

fixed

intcrest rate

of

7. 6573%

caleulated on the principal average amount allocated to this tranche.

B Financial on lending activity

As mcntioned abovc, further to the rcstructuring, Abbott International Luxembourg S.r.l

will be deemcd to

be in

a financial on-lending aetivity.

Depending on the amounts of Tranche A and B of the MFA and taking into account the

fcaturcs and conditions of the Tranche A and B of the MFA, wc will revert to you in arder

to determine the appropriate and acceptable profit with respect to Articles 56 of the LfTL

and

164

(3) of the LITL (aftcr deduction of ail the charges incurred by Abbott lntemational

Luxembourg S.r.l) to

be

earned by Abbott International Luxembourg S.r.l..

(23)


36/66

1


37/66

Should the total amounl ofTranche A and B for the first year exceed

UR

1,250 Mio, an

acceptable lev

l

of taxable spread will

be

0,03 125% of the sum of the Average Gross

Financial Assct Amount and the Average Foreign Asset Amount.

The acceptable leve of the spread may

be

reviewed if the principal amounts of the loans

and receivables involved in the financial on-lending activity transactions vary significantly

(i.e., if the principal amount of the loans and receivables incrcasc significantJy, the spread

could decrease, conversely if the principal amounts of the Joans and receivable in the

financial on-lending activity decrease significantly, the spread could increasc).

(24)


38/66

Enclosure 10

Tax

treat

me

nt

of the potential rcimbursement

of

sb

ar

e capital

of

Abbott

Investments Luxembou

rg

S. r

.l

A. At the level

of

Abbott

In

ves

tm

ents Luxembourg S. r.l

At a latcr stage, Abbott Investments Luxembourg S. r.l may redeem part of the

outstanding sharcs held by Abbott International Luxembourg S. r l in exchange for (C)

PECs or PECs.

Article

97

(1) of the Luxembourg Incomc Tax

Law

("LITL") states that ail dividcnds,

profit sharings and ether allocations

granted under whatever

fo1m

, in respect

of

sharcs,

profit sharcs or ether participations of whatcver nature in collective cntities as mentioncd

in articles 159 and 160

LITL

, are considered income from capital. Article 146 (1 , 1

LITL

re

fers (among others) to article 97 l ),

1

UTL in order to dctcrmi ne the income that is

subjcct to withbolding tax in Luxembourg.

Article 97, (3) b) L TL provides for an exception to article 97 (1) LITL

in

stating that the

procccds allocatcd at the occasion of the reduction of the sharc capital (the rcimburscment

of

share premium bcing assimilated to a reduction

of

share capital)

and

conesponding to

contributions of the shareholders are not deemcd to constitutc income from movable

property. Such reimbursemcnt of sharc capital would however be taxable

up to

the amount

of

rctaincd eamings incorporated into

the

share capital, as such rctaincd eamings would be

dcemed distributed first. Furthennore, the reduction

of

share capital will also

be

taxable if

it is not motivated by serious economica[ reasons. According to the Administrative

Practice Note, if a company disposes of rctai

ned

earnings that t docs not want to distribute

to the sharcholders, the rcimbursemcnt of sharc capital is not motivatcd by scrious

economical rcasons. Legitimate economie reasons

may

also not be available in case the

reimburscment of the share capital wou id

rem

ain outstanding.

Accordingly, if undcttaken, this reduction of sharc capital will not be subject to

withholding tax in Luxembourg provided that Abbott Investments Luxembourg S. r.l

will

not have any rctaincd eamings at the beginning of t

he cutTent

financial year

in

which the

reduction

of

share capital will be held. In the contrary case, s

uch

reimbursement

of

share

capital will be rc-qualified as a dividcnd distribution up to the amount of retained earnings

incorporatcd into the share capital of Abbott lnvestments Luxembourg S. r.l) and should

in principle be subject

to

a 15% withholding tax pursuant to article 146

LITL.

However, such a dividend distribution will not be subject to any Luxembourg withholding

tax provided that Abbott International Luxembourg S.

r.l

will comply with the minimwn

threshold

and

holding pcriod

req

uirement provided

by

article 147 LITL (please refer to

Enclosure 6).

(25)


39/66

B At the l

v

el

of

Abbott International Luxembourg S. r l

According to artic

le

10 LITL, Are

on

ly being considered for

the

determination o the total

net income [ ..]:

1. Conunercial profits,

2.

Agticultural and forestry profit

s,

3.

Profits

from

the cxercise of a liberal profession,

...)

6.

Net incarne deriving fro m movable propert

y,

...)

8.

Other net in

co

me specified under article 99 LITL

The listing of article 10 LlTL

is

restricti

ve.

The profits and income not affcctcd by n1 to 8

[ofthe above

li

st] benefit fTom a so-called mate

ri

al exemption.

ln the event the movable property

wo

uld be part o the net assets invested in an enterprise

or

an

exploitation as asscts invested by destination (notwendigcs Betriebsvermgung) or

by option gewillk:rtes Betriebsvcnngung), the related income

wou

ld be taxable as

commercial profit, agricultur

aJ and

forestry profit or profit

from

a liberal profession. The

subsidiary character o article 97 LITL n comparison with the three first categories o

revenue listed in article 10 LlTL finds its legal foundation in article 97 (4) LITL.

According to the prepara tory works to the Luxembourg Incornc Tax

Law

( commentarics

to

the proposed article 114 (now article

97

LITL)), the income dcri

ved from

one

o

the thrcc

first categories

o

revenue as listed under article

10

LITL

is

subject to its respective own

ru les

for

the determination

o

profit. This pri iplc is also laid down in article 97 (

4) LITL

which states that insofar an incorne rcfcrred to in this article

is

included in the commercial

profit,

in

the agricultural

and

forestry profit or in the profit

from

a liberal profession,

according to the provisions goveming the detennination o the said profit, it shall be

taxable in the rclated net income category.

ln the case at hand, taking into consideration the nature

o

the activities to be perfonned by


r.l

and the fact that the movable property will be

part o

the net

assets invested o Abbott International Luxembourg S. r.l, movablc incomc

to

be received by Abbott

Lnternati

onal Luxembourg S. r.l

will be

considcred

as

commercial profits as envisaged by article 14 LITL and will be taxed as such.

Consequcntl

y,

the general principlc

o

article 40 LITL

( thorie de /'accrochement du

bilan fiscal au bilan comptable ) will apply. Therefo re, the

tax

trcatmcnt

o

an

operation/item involving income cove

rcd

by article 97

LJTL

will follow the applicable

accounting trcatment

o thi

s operation/item.

(26)


40/66


r l

will record in its statutory accounts, further to the

rcimbursement o share capital the reimbursement o share premium bcing assimilated to

a reduction o sharc capital)

fiom

Abbott lnvcstmcnts Luxembourg S. r.l, a dccrcase o

the acquisition costs o its shareholding in Abbott lnvestments Luxembourg S. r l and a

corrcsponding incrcase o assets ci , receivable). This transaction will not have any

impact

on

the profitlloss account

and

will not result

in

the

reali

zation

o

any profit.

Conscquently, this rcimbursement

o

share capital

will

not trigger any impact

from

a Luxembourg tax perspective.

In the case retained carnings would have becn incorporatcd into the sharc capital o Abbott

Invcstments Luxembourg S. r.l, such reimbursement o share capital will

be

re-qualificd

as

a dividcnd distribution up to the amount o retaincd eamings incorporated into the share

capital

o Abbot1 fnvc

stments Luxembourg S. r.l).

Accordingly, Abbott

In

ternational Luxembourg S.

r l wi ll

benefit from the Luxembourg

participation exemption regime

in

Luxembourg

for

its qualifying participations

in

Abbott

lnvcstments Luxembourg S. r.l with respect to dividends derivcd in relation to its

qualifying patticipation, provided that the conditions o Article 166 o the UTL are

fu i lied.

Pl

case rcfcr to Enclosure for furthcr details in th is respect.

27)


41/66

Enclosure

Luxembourg participation exemption regime

A Dividend income

and

Article 166

of

he LITL provides

for

the exemption

of

he dividends

i

he following

conditions are fu filled: hedi

stributing company is:

- A collective entity fall ing under article 2 of the amended version o the Council

directive o 23 July 1990 on the common system o taxation applicable in the

case o parent companies

and

subsidiaries o different Member States

(90/435/EEC); or

- A Luxembourg res ident capital company which is fully taxable and does not

take one o the fonns listed in tl1e Enclosure

to

the paragraph

10 o

article

66 o the LITL; or

A

non-resident capital company

tb

at is fully li

ab

le

in

its state o residence

to a

tax corresponding to the Luxembourg corporate income tax. Regarding this

condi tion, the Luxembourg tax authorities have set the rule that the foreign tax

must be assesscd at a minimum rate o l 0,5 on a taxable basis detem1ined

similarly

to

the Luxembourg one;

The bcneficiary company is:

A Luxembourg res ident collective entity which is fully taxable and takes one

o the fmms

li

sted in the Enclosure

to

the paragraph

10

o article

166

o the

LITL; or

- A

Luxe

mbou rg resident capital company, wbich is fully taxable and does not

take oneo he fonns listed in the above-mentioned Enclosure; or

- A domestic permanent establishment o a collective entity falli ng under article

2 o the arnended version o

th

e Council directive o 23 July 1990 on the

common system

o

taxation applicable

in

the case

o

parent companics and

subsidiaries o different Member States (90/435/EEC); or

- A domestic permanent establishment o a capital company th at is resident in a

State

wi

th which Luxembourg has concluded a double tax treaty;

- A domestic permanent establishment of a capital company or o a cooperative

company which is resident in a European Econom ie Arca (EEA) Mcmbcr State

other than a

EU

Member State.

(28)


42/66

And

- At the date on which the income is made available, the bcneficiary hcld

or

unde1takes to hold, direct y, for an uninterrupted period

of

at east 12 months a

participation in the share capital

of

the subsidiary

of

at east 10%

or

with an

acquisition priee ofat east

EUR

1.2 million.

ff

the participation is held through

a Luxembourg tax-transparcnt cntity, this will be rcgarded as direct

participation proportionally to the interest held

by

the Luxembourg holding

company in the tax-transparent cntity.

A ftuthcr bene'fit

of

the system

by

compari

son

with the

one

applicable

in

other

countries

is

the ability to

de

d

uct

related expenses (e.g., interest charges incurred in

financing the shares). Neverthelcss,

ex

penses incurred during the year in which a

dividend

is

rcceived and which are coru1ccted to the exempt participation may only be

deducted insofar as they exceed the exempt dividend for

the

year in question.

Additionally,

if

a writc-down in the value

of

the participation has been booked

as

consequence of the distribution

of

divi

dc

nds, this write-down will not be deductible up

to the amou

nt

of

the exempt

div

idend.

B Capital ga

s

The

Grand-Ducal dccrcc

of21

Deccmber 2001

fo

r the application

of

Article 166

of

the

LITL providcs that capital gains realized from the disposai

of

sharcholdings are tax

exempt

if:

The subsidiary is:

- A collective entity falling un

der

article 2

of

the amendcd version

of

the Council

directive

of23

July 1990 on the common system

of

taxation applicable in the case

of

parent corn panics and subsidiaries ofdifferent Member States

90

/435/EEC);

or

- A Luxembourg resident capital

compa

n

y

which

is

fully taxable and does not take

one

of the

forms Jisted in the Encloswe to

the

paragraph

l0 of

article 166

of

the

LITL;

or

- A non-resident capital company that is fully liable in its statc of residence to a tax

corresponding to the Luxembourg corporate incorne tax. Regarding this condition,

the Luxembourg tax authori.ties have

set

the rule that the foreign tax must

be

assessed

at a minimum rate

of

10,5%

on

a taxable basis determined similarly

to

the

Luxembourg one;

The

beneficiary company is:

- A Luxembourg resident collective entity, which is full y taxable and takes

one

of

the

fonns listcd in the Enclosure to

1c

paragraph l0

of

article 166

of

the LITL; or

(29)


43/66

- A L

ux

embourg resident capital company, which is fully taxable and does not take

one

of

the forms listed in the above-mentioned Enclosure; or

A

domestic permanent establishment

of

a collective entity falling under article

2 of

the amended version ofthe Co unc

il

directive

of

23 July 1990 on the common system

of taxation applicable in the case of parent companies and subsidiarics of different

Member States (90/435/EEC); or

- A domestic permanent establishment of a capital company that is resident in a State

with which Luxembourg has concludcd a double tax treaty;

A domestic permanent establishment

of

a capital company or

of a

cooperative

company which is resident in a

Eu

ropean Economi e Area (EEA) Member State other

than a

EU

Mcmb

er

State.

And

- At the date on which the alienation takes place, the bcncficiary has hcld or

unertakes

to

hold the respective participation for an uninterrupted period

of

at cast

12 months, and during this period the participation held does not fall below 10 or

an acquisition priee

of

Jess than EUR 6 million.

f

the sharcs are hc

ld

through a

Luxembourg tax-transparent entity, this rcquirement must be fulfillcd not by the tax

transparent entity itself, but by the beneficiary, proportional to the interest held by

the latter in the tax-transparent entity.

A

recapture system exists, undcr which the exempt amount of the gain

is

reduccd by

the algebraic sum

of

income (mainly derived from the participation and potcntial write

downs in the value

of

the participation), to the extent that they have reduced the taxable

base

of

that ycar or prcvious ycars. Basically, an cffcct

of

this ru le is that the capital

gain realized will become taxable up to the amount

of

the aggregate cxpenses and

write-downs deducted during the respective and previous years in relation to the

participation.

The purpose

of

the system is to avo

id

the taxation vacuum, which cou

ld

result if the

dcductibility of expenses and write-downs connected to the participation was allowed

whcrcas the income arising from the participation was tax exempt.

(30)


44/66


45/66

Simplitied proposed structure

o

the group

Fiscal Unity

Abbott Overseas

Luxembourg

Sarl

Luxembourg)

Abbotl Overscas Sub

Holding Cyprus) Ltd

Cyprus)

Abbott

Laboratories

US)

Abboll

Uealth

Products Ln

c

Delaware)

Abbott Unlversal Ltd

Delaware)

Abbott Holding

Gibra

ltar

Ltd

.

Gibraltar)

MF

----- ---- .

Tranche

:

Tranche

:

Tranche C

CPECs

Abbott ln

wstments

Luxembourg Sarl

Luxembourg)

CF

Cs

Enclosure

5)


46/66


47/66

Enclosure 3

Dra t version

of

the CPEC agree

m nt

6)


48/66


49/66

Abbott

Inv

estments Luxembourg S. r.l.

Socit

responsabilit limite

Share capital: USD 44,989,000

Registercd office: 26 boulevard

Ro

yal, L-2449 Luxembourg

R.C.S. Luxembourg: B 144.635

AUTHORIZAT

IO

N

FOR

CONVE

RTID

LE

PREFERRED

.EQUlTY

CE

RTI

FI

C

TES

Series A

The Board of Managers and the sole shareholder of Abbott Investments Luxembourg S. r.l., a

so i

t responsabilit limite (Luxembourg private limited liability company) (the Company),

with registered office

at

26 boulevard Royal,

L-2449

Luxembourg, duly registered

wi1

the

Regi

str

e

de

ommerce e t d

es

Socits (Luxembourg Trade and Companies Register) under the

number 8

144.635,

have authorized the issue and sale

of

up to

3,698,638

Series A Convertible

Preferred Equity Certiticates (each a Series A

CPEC

and toge1er the Seri

es

A CPECs)

governed by the following tcrms and conditions

of

the Series A CPECs {the

Terms

and

Condition

s).

TERMS AND

CO

NDITIONS

DEFINITIONS

Adju

st

ment Event means any

of

the following; (i) the Company dis ributes a dividend with respecr

to its Sharc Capital in an amount in excess

of

the Pcnnittcd Dividends and such excess

is

composed

of

an in kind distribution

of

Shares;

i

i) the Company subdivides or combines into a larger or

smaller number its outstanding Shares; (iii) the Company is recapitalized, consolidated with or

merged into any other entity; or (iv) the Company issues Sbares in exchange for cash or propcrty

with an issue priee per Share that is Jess than the Fai r Market Value per Share immediately prior to

such issuance.

Aftliate means, as to any Person, any othcr Person having control of, controlled by, or under

common control

wiU1

such first person, and for this purposc, control

of

a Pcrson mea

ns

U e

direct, indirect or beneficiai ownership

of

(i) 100%

of

the outstanding stock or comparable cquity

interest in the person as measured

by

the ability to elect the board of directors, managers, trustees or

other controlliog Persons of such person and (ii) 100%

of

the outstanding stock or comparable

equity interest in the Person as measured

by

value.

App

li

cabl e Rate mcans the Fixed Rate Yiel

d.

Board of

Ma

nagers means the board of managers of the Company or, as long as therc is only one

appointed manager, the sole manager

of

the Company.

Business .Days means ali

of

the da

ys

in a calendar year in which banks

in

the City

of

Luxembourg

are open for ordinary business.

Company means Abbott lnvestments Luxembourg S. r.J.


50/66

Conversion Date

means

the date speci ficd by the Company for conversion of U e Series A CPECs

into Sharcs.

Conversion Shares means 0.009972339 Shares, whieh represents the quotient

of

(x) the Par Value

and

(y)

the Fair Market Value of one Share, determined as of the Issue Date per Series A CPEC;

provided that in the case of any Adjustrnent Event the nurnber of Conversion Shares shall be

adjusted in such manner as is necessary in order that, after such adjusnnent:

the nurnber ofConversion Shares per Series A CPEC will carry i)

as

nearly

as

possible (and

in any event

not

Jess tban) the same proportion (expressed as a perecnlage

of

tbe

total

numbcr

of

votes exereisable in respect

of

ali the Shar

es) of

the voles as immediate y before

the Adjustment Event; and (ii) the samc cnti tlcment to participate (expressed as a percentage

of the total entitlcmenl eonferred by

ail

the Sbares)

in

the profits and assets of the Company

as

immediately before the Adjuslment Event;

the total Repurehase Priee will be the same

as

it

was

immediately bcfore the Adjustment

Event; and

cach Sharc rcceived as a rcsult of a conversion of Series A CPECs shall carry a share

premium cqual to the Par Value of the Series A CPEC(s) eonverted minus the par value of

the Share(s) reeeived in exchange.

ln calculating the aggregate entitlement to Conversion Shares, entitlemcnts to a fraction of a

Conversion Sharc will be rounded

down

to the nearest whole Co nversion Sharc.

CPEC Registcr mcans the regis ter and transfer book maintained by the Company in respect of the

Series A CPECs.

Extraordinary Event means a disposai at fair market value of a substantial amount or all of the

assets directly hcld by the Company, including such

di

sposais to an Affiliate or other related

person.

Fair arket Value means the value of a Share, calculated on a Fully Dilutcd Basis, as determined

by an indcpcodent appraiser agreed to by the lssuer and the Holder(s) by utilizing any reasonable

valuation methodology based on arm's length principles. In the event of no agreement

on

the

nomination

of

1is independent appraiser,

this

expert

sha

ll

be

nominated at the request

of

the most

diligent party by the President of the Luxembourg court

( Tribunal d'arrondissement de

Luxembourg

'')as soon as possible.

Financial Year mcans the accounting ycar of the Company as provided for in 1e Company's

articles of association.

Fixed Rate

Yi

cld mcans 1% of the Par Value of the Series A CPEC per annum.

F

ull

y Diluted Basis in the expression "on a F

ull

y Diluted Basis'' means taking into accounl an

aggregate nurnber of shares in the Company eomputed

on

the basis

of

1e assumption thal ail the

shares of the Company

to

wbich any existing CPE C and/or any other convertible instrument may

give access shall have

bcen

issued.

Ho der means a holdcr of an outstanding Series A CPEC, as recordee in the

CPEC

Register.

2


51/66

ln

solvcnt means (i) that

the

aggregate amount of the Company s obligations cxceecls the fair market

value of the Company s assets or (ii) if the Company is

no

longer in a position topay for its debts

as

they become due

and

the Company is no longer creditworthy.

Issue Date means Dcccmber 1, 2009, being the date of issuance of Series A CPECs

to

the

llolder(s).

ar Value means, in relation

to

one Series A CP

EC USD

1,000.

Paymcnt Date means, in relation

to

any Paymcnt Period, the date 60 da ys after the end

of

such

Paymcnt Period.

Payment Period mcans, for as long as the Series A CPECs remain outslanding, the Financial Year

of the Company, cxccpt as follows:

1. the Paymcnt Period for the year of issuance shall mean the period begillllng on the Issue

Date and ending on the last day

of

the Financial Year including the Issue Date; and

11. the Paymcnt Pcriod for the year

of

conversion, redemption, or rcpurchase shall mean the

period bcginning on the first day

of

the Financial Year that includes the Retirement Date and

ending on the Retirement Date.

Permitted Dividend means a dividend on

1e

Sharcs that satisfics lhe restrictions set forth m

Article 6 hereof.

Person means any individual, corporation, company, association, partnership, joint venture, trust,

unincorporatcd organisation or govemment (or any agency, instrumentality or political subdivision

thereof).

Record Date means, in relation

to

any Payment Pcriod, the last Business Day

in

thal Paymcnt

Period.

Rc

pur

chase Date means the date specified

by

the Company for the repurchase of the Series A

CPECs.

Repurchase Priee means, al any lime,

in

respect of one Series A CPEC, the amoum obtained

by

rnulliplying the Fai r Maikct Value per Share

as

at the relevant Retirement Date, by 0.009972339

(i.e. the oumber of Conversion Shares per Series A CPECs),

as

adjustcd

as

providcd hcrein for any

Adjustmeot Event.

Retained Earnings mcans the retained eamings

of

the Company determincd

on

an

unconsolidated

basis

in

accordancc with generally acceptcd accounting principles as

in

effect from time to timc

in

Luxembourg consistent wi1 the policies and practices of the Company.

Retirement Date meaos the date of the repaymcnt of ilic Series A CPECs whcther by way

of

conversion, redemption

or

repurchase.

Senior Obligations means ali present and future obligations of the Company, whethcr secured or

unsecured, other than the Subordinated Securities and the Series A CPECs.

S

harc

means a voling ordinary sharc having a nominal

va

lue of

USD

1,000 in the Share Capital.

3


52/66

Sh rc Capital mcans the ordinary sharc capital of the Company.

Subordinated Securitics mcans ali the outstanding shares

of Lb c

Share Capital

from

timc lo

lime:

provided

thal

the Series

A

CPECs including any other series

of

Series A CPECs)

shall

not

constitute Subordinatcd Securities.

ln

the construction of

1csc

Tcrms and Conditions words delined

in

the plural shaH a so imply the

singular and vice-versa.

ISSUE

1.1 Pursuant to the resolutions of the Board of Managers and according to these Tenns and

Cond ition

s

the Company issues the Series

A

CPECs in an aggregate amount o USD

3,698,638,000 to Abbott International Luxembourg S..r.l

on

the Issue Date

in

consideration

for

the cancellatioo

of

U c

Shares bcld by Abbott Internati

onal

Luxembourg

S. r.l.

in

the

Co

mpany baving

the same value.

1.2

The Series A CPECs shall

be

comprised of 3,698,638 Series A CPECs wilh a Par Value

of USD

1,0

00

each.

1.3

The Series CPECs sball

be

issucd by

the

Company to the Holder as of the Issue Date,

and sball remain outstanding

for

a term

of 30

yea rs, unless earlicr redeemcd, repurchased

or converted pursuantto these Tcrms and Conditions.

YlEL

2.

1.

Each Series A CP

EC

shall carry the right to reccive a yield payable by the Company

in

respect

of

any Paytnent Period

of

an amount cqual to

the

product of the Applicable

Rate

and the Par Value of such Series A CPEC multiplied

by

a fraction of which the numerator

shall be the numbcr of days in such Payment Pcriod and the denominator sball

be

365

the Yield).

2.2. The Yield shall

be

payable on each Payment Date to the Holder only to the extent

dcclared

by

the Board

of

Managers and only

to

the extent

of

the existence

of

Retained

f3arn ings of

the Company determined beforc accru

al of

the Yield on

this

or othcr similar

instruments thal the Company may issue) as

of

the close of the last Payment Pcriod

preccding such Payment Date and provided lhat Lb c Company

would

not become

lnsolvent as a rcsult

of

he paytnent

of

such Yie l

d.

2.3.

Any

Yield

in

arrears

fo

r any Payment Period

may be

declared

by

the 13oard

of Managers

lo 1e

cxtcnt

of

the existence of Retained Earnings

of th

e Company as computed prior

to

1c

accrual

of

any acerued yield on t

hi

s or otber similar instruments that

U e

Company

may issue and paid on any date speeified by the Board of Managers), whether or

not

a

Payment Date,

to

those Holdcrs wbose

names

appear in the CPEC Rcgister on the

relevant

Record

Date; provided thal the Company would not become lnsolvent as a resull

of

such paytncnt. Any such

paYJnent

shall first

be

applied against any arrears

of Yicld

taking

carl

ier arrears

be

fore

la

er ones).

4


53/66

2.4 So long as no Event

o

Default

as

defincd herein) has occurrcd

and is

continuing,

the

Company may clect in its absolute discretion,

from

time to time, to satisfy its obligation

to

pay Yield for any Payment Period,

in

whole or in part, by issuing and delivering

Sharcs having an aggregate Fair Market Value equal

to

the portion

o

th

e Yield

to

which

the election relates. The shareholder(s) by signing these Terms and Conditions undertakc

to vote in favour

o

the issuance o

new

Shares o the Ilolder(s) and

o

the increase

o the

share capi

tal

o t

he

Company in any extraordinary general meeting o the sharebolder(s)

o the Company that could be held in 1e future in order to reflect the payment o the

Yield as from time to t me detennincd by the Board

o

Managers in accordance with this

section 2.4, and sha

ll

cause any transferee or successor

to do

so, among othcrs, by not

transferring any Shares without the transferee baving signed and agrccd to tbesc Tenus

and Conditions, as weil as having delegatcd

to

the Board

o

Managers the powers

necessary hereundcr.

R

PTION

3.1

Series A CPECs may not be redeemed in part and the Company may not repurchase,

redeem or otherwise acquire for value

the

Series A CPECs except in accordancc wiili

these Terms and Conditions. Prior

to

the redemption

o

ilie Series A CPBCs, no Person

sball have any righi, power, privilege or ability

to

demand, sue for or otherwise make

clairns in respect of, 1e acceleration, redemption or calling o ali or any part

o

the Series

A CPECs.

3.2 Mandatory Redemption. On the 30th annjvcrsary

o

the Issue Date, the Company shall

redeem ali outstanding Series A CPECs

for

cither

x)

an amount

o

cash pcr Series A

CPEC equalto the Repurchase Priee (provided thal the Company would have sufficient

funds available

to

settle its liabilities undcr ali Senior Obligations

lhcn

outstanding and

the Company would not become Insolvent as a result o such cash payment) or (y) for the

number

o

Conversion Shares, adjusted as provided herein for any Adjustment Event, at

the sole discretion

o

the Company. The notice procedures applicable to a repurchase

o

Series A CPECs by the Company shall apply to redemption o Series A CPECs at

maturity.

3.3 Liquidation Rights. ln the event

o

any volunlary or involuntary liquidation, bankruptcy,

dissolution or winding up

o

the affairs

o

the Company (a Liquidation), each Series A

CPEC

shall be redeemed for either (x) an amount o cash per CPEC equal

to

the

Repurchase Priee or

y)

for the number of Conversion Shares, adjusted as provided herein

for

any Adjustment Event, at the sole

di

scretion of the Company.

Such

payment shall be

made bcforc any paytuent

by

the

Company

in

respect

o

the Subordinatcd Sccurities but

after paytncnt o ali otbcr obligations o U e Company

and

only to the extent the

Company would not become Insolvent as a rosult

o the

Series A CPEC redemption.

3.4 The Company shall not commence a voluntary Liquidation without the consent

o

Holders holding

in

aggregate more ilian 50 o the issued and outstanding Series A

CPECs unless the amount

du

e on each Series A CPEC in respect

o

thal voluntary

Liquidation can be fully providcd for.

5


54/66

3.5

In

accordance with the articles o association o the Company, the consent o a majotity

o the shareholders represcnting 75 o the Company's share capital

is

necessary

to

decide a voluntary Liquidation.

3.6

Any

Liquidation payment due

in

respect

o

any Seties A CPEC shall be made

to

the

Holders

o

Series A CPECs wh ose names appear

on tbe

CPEC Register on the date of the

Liquidation (

for

the avoidancc

o

doubt sucb tenn shall not include bankruptcy or

assimilatcd insolvency events and procedures).

ONVERSION

4 1

Conversion Right. At any time beginning on the 3'

anniversary

o

the Issue Date

(including the date o maturity or the date

o

Liquidation) or, i earlier, upoo the

occutTence o an

Extraordina

ry

Event, (i) the Company shall be entitlcd to elect

to

convcrt Series A CPECs,

in

whole or part, into Shares by requiring any Bolder

o

exchange each such Series A CPEC for the number

o

Conversion Shares, as adjustcd

as

a resull

o

an Adjustment Event, and (ii) any Holdcr shall be entitled to elecl to couvert

Series A CPECs, in whole or part, into Shares

by

requiring the Company to exchange

each such Series A CPEC for the number o Conversion Sbarcs, as adjusted as a result o

an Adjustment Event. If an election by the Company is made to convert

fewer

than ali

o

the Series A CPECs, the conversion shaH be pr r t as to

ali

Holders o the Series

abbott laboratories 2009 tax ruling

Documents