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7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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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7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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)
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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)
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7/25/2019 Abbott Laboratories 2009 Tax Ruling
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Enclosure 1
Advance Tax Agreement dated May 13, 2009
4)
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7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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:
~ ~ ~
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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)
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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)
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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..
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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)
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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)
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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)
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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)
7/25/2019 Abbott Laboratories 2009 Tax Ruling
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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)
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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
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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.
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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.
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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
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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
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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.
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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
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Enclosure 5
Articles
of
association
of
Abbott Holding Subsidiary
Gibraltar
) Limited
Luxembourg S.C.S
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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)
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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 ;
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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.
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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.
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Enclosure 8
Master citity Agreement
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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..
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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).
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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).
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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
Abbott International Luxembourg S.
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.
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Abbott International Luxembourg S.
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.
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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.
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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
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- 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.
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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
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Enclosure 3
Dra t version
of
the CPEC agree
m nt
6)
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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.
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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.
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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.
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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).
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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.
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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