x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(Exact name of registrant as specified in its charter)
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Delaware
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32-0375147
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. employer identification number)
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Large Accelerated Filer
x
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Accelerated Filer
¨
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Non-Accelerated Filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Emerging growth company
¨
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PART I.
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 1.
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Item 2.
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Item 6.
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2017 Form 10-Q
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1
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Three months ended
March 31, |
||||||
(in millions, except per share data)
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2017
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2016
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||||
Net revenues
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$
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6,538
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$
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5,958
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Cost of products sold
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1,616
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1,369
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Selling, general and administrative
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1,368
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1,355
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Research and development
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1,135
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946
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Acquired in-process research and development
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—
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10
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Total operating costs and expenses
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4,119
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3,680
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Operating earnings
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2,419
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2,278
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Interest expense, net
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247
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200
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Net foreign exchange loss
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13
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302
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Other expense, net
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73
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—
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Earnings before income tax expense
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2,086
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1,776
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Income tax expense
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375
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422
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Net earnings
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$
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1,711
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$
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1,354
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Per share data
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Basic earnings per share
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$
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1.07
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$
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0.83
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Diluted earnings per share
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$
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1.06
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$
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0.83
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Cash dividends declared per common share
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$
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0.64
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$
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0.57
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Weighted-average basic shares outstanding
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1,597
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1,616
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Weighted-average diluted shares outstanding
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1,603
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1,625
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2017 Form 10-Q
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2
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Three months ended
March 31, |
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(in millions)
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2017
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2016
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Net earnings
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$
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1,711
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$
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1,354
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Foreign currency translation adjustments, net of tax expense (benefit) of $— for the three months ended March 31, 2017 and $41 for the three months ended March 31, 2016
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170
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188
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Net investment hedging activities, net of tax expense (benefit) of $(36) for the three months ended March 31, 2017 and $— for the three months ended March 31, 2016
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(64
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)
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—
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Pension and post-employment benefits, net of tax expense (benefit) of $8 for the three months ended March 31, 2017 and $8 for the three months ended March 31, 2016
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11
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15
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Marketable security activities, net of tax expense (benefit) of $(1) for the three months ended March 31, 2017 and $(7) for the three months ended March 31, 2016
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(8
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)
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(25
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)
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Cash flow hedging activities, net of tax expense (benefit) of $(13) for the three months ended March 31, 2017 and $(7) for the three months ended March 31, 2016
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(65
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)
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(40
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)
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Other comprehensive income
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44
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138
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Comprehensive income
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$
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1,755
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$
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1,492
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2017 Form 10-Q
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3
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(in millions, except share data)
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March 31,
2017 |
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December 31,
2016 |
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(unaudited)
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Assets
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Current assets
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Cash and equivalents
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$
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4,740
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$
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5,100
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Short-term investments
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1,508
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1,323
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Accounts receivable, net
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4,677
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4,758
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Inventories
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1,427
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1,444
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Prepaid expenses and other
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3,195
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3,562
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Total current assets
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15,547
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16,187
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Investments
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2,123
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1,783
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Property and equipment, net
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2,612
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2,604
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Intangible assets, net
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28,629
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28,897
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Goodwill
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15,490
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15,416
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Other assets
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1,263
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1,212
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Total assets
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$
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65,664
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$
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66,099
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Liabilities and Equity
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Current liabilities
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Short-term borrowings
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$
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400
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$
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377
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Current portion of long-term debt and lease obligations
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25
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25
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Accounts payable and accrued liabilities
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8,419
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9,379
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Total current liabilities
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8,844
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9,781
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Long-term debt and lease obligations
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36,526
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36,440
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Deferred income taxes
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6,797
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6,890
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Other long-term liabilities
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8,499
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8,352
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Commitments and contingencies
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Stockholders’ equity
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Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,762,827,782 shares issued as of March 31, 2017 and 1,754,900,486 as of December 31, 2016
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18
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18
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Common stock held in treasury, at cost, 171,461,810 shares as of March 31, 2017 and 162,387,762 as of December 31, 2016
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(11,430
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)
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(10,852
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)
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Additional paid-in capital
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13,889
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13,678
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Retained earnings
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5,063
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4,378
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Accumulated other comprehensive loss
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(2,542
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)
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(2,586
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)
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Total stockholders’ equity
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4,998
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4,636
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Total liabilities and equity
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$
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65,664
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$
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66,099
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2017 Form 10-Q
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4
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Three months ended
March 31, |
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(in millions) (brackets denote cash outflows)
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2017
|
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2016
|
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Cash flows from operating activities
|
|
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|
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Net earnings
|
$
|
1,711
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$
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1,354
|
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Adjustments to reconcile net earnings to net cash from operating activities:
|
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Depreciation
|
103
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103
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Amortization of intangible assets
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271
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165
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Change in fair value of contingent consideration
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85
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—
|
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Stock-based compensation
|
141
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|
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138
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|
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Upfront costs and milestones related to collaborations
|
28
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|
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25
|
|
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Devaluation loss related to Venezuela
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—
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298
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Other, net
|
45
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62
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Changes in operating assets and liabilities, net of acquisitions:
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|
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Accounts receivable
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(34
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)
|
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81
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Inventories
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71
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|
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19
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Prepaid expenses and other assets
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(53
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)
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(159
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)
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Accounts payable and other liabilities
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(266
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)
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42
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Cash flows from operating activities
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2,102
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2,128
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|
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Cash flows from investing activities
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|
|
|
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Acquisitions and investments
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(63
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)
|
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(28
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)
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Acquisitions of property and equipment
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(95
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)
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(121
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)
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Purchases of investment securities
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(970
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)
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(1,342
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)
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Sales and maturities of investment securities
|
444
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|
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33
|
|
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Cash flows from investing activities
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(684
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)
|
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(1,458
|
)
|
||
|
|
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|
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Cash flows from financing activities
|
|
|
|
||||
Net change in short-term borrowings
|
23
|
|
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(6
|
)
|
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Repayments of long-term debt and lease obligations
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(6
|
)
|
|
—
|
|
||
Dividends paid
|
(1,027
|
)
|
|
(924
|
)
|
||
Purchases of treasury stock
|
(895
|
)
|
|
(409
|
)
|
||
Proceeds from the exercise of stock options
|
85
|
|
|
77
|
|
||
Other, net
|
26
|
|
|
43
|
|
||
Cash flows from financing activities
|
(1,794
|
)
|
|
(1,219
|
)
|
||
Effect of exchange rate changes on cash and equivalents
|
16
|
|
|
(294
|
)
|
||
Net decrease in cash and equivalents
|
(360
|
)
|
|
(843
|
)
|
||
Cash and equivalents, beginning of period
|
5,100
|
|
|
8,399
|
|
||
|
|
|
|
||||
Cash and equivalents, end of period
|
$
|
4,740
|
|
|
$
|
7,556
|
|
2017 Form 10-Q
|
|
5
|
|
2017 Form 10-Q
|
|
6
|
|
|
|
Three months ended
March 31, |
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Interest expense
|
|
$
|
273
|
|
|
$
|
215
|
|
Interest income
|
|
(26
|
)
|
|
(15
|
)
|
||
Interest expense, net
|
|
$
|
247
|
|
|
$
|
200
|
|
(in millions)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Finished goods
|
$
|
273
|
|
|
$
|
223
|
|
Work-in-process
|
1,024
|
|
|
1,080
|
|
||
Raw materials
|
130
|
|
|
141
|
|
||
Inventories
|
$
|
1,427
|
|
|
$
|
1,444
|
|
2017 Form 10-Q
|
|
7
|
(in millions)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Property and equipment, gross
|
$
|
7,596
|
|
|
$
|
7,526
|
|
Accumulated depreciation
|
(4,984
|
)
|
|
(4,922
|
)
|
||
Property and equipment, net
|
$
|
2,612
|
|
|
$
|
2,604
|
|
|
|
|
Three months ended
March 31, |
||||||
(in millions, except per share information)
|
|
2017
|
|
2016
|
||||
Basic EPS
|
|
|
|
|
||||
Net earnings
|
|
$
|
1,711
|
|
|
$
|
1,354
|
|
Earnings allocated to participating securities
|
|
9
|
|
|
7
|
|
||
Earnings available to common shareholders
|
|
$
|
1,702
|
|
|
$
|
1,347
|
|
Weighted-average basic shares outstanding
|
|
1,597
|
|
|
1,616
|
|
||
Basic earnings per share
|
|
$
|
1.07
|
|
|
$
|
0.83
|
|
|
|
|
|
|
||||
Diluted EPS
|
|
|
|
|
|
|
||
Net earnings
|
|
$
|
1,711
|
|
|
$
|
1,354
|
|
Earnings allocated to participating securities
|
|
9
|
|
|
7
|
|
||
Earnings available to common shareholders
|
|
$
|
1,702
|
|
|
$
|
1,347
|
|
Weighted-average shares of common stock outstanding
|
|
1,597
|
|
|
1,616
|
|
||
Effect of dilutive securities
|
|
6
|
|
|
9
|
|
||
Weighted-average diluted shares outstanding
|
|
1,603
|
|
|
1,625
|
|
||
Diluted earnings per share
|
|
$
|
1.06
|
|
|
$
|
0.83
|
|
|
2017 Form 10-Q
|
|
8
|
2017 Form 10-Q
|
|
9
|
|
|
Three months ended
March 31, |
||
(in millions, except per share information)
|
|
2016
|
||
Net revenues
|
|
$
|
5,959
|
|
Net earnings
|
|
1,287
|
|
|
Basic earnings per share
|
|
$
|
0.77
|
|
Diluted earnings per share
|
|
$
|
0.76
|
|
2017 Form 10-Q
|
|
10
|
|
2017 Form 10-Q
|
|
11
|
|
|
Three months ended
March 31, |
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
United States - Janssen's share of profits (included in cost of products sold)
|
|
$
|
212
|
|
|
$
|
153
|
|
International - AbbVie's share of profits (included in net revenues)
|
|
94
|
|
|
56
|
|
||
Global - AbbVie's share of other costs (included in respective line items)
|
|
59
|
|
|
63
|
|
|
(in millions)
|
|
||
Balance as of December 31, 2016
|
$
|
15,416
|
|
Foreign currency translation adjustments
|
74
|
|
|
Balance as of March 31, 2017
|
$
|
15,490
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(in millions)
|
Gross
carrying amount |
|
Accumulated
amortization |
|
Net
carrying amount |
|
Gross
carrying amount |
|
Accumulated
amortization |
|
Net
carrying amount |
||||||||||||
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed product rights
|
$
|
16,471
|
|
|
$
|
(4,451
|
)
|
|
$
|
12,020
|
|
|
$
|
16,464
|
|
|
$
|
(4,256
|
)
|
|
$
|
12,208
|
|
License agreements
|
7,809
|
|
|
(1,190
|
)
|
|
6,619
|
|
|
7,809
|
|
|
(1,110
|
)
|
|
6,699
|
|
||||||
Total definite-lived intangible assets
|
24,280
|
|
|
(5,641
|
)
|
|
18,639
|
|
|
24,273
|
|
|
(5,366
|
)
|
|
18,907
|
|
||||||
Indefinite-lived research and development
|
9,990
|
|
|
—
|
|
|
9,990
|
|
|
9,990
|
|
|
—
|
|
|
9,990
|
|
||||||
Total intangible assets, net
|
$
|
34,270
|
|
|
$
|
(5,641
|
)
|
|
$
|
28,629
|
|
|
$
|
34,263
|
|
|
$
|
(5,366
|
)
|
|
$
|
28,897
|
|
2017 Form 10-Q
|
|
12
|
|
|
2017 Form 10-Q
|
|
13
|
|
Fair value –
Derivatives in asset position |
|
Fair value –
Derivatives in liability position |
||||||||||||
(in millions)
|
Balance sheet caption
|
March 31,
2017 |
December 31, 2016
|
|
Balance sheet caption
|
March 31,
2017 |
December 31, 2016
|
||||||||
Foreign currency forward exchange contracts —
|
|
|
|
|
|
|
|
||||||||
Designated as cash flow hedges
|
Prepaid expenses and other
|
$
|
80
|
|
$
|
170
|
|
|
Accounts payable and accrued liabilities
|
$
|
18
|
|
$
|
5
|
|
Designated as cash flow hedges
|
Other assets
|
3
|
|
—
|
|
|
Other long-term liabilities
|
12
|
|
—
|
|
||||
Not designated as hedges
|
Prepaid expenses and other
|
12
|
|
55
|
|
|
Accounts payable and accrued liabilities
|
37
|
|
33
|
|
||||
Interest rate swaps designated as fair value hedges
|
Other assets
|
—
|
|
—
|
|
|
Other long-term liabilities
|
353
|
|
338
|
|
||||
Total derivatives
|
|
$
|
95
|
|
$
|
225
|
|
|
|
$
|
420
|
|
$
|
376
|
|
|
|
Three months ended
March 31, |
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Foreign currency forward exchange contracts
|
|
$
|
(61
|
)
|
|
$
|
(46
|
)
|
|
|
|
Three months ended
March 31, |
||||||
(in millions)
|
Statement of earnings caption
|
|
2017
|
|
2016
|
||||
Foreign currency forward exchange contracts —
|
|
|
|
|
|
||||
Designated as cash flow hedges
|
Cost of products sold
|
|
$
|
17
|
|
|
$
|
1
|
|
Not designated as hedges
|
Net foreign exchange loss
|
|
(46
|
)
|
|
(65
|
)
|
||
Interest rate swaps designated as fair value hedges
|
Interest expense, net
|
|
(15
|
)
|
|
254
|
|
||
Total
|
|
|
$
|
(44
|
)
|
|
$
|
190
|
|
2017 Form 10-Q
|
|
14
|
•
|
Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;
|
•
|
Level 2 – Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and
|
•
|
Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability.
|
|
|
|
Basis of fair value measurement
|
||||||||||||
(in millions)
|
Total
|
|
Quoted prices in active markets for identical
assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and equivalents
|
$
|
4,740
|
|
|
$
|
727
|
|
|
$
|
4,013
|
|
|
$
|
—
|
|
Time deposits
|
1,029
|
|
|
—
|
|
|
1,029
|
|
|
—
|
|
||||
Debt securities
|
2,490
|
|
|
—
|
|
|
2,490
|
|
|
—
|
|
||||
Equity securities
|
65
|
|
|
65
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
|
95
|
|
|
—
|
|
|
95
|
|
|
—
|
|
||||
Total assets
|
$
|
8,419
|
|
|
$
|
792
|
|
|
$
|
7,627
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate hedges
|
$
|
353
|
|
|
$
|
—
|
|
|
$
|
353
|
|
|
$
|
—
|
|
Foreign currency contracts
|
67
|
|
|
—
|
|
|
67
|
|
|
—
|
|
||||
Contingent consideration
|
4,298
|
|
|
—
|
|
|
—
|
|
|
4,298
|
|
||||
Total liabilities
|
$
|
4,718
|
|
|
$
|
—
|
|
|
$
|
420
|
|
|
$
|
4,298
|
|
2017 Form 10-Q
|
|
15
|
|
|
|
Basis of fair value measurement
|
||||||||||||
(in millions)
|
Total
|
|
Quoted prices in active markets for identical
assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and equivalents
|
$
|
5,100
|
|
|
$
|
1,191
|
|
|
$
|
3,909
|
|
|
$
|
—
|
|
Time deposits
|
1,014
|
|
|
—
|
|
|
1,014
|
|
|
—
|
|
||||
Debt securities
|
1,974
|
|
|
—
|
|
|
1,974
|
|
|
—
|
|
||||
Equity securities
|
76
|
|
|
76
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
|
225
|
|
|
—
|
|
|
225
|
|
|
—
|
|
||||
Total assets
|
$
|
8,389
|
|
|
$
|
1,267
|
|
|
$
|
7,122
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate hedges
|
$
|
338
|
|
|
$
|
—
|
|
|
$
|
338
|
|
|
$
|
—
|
|
Foreign currency contracts
|
38
|
|
|
—
|
|
|
38
|
|
|
—
|
|
||||
Contingent consideration
|
4,213
|
|
|
—
|
|
|
—
|
|
|
4,213
|
|
||||
Total liabilities
|
$
|
4,589
|
|
|
$
|
—
|
|
|
$
|
376
|
|
|
$
|
4,213
|
|
2017 Form 10-Q
|
|
16
|
|
|
|
|
Basis of fair value measurement
|
||||||||||||||
(in millions)
|
Book Value
|
Approximate fair value
|
|
Quoted prices in
active markets for identical assets
(Level 1) |
|
Significant
other
observable
inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
||||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
$
|
47
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
42
|
|
Total assets
|
$
|
47
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
42
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
400
|
|
$
|
400
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
—
|
|
Current portion of long-term debt and lease obligations
|
25
|
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|||||
Long-term debt and lease obligations, excluding fair value hedges
|
36,879
|
|
36,976
|
|
|
34,896
|
|
|
2,080
|
|
|
—
|
|
|||||
Total liabilities
|
$
|
37,304
|
|
$
|
37,401
|
|
|
$
|
34,896
|
|
|
$
|
2,505
|
|
|
$
|
—
|
|
|
|
|
|
Basis of fair value measurement
|
||||||||||||||
(in millions)
|
Book Value
|
Approximate fair value
|
|
Quoted prices in
active markets for identical assets
(Level 1) |
|
Significant
other
observable
inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
||||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
$
|
42
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
37
|
|
Total assets
|
$
|
42
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
37
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
377
|
|
$
|
377
|
|
|
$
|
—
|
|
|
$
|
377
|
|
|
$
|
—
|
|
Current portion of long-term debt and lease obligations
|
25
|
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|||||
Long-term debt and lease obligations, excluding fair value hedges
|
36,778
|
|
36,664
|
|
|
34,589
|
|
|
2,075
|
|
|
—
|
|
|||||
Total liabilities
|
$
|
37,180
|
|
$
|
37,066
|
|
|
$
|
34,589
|
|
|
$
|
2,477
|
|
|
$
|
—
|
|
2017 Form 10-Q
|
|
17
|
|
Amortized Cost
|
|
Gross unrealized
|
|
Fair Value
|
||||||||||
(in millions)
|
|
Gains
|
|
Losses
|
|
||||||||||
Asset backed securities
|
$
|
937
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
934
|
|
Corporate debt securities
|
1,435
|
|
|
2
|
|
|
(2
|
)
|
|
1,435
|
|
||||
Other debt securities
|
122
|
|
|
—
|
|
|
(1
|
)
|
|
121
|
|
||||
Equity securities
|
18
|
|
|
48
|
|
|
(1
|
)
|
|
65
|
|
||||
Total
|
$
|
2,512
|
|
|
$
|
51
|
|
|
$
|
(8
|
)
|
|
$
|
2,555
|
|
|
Amortized Cost
|
|
Gross unrealized
|
|
Fair Value
|
||||||||||
(in millions)
|
|
Gains
|
|
Losses
|
|
||||||||||
Asset backed securities
|
$
|
891
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
888
|
|
Corporate debt securities
|
961
|
|
|
1
|
|
|
(2
|
)
|
|
960
|
|
||||
Other debt securities
|
127
|
|
|
—
|
|
|
(1
|
)
|
|
126
|
|
||||
Equity securities
|
18
|
|
|
60
|
|
|
(2
|
)
|
|
76
|
|
||||
Total
|
$
|
1,997
|
|
|
$
|
62
|
|
|
$
|
(9
|
)
|
|
$
|
2,050
|
|
2017 Form 10-Q
|
|
18
|
|
|
Defined
benefit plans |
|
Other post-
employment plans |
||||||||||||
|
Three months ended March 31,
|
|
Three months ended March 31,
|
||||||||||||
(in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
58
|
|
|
$
|
53
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Interest cost
|
50
|
|
|
51
|
|
|
6
|
|
|
6
|
|
||||
Expected return on plan assets
|
(95
|
)
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial losses and prior service costs
|
26
|
|
|
22
|
|
|
1
|
|
|
—
|
|
||||
Net periodic benefit cost
|
$
|
39
|
|
|
$
|
37
|
|
|
$
|
14
|
|
|
$
|
13
|
|
|
|
|
Three months ended
March 31, |
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Cost of products sold
|
|
$
|
3
|
|
|
$
|
3
|
|
Research and development
|
|
64
|
|
|
63
|
|
||
Selling, general and administrative
|
|
74
|
|
|
72
|
|
||
Pre-tax compensation expense
|
|
141
|
|
|
138
|
|
||
Tax benefit
|
|
47
|
|
|
48
|
|
||
After-tax compensation expense
|
|
$
|
94
|
|
|
$
|
90
|
|
2017 Form 10-Q
|
|
19
|
2017
|
|
2016
|
||||||||||||
Date Declared
|
|
Payment Date
|
|
Dividend Per Share
|
|
Date Declared
|
|
Payment Date
|
|
Dividend Per Share
|
||||
02/16/17
|
|
05/15/17
|
|
$
|
0.64
|
|
|
10/28/16
|
|
02/15/17
|
|
$
|
0.64
|
|
|
|
|
|
|
|
09/09/16
|
|
11/15/16
|
|
$
|
0.57
|
|
||
|
|
|
|
|
|
06/16/16
|
|
08/15/16
|
|
$
|
0.57
|
|
||
|
|
|
|
|
|
02/18/16
|
|
05/16/16
|
|
$
|
0.57
|
|
(in millions)
|
Foreign
currency translation adjustments |
|
Net investment hedging activities
|
|
Pension
and post-
employment benefits |
|
Marketable
security activities
|
|
Cash flow hedging
activities |
|
Total
|
||||||||||||
Balance as of December 31, 2016
|
$
|
(1,435
|
)
|
|
$
|
140
|
|
|
$
|
(1,513
|
)
|
|
$
|
46
|
|
|
$
|
176
|
|
|
$
|
(2,586
|
)
|
Other comprehensive income (loss) before reclassifications
|
170
|
|
|
(64
|
)
|
|
(8
|
)
|
|
2
|
|
|
(49
|
)
|
|
51
|
|
||||||
Net losses (gains) reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
19
|
|
|
(10
|
)
|
|
(16
|
)
|
|
(7
|
)
|
||||||
Net current-period other comprehensive income (loss)
|
170
|
|
|
(64
|
)
|
|
11
|
|
|
(8
|
)
|
|
(65
|
)
|
|
44
|
|
||||||
Balance as of March 31, 2017
|
$
|
(1,265
|
)
|
|
$
|
76
|
|
|
$
|
(1,502
|
)
|
|
$
|
38
|
|
|
$
|
111
|
|
|
$
|
(2,542
|
)
|
2017 Form 10-Q
|
|
20
|
(in millions)
|
Foreign
currency translation adjustments |
|
Pension
and post-
employment benefits |
|
Marketable
security activities
|
|
Cash flow hedging
activities |
|
Total
|
||||||||||
Balance as of December 31, 2015
|
$
|
(1,270
|
)
|
|
$
|
(1,378
|
)
|
|
$
|
47
|
|
|
$
|
40
|
|
|
$
|
(2,561
|
)
|
Other comprehensive income (loss) before reclassifications
|
188
|
|
|
1
|
|
|
(24
|
)
|
|
(39
|
)
|
|
126
|
|
|||||
Net losses (gains) reclassified from accumulated other comprehensive loss
|
—
|
|
|
14
|
|
|
(1
|
)
|
|
(1
|
)
|
|
12
|
|
|||||
Net current-period other comprehensive income (loss)
|
188
|
|
|
15
|
|
|
(25
|
)
|
|
(40
|
)
|
|
138
|
|
|||||
Balance as of March 31, 2016
|
$
|
(1,082
|
)
|
|
$
|
(1,363
|
)
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
(2,423
|
)
|
|
|
Three months ended
March 31, |
||||||
(in millions) (brackets denote gains)
|
|
2017
|
|
2016
|
||||
Pension and post-employment benefits
|
|
|
|
|
||||
Amortization of actuarial losses and other
(a)
|
|
$
|
27
|
|
|
$
|
22
|
|
Tax benefit
|
|
(8
|
)
|
|
(8
|
)
|
||
Total reclassifications, net of tax
|
|
$
|
19
|
|
|
$
|
14
|
|
Cash flow hedging activities
|
|
|
|
|
||||
Losses (gains) on designated cash flow hedges
(b)
|
|
$
|
(17
|
)
|
|
$
|
(1
|
)
|
Tax expense
|
|
1
|
|
|
—
|
|
||
Total reclassifications, net of tax
|
|
$
|
(16
|
)
|
|
$
|
(1
|
)
|
|
2017 Form 10-Q
|
|
21
|
|
2017 Form 10-Q
|
|
22
|
2017 Form 10-Q
|
|
23
|
|
|
|
Three months ended
March 31, |
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
HUMIRA
|
|
$
|
4,118
|
|
|
$
|
3,577
|
|
IMBRUVICA
|
|
551
|
|
|
381
|
|
||
VIEKIRA
|
|
263
|
|
|
414
|
|
||
Lupron
|
|
194
|
|
|
190
|
|
||
Creon
|
|
185
|
|
|
150
|
|
||
Synagis
|
|
300
|
|
|
319
|
|
||
Synthroid
|
|
192
|
|
|
182
|
|
||
AndroGel
|
|
136
|
|
|
156
|
|
||
Kaletra
|
|
115
|
|
|
133
|
|
||
Sevoflurane
|
|
107
|
|
|
111
|
|
||
Duodopa
|
|
80
|
|
|
68
|
|
||
All other
|
|
297
|
|
|
277
|
|
||
Total net revenues
|
|
$
|
6,538
|
|
|
$
|
5,958
|
|
2017 Form 10-Q
|
|
24
|
|
2017 Form 10-Q
|
|
25
|
•
|
In January 2017, AbbVie announced that the FDA approved IMBRUVICA for the treatment of patients with relapsed/refractory marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prior anti-CD20-based therapy. This indication is approved under accelerated approval based on overall response rate (ORR) and continued approval may be contingent upon verification and description of clinical benefit in a confirmatory trial. MZL is a slow-growing form of non-Hodgkin's lymphoma. This marks the seventh FDA approval and fifth disease indication for IMBRUVICA since the medication's initial approval in 2013.
|
•
|
In April 2017, AbbVie announced that the FDA accepted a supplemental New Drug Application (sNDA) for IMBRUVICA in chronic graft-versus-host-disease (cGVHD) after failure of one or more lines of systemic therapy. cGVHD is a severe, potentially life-threatening consequence of stem cell or bone marrow transplant. If approved by the FDA, IMBRUVICA will be the first therapy specifically approved to treat this condition.
|
•
|
AbbVie recently initiated a Phase 3 clinical trial to study the safety and efficacy of venetoclax in combination with azacitidine in untreated (treatment-naïve) elderly subjects with acute myeloid leukemia who are ineligible for standard induction therapy (high-dose chemotherapy).
|
•
|
AbbVie recently initiated a Phase 3 clinical trial to evaluate the efficacy of Rova-T as maintenance therapy following first-line platinum based chemotherapy in participants with extensive stage small cell lung cancer.
|
•
|
In April 2017, AbbVie announced that two Phase 3 studies evaluating veliparib, an investigational, oral poly (adenosine diphosphate-ribose) polymerase (PARP) inhibitor in combination with chemotherapy did not meet their primary endpoints. The studies evaluated veliparib in combination with carboplatin and paclitaxel in patients with squamous non-small cell lung cancer (NSCLC) and triple negative breast cancer (TNBC). Ongoing Phase 3 studies include non-squamous non-small cell lung cancer, BRCA1/2 breast cancer and ovarian cancer.
|
2017 Form 10-Q
|
|
26
|
•
|
In January 2017, AbbVie announced that its marketing authorization application (MAA) has been validated and is now under accelerated assessment by the European Medicines Agency (EMA) for the company's investigational, pan-genotypic regimen of glecaprevir/pibrentasvir (G/P) for the treatment of all major chronic HCV genotypes. G/P is also intended to address the needs of patients with specific treatment challenges, including those with severe chronic kidney disease (CKD) and those not cured with previous direct-acting antiviral (DAA) treatment. In February 2017, AbbVie announced that the FDA accepted its New Drug Application (NDA) and granted priority review for the company's investigational, pan-genotypic regimen of G/P for the treatment of all major chronic HCV genotypes.
|
•
|
In February 2017, AbbVie announced that the Committee for Medicinal Products for Human Use (CHMP) granted a positive opinion for a shorter, eight-week treatment of VIEKIRAX (ombitasvir/paritaprevir/ritonavir tablets) + EXVIERA (dasabuvir tablets) as an option for previously untreated adult patients with genotype 1b chronic HCV and minimal to moderate fibrosis.
|
|
|
Three months ended
March 31, |
|
Percent change
|
||||||||||
|
|
|
At actual
currency rates |
|
At constant
currency rates |
|||||||||
(dollars in millions)
|
|
2017
|
|
2016
|
|
|||||||||
United States
|
|
$
|
4,052
|
|
|
$
|
3,494
|
|
|
15.9
|
%
|
|
15.9
|
%
|
International
|
|
2,486
|
|
|
2,464
|
|
|
0.9
|
%
|
|
1.8
|
%
|
||
Net revenues
|
|
$
|
6,538
|
|
|
$
|
5,958
|
|
|
9.7
|
%
|
|
10.1
|
%
|
2017 Form 10-Q
|
|
27
|
|
|
Three months ended
March 31, |
|
Percent change
|
||||||||||
|
|
|
At actual
currency rates |
|
At constant
currency rates |
|||||||||
(dollars in millions)
|
|
2017
|
|
2016
|
|
|||||||||
HUMIRA
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
2,696
|
|
|
$
|
2,195
|
|
|
22.8
|
%
|
|
22.8
|
%
|
International
|
|
1,422
|
|
|
1,382
|
|
|
2.9
|
%
|
|
4.6
|
%
|
||
Total
|
|
$
|
4,118
|
|
|
$
|
3,577
|
|
|
15.1
|
%
|
|
15.8
|
%
|
IMBRUVICA
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
457
|
|
|
$
|
325
|
|
|
40.7
|
%
|
|
40.7
|
%
|
Collaboration revenues
|
|
94
|
|
|
56
|
|
|
68.0
|
%
|
|
68.0
|
%
|
||
Total
|
|
$
|
551
|
|
|
$
|
381
|
|
|
44.7
|
%
|
|
44.7
|
%
|
VIEKIRA
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
38
|
|
|
$
|
125
|
|
|
(69.6
|
)%
|
|
(69.6
|
)%
|
International
|
|
225
|
|
|
289
|
|
|
(21.9
|
)%
|
|
(20.8
|
)%
|
||
Total
|
|
$
|
263
|
|
|
$
|
414
|
|
|
(36.3
|
)%
|
|
(35.5
|
)%
|
Lupron
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
155
|
|
|
$
|
151
|
|
|
1.9
|
%
|
|
1.9
|
%
|
International
|
|
39
|
|
|
39
|
|
|
1.2
|
%
|
|
(0.2
|
)%
|
||
Total
|
|
$
|
194
|
|
|
$
|
190
|
|
|
1.7
|
%
|
|
1.4
|
%
|
Creon
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
185
|
|
|
$
|
150
|
|
|
22.8
|
%
|
|
22.8
|
%
|
Synagis
|
|
|
|
|
|
|
|
|
||||||
International
|
|
$
|
300
|
|
|
$
|
319
|
|
|
(5.9
|
)%
|
|
(8.2
|
)%
|
Synthroid
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
192
|
|
|
$
|
182
|
|
|
5.7
|
%
|
|
5.7
|
%
|
AndroGel
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
136
|
|
|
$
|
156
|
|
|
(12.8
|
)%
|
|
(12.8
|
)%
|
Kaletra
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
19
|
|
|
$
|
33
|
|
|
(41.8
|
)%
|
|
(41.8
|
)%
|
International
|
|
96
|
|
|
100
|
|
|
(4.4
|
)%
|
|
(6.4
|
)%
|
||
Total
|
|
$
|
115
|
|
|
$
|
133
|
|
|
(13.6
|
)%
|
|
(15.1
|
)%
|
Sevoflurane
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
18
|
|
|
$
|
17
|
|
|
0.7
|
%
|
|
0.7
|
%
|
International
|
|
89
|
|
|
94
|
|
|
(4.9
|
)%
|
|
(3.0
|
)%
|
||
Total
|
|
$
|
107
|
|
|
$
|
111
|
|
|
(4.0
|
)%
|
|
(2.4
|
)%
|
Duodopa
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
14
|
|
|
$
|
7
|
|
|
84.6
|
%
|
|
84.6
|
%
|
International
|
|
66
|
|
|
61
|
|
|
8.9
|
%
|
|
12.0
|
%
|
||
Total
|
|
$
|
80
|
|
|
$
|
68
|
|
|
17.0
|
%
|
|
19.8
|
%
|
All other
|
|
$
|
297
|
|
|
$
|
277
|
|
|
7.7
|
%
|
|
8.5
|
%
|
Total net revenues
|
|
$
|
6,538
|
|
|
$
|
5,958
|
|
|
9.7
|
%
|
|
10.1
|
%
|
2017 Form 10-Q
|
|
28
|
|
|
Three months ended
March 31, |
|||||||||
(dollars in millions)
|
|
2017
|
|
2016
|
|
% change
|
|||||
Gross margin
|
|
$
|
4,922
|
|
|
$
|
4,589
|
|
|
7
|
%
|
as a % of net revenues
|
|
75
|
%
|
|
77
|
%
|
|
|
|
|
Three months ended
March 31, |
|||||||||
(dollars in millions)
|
|
2017
|
|
2016
|
|
% change
|
|||||
Selling, general and administrative
|
|
$
|
1,368
|
|
|
$
|
1,355
|
|
|
1
|
%
|
as a % of net revenues
|
|
21
|
%
|
|
23
|
%
|
|
|
2017 Form 10-Q
|
|
29
|
|
|
Three months ended
March 31, |
|||||||||
(dollars in millions)
|
|
2017
|
|
2016
|
|
% change
|
|||||
Research and development
|
|
$
|
1,135
|
|
|
$
|
946
|
|
|
20
|
%
|
as a % of net revenues
|
|
17
|
%
|
|
16
|
%
|
|
|
|||
Acquired in-process research and development
|
|
$
|
—
|
|
|
$
|
10
|
|
|
(100
|
)%
|
|
|
Three months ended
March 31, |
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Interest expense
|
|
$
|
273
|
|
|
$
|
215
|
|
Interest income
|
|
(26
|
)
|
|
(15
|
)
|
||
Interest expense, net
|
|
$
|
247
|
|
|
$
|
200
|
|
|
|
|
|
|
||||
Net foreign exchange loss
|
|
$
|
13
|
|
|
$
|
302
|
|
Other expense, net
|
|
73
|
|
|
—
|
|
2017 Form 10-Q
|
|
30
|
|
Three months ended
March 31, |
||||||
(in millions)
|
2017
|
|
2016
|
||||
Cash flows provided by/(used in):
|
|
|
|
||||
Operating activities
|
$
|
2,102
|
|
|
$
|
2,128
|
|
Investing activities
|
(684
|
)
|
|
(1,458
|
)
|
||
Financing activities
|
(1,794
|
)
|
|
(1,219
|
)
|
2017 Form 10-Q
|
|
31
|
2017 Form 10-Q
|
|
32
|
|
|
2017 Form 10-Q
|
|
33
|
|
|
Period
|
(a) Total
Number of Shares
(or Units)
Purchased |
|
(b) Average
Price Paid per Share (or Unit) |
|
(c) Total Number
of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
|
(d) Maximum
Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
|
||
January 1, 2017 – January 31, 2017
|
68,472
|
|
(1)
|
$43.96
|
(1)
|
—
|
|
|
$36,288,894
|
|
February 1, 2017 – February 28, 2017
|
53,260
|
|
(1)
|
$42.30
|
(1)
|
—
|
|
|
$5,036,288,894
|
(2)
|
March 1, 2017 – March 31, 2017
|
7,798,075
|
|
(1)
|
$64.17
|
(1)
|
7,789,297
|
|
|
$4,536,288,945
|
|
Total
|
7,919,807
|
|
(1)
|
$63.85
|
(1)
|
7,789,297
|
|
|
$4,536,288,945
|
(2)
|
1.
|
In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares included the shares deemed surrendered to AbbVie to pay the exercise price in connection with the exercise of employee stock options – 68,472 in January; 53,260 in February; and 8,778 in March, with average exercise prices of $43.96 in January; $42.30 in February; and $46.11 in March.
|
2.
|
On February 16, 2017, AbbVie's board of directors authorized a $5.0 billion increase to AbbVie's existing stock repurchase program. The stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's direction depending on the company's cash flows, net debt level and market conditions. The program has no time limit and can be discontinued at any time.
|
|
2017 Form 10-Q
|
|
34
|
|
|
ABBVIE INC.
|
|
|
|
|
|
|
|
By:
|
/s/ William J. Chase
|
|
|
William J. Chase
|
|
|
Executive Vice President,
|
|
|
Chief Financial Officer
|
2017 Form 10-Q
|
|
35
|
Exhibit No.
|
|
Exhibit Description
|
|
|
|
10.1
|
|
Form of AbbVie Inc. Non-Employee Director Restricted Stock Unit Agreement.*
|
|
|
|
10.2
|
|
Form of AbbVie Inc. Non-Qualified Stock Option Agreement.*
|
|
|
|
10.3
|
|
Form of AbbVie Inc. Performance Share Award Agreement.*
|
|
|
|
10.4
|
|
Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement.*
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following financial statements and notes from the AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed on May 5, 2017, formatted in XBRL: (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.
|
1.
|
Definitions
. To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.
|
(a)
|
Agreement
: This Restricted Stock Unit Agreement.
|
(b)
|
Data
: Certain personal information about the Director held by the Company and the Subsidiary for which the Director provides services (if applicable), including (but not limited to) the Director’s name, home address and telephone number, email address, date of birth, social security, passport or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Director’s favor, for the purpose of managing and administering the Program.
|
(c)
|
Director’s Representative
: The Director’s legal guardian or other legal representative.
|
(d)
|
Program
: The AbbVie 2013 Incentive Stock Program.
|
(e)
|
Termination
: A termination from service for any reason (including death or retirement) with the Board of Directors of the Company and all Subsidiaries.
|
2.
|
Delivery Date and Shareholder Rights
. The “Delivery Date” for Shares underlying the Units is the date on which the Shares are payable to the Director after the Restrictions on such Units lapse pursuant to Section 4 below. Prior to the Delivery Date:
|
(a)
|
the Director shall not be treated as a shareholder as to those Shares underlying the Units, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;
|
(b)
|
the Director shall not be permitted to vote the Shares underlying the Units; and
|
(c)
|
the Director’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.
|
3.
|
Restrictions
. The Units shall be fully vested as of the Grant Date; provided, however, that the Units will be subject to subsections (3)(a), (b), and (c) below (collectively, the “
Restrictions
”) until the earlier to occur of the events described in subsection 4(a) or (b).
|
(c)
|
The Director shall not be entitled to receive any Shares prior to completion of all actions deemed appropriate by the Company to comply with federal, state or other applicable securities laws and stock exchange requirements.
|
4.
|
Lapse of Restrictions
. The Restrictions shall lapse and have no further force or effect and Shares underlying the Units shall be settled upon the earlier of the following events (each, a “
Delivery Date
”):
|
(a)
|
Termination Event
. The date of the Director’s Termination; or
|
(b)
|
Change in Control
. The date of occurrence of a Change in Control; provided that the event constituting a Change in Control is a “change in control event” as such term is defined in Treasury Regulation § 1.409A-3(i)(5).
|
5.
|
Withholding Taxes
. The Director may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:
|
(a)
|
tendering a cash payment;
|
(b)
|
having the Company withhold Shares from the Shares to be delivered to satisfy the applicable withholding tax;
|
(c)
|
tendering Shares received in connection with the Units back to the Company; or
|
(d)
|
delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.
|
6.
|
No Right to Continued Service
.
This Agreement and the Director’s participation in the Program is not and shall not be interpreted to:
|
(a)
|
form a contractual or other relationship with the Company or its Subsidiaries;
|
(b)
|
confer upon the Director any right to continue in the service of the Company or any of its Subsidiaries; or
|
(c)
|
interfere with the ability of the Company or its Subsidiaries to terminate the Director’s service at any time.
|
7.
|
No Contract as of Right
. The Award does not create any contractual or other right to receive additional Awards or other Program Benefits. Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Director. Future Awards, if any, and their terms and conditions, will be at the sole discretion of the Committee.
|
8.
|
Data Privacy
.
|
(a)
|
Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Director’s personal Data is necessary for the Company’s administration of the Program and the Director’s participation in the Program. The Director’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program. As such (where required under applicable law), the Director:
|
(i)
|
voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and
|
(ii)
|
authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Director’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Director’s behalf to a broker or other third party with whom the Director may elect to deposit any Shares acquired pursuant to the Program.
|
(b)
|
Data may be provided by the Director or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Director’s participation in the Program. Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Director’s country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. The
|
(c)
|
The Company will transfer Data as necessary for the purpose of implementation, administration and management of the Director’s participation in the Program, and the Company and the Subsidiary that served by the Director (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program. These recipients may be located throughout the world.
|
(d)
|
The Director may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:
|
(i)
|
obtain confirmation as to the existence of the Data;
|
(ii)
|
verify the content, origin and accuracy of the Data;
|
(iii)
|
request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and
|
(iv)
|
oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Director’s participation in the Program.
|
9.
|
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Units, the Director’s participation in the Program or the Director’s acquisition or sale of the underlying Shares. The Director is hereby advised to consult with the Director’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.
|
10.
|
Entire Agreement
. This Agreement and the Program constitute the entire agreement between the Director and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award. Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.
|
11.
|
Succession
. This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Director, the Director’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.
|
12.
|
Compliance with Applicable Laws and Regulations
.
The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed. If the Director relocates to another country, the Company may establish special or alternate terms and conditions as necessary or advisable to comply with local laws, rules or regulations, to facilitate the operation and administration of the Award and the Program and/or to accommodate the Director’s relocation.
|
13.
|
Code Section 409A
. Payments made pursuant to this Agreement are intended to be exempt from or to otherwise comply with the provisions of Code Section 409A to the extent applicable. The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Director’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.
|
14.
|
Determinations
. Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Director, the Director’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.
|
15.
|
Severability
. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law. To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.
|
16.
|
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any state’s conflict of laws principles.
|
1.
|
Definitions
. To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.
|
(a)
|
Agreement:
This Non-Qualified Stock Option Agreement.
|
(b)
|
Cause
: Unless otherwise defined in the Employee’s Change in Control Agreement, cause shall mean the following, as determined by the Company in its sole discretion:
|
(i)
|
material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:
|
(A)
|
material breach by the Employee of the Code of Business Conduct;
|
(B)
|
material breach by the Employee of the Employee’s Employee Agreement;
|
(C)
|
commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;
|
(D)
|
wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or
|
(E)
|
failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or
|
(ii)
|
to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.
|
(c)
|
Change in Control Agreement:
An agreement regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee.
|
(d)
|
Code of Business Conduct:
The Company’s Code of Business Conduct, as amended from time to time.
|
(e)
|
Controlled Group:
AbbVie and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of Code Section 414 (b), (c), or (m)) with AbbVie.
|
(f)
|
Data:
Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, email address, date of birth, social security, passport or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.
|
(g)
|
Disability:
Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.
|
(h)
|
Employee Agreement:
The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.
|
(i)
|
Employee’s Representative:
The Employee’s
legal
guardian or other legal representative.
|
(j)
|
Good Reason:
Unless otherwise defined in the Employee’s Change in Control Agreement, good reason shall mean the occurrence of any of the following circumstances without the Employee’s express written consent:
|
(i)
|
a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was,
|
(ii)
|
the failure by the Company or a subsidiary to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date such compensation is due;
|
(iii)
|
a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;
|
(iv)
|
the failure by the Company or a subsidiary to award the Employee an annual bonus in any year which is at least equal to the annual bonus awarded to the Employee under the annual bonus plan of the Company or subsidiary for the year immediately preceding the year of the Change in Control;
|
(v)
|
the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;
|
(vi)
|
the failure by the Company or a subsidiary to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s or subsidiary’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability and vacation;
|
(vii)
|
the relocation of the Employee’s base office to a location that is more than 35 miles from the Employee’s base office immediately prior to the Change in Control; or
|
(viii)
|
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform this Agreement as contemplated in Section 5.
|
(k)
|
Option:
The Non-Qualified Stock Option granted pursuant to this Agreement.
|
(l)
|
Program:
The AbbVie 2013 Incentive Stock Program.
|
(m)
|
Retirement:
|
(i)
|
Except as provided under (ii) or (iii) below, Retirement means either of the following:
|
◦
|
age 55 with 10 years of service; or
|
◦
|
age 65 with at least three years of service.
|
(ii)
|
For Employees who (A) are not covered by (iii) below and (B) transferred to the Company directly from Abbott Laboratories either as a result of the Company’s spin-off from Abbott Laboratories or during the period from January 1, 2013 through June 30, 2015 with the consent of each company’s head of human resources and were hired into the Abbott Laboratories controlled group prior to January 1, 2004, Retirement means any of the following:
|
◦
|
age 50 with 10 years of service;
|
◦
|
age 65 with at least three years of service; or
|
◦
|
age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.
|
(iii)
|
For participants in the AbbVie Pension Plan for Former BASF and Former Solvay Employees, Retirement means either of the following:
|
◦
|
age 55 with 10 years of service; or
|
◦
|
age 65 with at least three years of service.
|
(iv)
|
For purposes of calculating service under this Section 1(m), except as otherwise provided by the Committee or its delegate: (A) service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group; and (B) for Employees who transferred to the Company directly from Abbott Laboratories during the period from January 1, 2013 through June 30, 2015 either as a result of the Company’s spin-off from Abbott Laboratories or with the consent of each company’s head of human resources, service includes service with Abbott Laboratories that is counted for benefit calculation purposes under the AbbVie Pension Plan, the AbbVie Pension Plan for Former BASF and Former Solvay Employees, or another Company-sponsored pension plan, as applicable.
|
(n)
|
Termination:
A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries. Any Termination shall be effective on the
|
2.
|
Term of Option
. Subject to Sections 5 and 7, the Employee may exercise all or a portion of the vested Option at any time prior to the 10
th
anniversary of the Grant Date (the “
Expiration Date
”); provided that the Option may be exercised with respect to whole Shares only. In no event shall the Option be exercisable on or after the Expiration Date. To the extent the Option is not exercised prior to the Expiration Date (or any earlier expiration of the Option pursuant to Sections 5 and 7), it shall be canceled and forfeited.
|
3.
|
Vesting
. The Option shall vest and become exercisable as follows:
|
(a)
|
on the first anniversary of the Grant Date, one-third of the total number of Shares may be purchased;
|
(b)
|
on the second anniversary of the Grant Date, two-thirds of the total number of Shares may be purchased; and
|
(c)
|
on the third anniversary of the Grant Date, the Option may be exercised in full.
|
4.
|
Exercise of the Option
. To the extent vested, the Option may be exercised in whole or in part as follows:
|
(a)
|
Who May Hold/Exercise the Option
.
|
(i)
|
General Rule - Exercise by Employee Only
. During the lifetime of the Employee, the Option may be exercised only by the Employee or the Employee’s Representative.
|
(ii)
|
Death Exception
. If the Employee dies, then the Option may be exercised only by the executor or administrator of the estate of the Employee or the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution. Such person(s) shall furnish the appropriate tax clearances, proof of the right of such person(s) to exercise the Option, and other pertinent data as the Company may deem necessary.
|
(iii)
|
Transferability
. Except as otherwise provided by the Committee or its delegate, the Option is not transferable other than by will or the laws of
|
(b)
|
Method of Exercise
. Subject to the requirements of local law, the Option may be exercised only by:
|
(i)
|
delivery to the designated employee or agent of the Company of a written, electronic, or telephonic notice of exercise, specifying the number of Shares with respect to which the Option is then being exercised, and payment of the full Exercise Price of the Shares being purchased in cash or with other Shares held by the Employee having a then Fair Market Value equal to the Exercise Price;
|
(ii)
|
delivery of a properly-executed exercise notice together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the Exercise Price;
|
(iii)
|
a combination of (i) and (ii) above; or
|
(iv)
|
any other manner approved by the Committee from time to time.
|
(c)
|
Payment of Taxes
. To the extent permitted under applicable law and by the Company, the Employee may satisfy any federal, state, local or other applicable taxes arising from any transaction related to the exercise of the Option pursuant to this Agreement by:
|
(i)
|
tendering a cash payment;
|
(ii)
|
having the Company withhold Shares from the Option exercised to satisfy the applicable withholding tax;
|
(iii)
|
tendering Shares received in connection with the Option back to the Company; or
|
(iv)
|
delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.
|
5.
|
Effect of Termination or Death on the Option
. By accepting this Option grant, the Employee acknowledges that, except as otherwise provided in this Agreement, in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Option under the Program, if any, will cease and will not be extended by any notice period mandated under local law (
e.g.
, active employment does not include a period of “garden leave” or similar period pursuant to local law) and that the Company shall have the exclusive discretion to determine Termination occurs.
|
(a)
|
Termination due to Retirement
. Subject to Section 7 below, in the event of Termination due to Retirement, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.
|
(b)
|
Termination due to Disability
. Subject to Section 7 below, in the event of Termination due to Disability, then (regardless of any subsequent death of the Employee) the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.
|
(c)
|
Termination due to Death of the Employee
. In the event of the death of the Employee during employment, the Option will continue to vest pursuant to Section 3, and the last date on which the Option may be exercised is the day prior to the Expiration Date.
|
(d)
|
Termination for Reason Other than under Subsection 5(a), (b) or (c) or Section 6
.
|
(i)
|
Options Granted Within Nine Months of Termination
. Any Option granted less than nine months prior to a Termination for any reason other than those set forth in subsections 5(a), (b) or (c) or Section 6 shall be cancelled and forfeited immediately upon such Termination.
|
(ii)
|
Options Granted Nine Months or More Prior to Termination
. Subject to Section 7 below, an Option granted nine months or more prior to a Termination for any reason other than those set forth in subsections 5(a), (b) or (c) or Section 6 will continue to vest and shall be exercisable to the extent permitted by Section 3 for a three-month period after the Employee’s effective date of Termination, but in no event shall such Option be exercised on or after the Expiration Date. In the event of the death of the Employee during the three-month period after the Employee’s effective date of Termination, the Option shall continue to vest and be exercisable for a three-month period measured from the date of death, but in no event shall such Option be exercised on or after the Expiration Date.
|
6.
|
Change in Control
. In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “
Surviving Entity
”) may assume, convert or replace this Option with an award of at least equal value and terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement. If the Surviving Entity does not assume, convert or replace this Option, the Option shall vest on the date of the Change in Control. If the Surviving Entity does assume, convert or replace this Option, then in the event the Employee’s Termination (a) occurs within the time period beginning six months immediately before a Change in Control and ending two years immediately following such Change in Control, and (b) was initiated by the Company (or the Surviving Entity) for a reason other than Cause or was initiated by the Employee for Good Reason, the Option will become fully vested and exercisable as of the later of the date of the Change in Control and the date of the Employee’s Termination. The provisions of this Section 6 shall supersede Section 13(a)(i) of the Program.
|
7.
|
Effect of Certain Bad Acts
.
The Option shall be cancelled and forfeited immediately if, in the sole opinion and discretion of the Committee or its delegate, the Employee:
|
(a)
|
commits a material breach of the terms and conditions of the Employee’s employment, including, but not limited to:
|
(i)
|
material breach by the Employee of the Code of Business Conduct;
|
(ii)
|
material breach by the Employee of the Employee’s Employee Agreement or employment contract, if any;
|
(iii)
|
commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;
|
(iv)
|
wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or
|
(v)
|
failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or
|
(b)
|
to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.
|
8.
|
No Right to Continued Employment
. This Agreement and the Employee’s participation in the Program do not and shall not be interpreted to:
|
(a)
|
form an employment contract or relationship with the Company or its Subsidiaries;
|
(b)
|
confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or
|
(c)
|
interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.
|
9.
|
Nature of Grant
. In accepting this Option grant, the Employee acknowledges that:
|
(a)
|
The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
|
(b)
|
This Option grant is a one-time benefit and does not create any contractual or other right to receive future grants of Options, benefits in lieu of Options, or other Program benefits in the future, even if Options have been granted repeatedly in the past;
|
(c)
|
All decisions with respect to future Option grants, if any, and their terms and conditions, will be made by the Company, in its sole discretion;
|
(d)
|
Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;
|
(e)
|
The Employee is voluntarily participating in the Program;
|
(f)
|
The Option and Shares subject to the Option are:
|
(i)
|
extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;
|
(ii)
|
not intended to replace any pension rights or compensation;
|
(iii)
|
not part of the Employee’s normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, holiday pay, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or its Subsidiaries;
|
(g)
|
The future value of the Shares underlying the Option is unknown and cannot be predicted with certainty;
|
(h)
|
In consideration of this Option grant, no claim or entitlement to compensation or damages shall arise from the Option resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;
|
(i)
|
The Option and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and
|
(j)
|
Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Option, the amount realized upon exercise of the Option or the amount realized upon a subsequent sale of any Shares acquired upon exercise of the Option, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.
|
10.
|
Data Privacy
.
|
(a)
|
Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program.
|
(i)
|
voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and
|
(ii)
|
authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.
|
(b)
|
Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program. Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.
|
(c)
|
The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program. These recipients may be located throughout the world.
|
(d)
|
The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:
|
(i)
|
obtain confirmation as to the existence of the Data;
|
(ii)
|
verify the content, origin and accuracy of the Data;
|
(iii)
|
request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and
|
(iv)
|
oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.
|
11.
|
Private Placement
. This Option grant is not intended to be a public offering of securities in the Employee’s country. The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Option grant is not subject to the supervision of the local securities authorities.
|
12.
|
Exchange Controls
. As a condition to this Option grant, the Employee agrees to comply with any applicable foreign exchange rules and regulations.
|
13.
|
Compliance with Applicable Laws and Regulations
.
|
(a)
|
The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.
|
(b)
|
Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“
Tax-Related Items
”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries. The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the issuance of Shares upon exercise of the Option, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the
|
(c)
|
The Employee’s country of residence may have insider trading and/or market abuse laws that may affect the Employee’s ability to acquire or sell Shares under the Program during such times the Employee is considered to have “inside information” (as defined under the laws in the Employee’s country). These laws may be the same or different from any Company insider trading policy. The Employee acknowledges that it is the Employee’s responsibility to be informed of and compliant with such regulations, and the Employee is advised to speak to the Employee’s personal advisor on this matter.
|
14.
|
Code Section 409A
. The Option is intended to be exempt from the requirements of Code Section 409A. The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that the Option is subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.
|
15.
|
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Option, the Employee’s participation in the Program or the Employee’s acquisition or sale of the
|
16.
|
Imposition of Other Requirements
. The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Option and on any Shares acquired under the Program, to the extent the Company or any Subsidiary determines it is necessary or advisable to comply with local laws, rules and/or regulations or to facilitate the operation and administration of the Option and the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. The Employee agrees to take any and all actions, and consents to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country. In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.
|
17.
|
Determinations
. Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.
|
18.
|
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means. The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
|
19.
|
Addendum
. This Option grant shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country. Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and/or regulations or facilitate the operation and administration of the Option and the Program (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Employee’s relocation). The Addendum constitutes part of this Agreement.
|
20.
|
Severability
. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law. To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.
|
21.
|
Entire Agreement
. This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Option and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Option. Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.
|
22.
|
Succession
. This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Option have passed by will or the laws of descent or distribution.
|
23.
|
Language
. If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
|
24.
|
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any state’s conflict of laws principles.
|
a)
|
The starting date of the offer will be the Grant Date (as defined in the Agreement), and this offer conforms to General Ruling no. 336 of the Chilean Superintendence of Securities and Insurance;
|
b)
|
The offer deals with securities not registered in the registry of securities or in the registry of foreign securities of the Chilean Superintendence of Securities and Insurance, and therefore such securities are not subject to its oversight;
|
c)
|
The issuer is not obligated to provide public information in Chile regarding the foreign securities, as such securities are not registered with the Chilean Superintendence of Securities and Insurance; and
|
d)
|
The foreign securities shall not be subject to public offering as long as they are not registered with the corresponding registry of securities in Chile.
|
a)
|
La fecha de inicio de la oferta será el de la fecha de otorgamiento (o “Grant Date”, según este término se define en el documento denominado “Agreement”) y esta oferta se acoge a la norma de Carácter General n° 336 de la Superintendencia de Valores y Seguros Chilena;
|
b)
|
La oferta versa sobre valores no inscritos en el registro de valores o en el registro de valores extranjeros que lleva la Superintendencia de Valores y Seguros Chilena, por lo que tales valores no están sujetos a la fiscalización de ésta;
|
c)
|
Por tratar de valores no inscritos no existe la obligación por parte del emisor de entregar en chile información pública respecto de esos valores; y
|
d)
|
Esos valores no podrán ser objeto de oferta pública mientras no sean inscritos en el registro de valores correspondiente.
|
1.
|
AbbVie Inc.’s most recent Annual Report (Form 10-K):
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
2.
|
AbbVie Inc.’s most recent published financial statements (Form 10-Q or 10-K) and the auditor’s report on those financial statements:
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
3.
|
The AbbVie 2013 Incentive Stock Program: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
4.
|
AbbVie 2013 Incentive Stock Program Prospectus: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
a.
|
AbbVie Inc.’s most recent Annual Report (Form 10-K):
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
b.
|
AbbVie 2013 Incentive Stock Program Prospectus: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
1.
|
Definitions
. To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.
|
(b)
|
Cause
: Unless otherwise defined in the Employee’s Change in Control Agreement, cause shall mean the following, as determined by the Company in its sole discretion:
|
(i)
|
material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:
|
(A)
|
material breach by the Employee of the Code of Business Conduct;
|
(B)
|
material breach by the Employee of the Employee’s Employee Agreement or employment contract, if any;
|
(C)
|
commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;
|
(D)
|
wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or
|
(E)
|
failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or
|
(ii)
|
to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.
|
(c)
|
Change in Control Agreement
: An agreement regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee.
|
(d)
|
Code of Business Conduct
: The Company’s Code of Business Conduct, as amended from time to time.
|
(e)
|
Controlled Group
: AbbVie and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of Code Section 414 (b), (c), or (m)) with AbbVie.
|
(f)
|
Data
:
Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, email address, date of birth, social security, passport or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.
|
(g)
|
Disability
:
Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.
|
(h)
|
Employee Agreement
: The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.
|
(i)
|
Employee’s Representative
:
The Employee’s
legal
guardian or other legal representative.
|
(j)
|
Good Reason
: Unless otherwise defined in the Employee’s Change in Control Agreement, good reason shall mean the occurrence of any of the following circumstances without the Employee’s express written consent:
|
(i)
|
a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an officer of a public company, the Employee ceasing to be an officer of a public company;
|
(ii)
|
the failure by the Company or a Subsidiary to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date such compensation is due;
|
(iii)
|
a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;
|
(iv)
|
the failure by the Company or a Subsidiary to award the Employee an annual bonus in any year which is at least equal to the annual bonus awarded to the Employee under the annual bonus plan of the Company or Subsidiary for the year immediately preceding the year of the Change in Control;
|
(v)
|
the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;
|
(vi)
|
the failure by the Company or a Subsidiary to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s or Subsidiary’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability and vacation;
|
(vii)
|
the relocation of the Employee’s base office to a location that is more than 35 miles from the Employee’s base office immediately prior to the Change in Control; or
|
(viii)
|
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform this Agreement as contemplated in Section 5.
|
(k)
|
Performance Determination Date
: The date on which the Committee determines whether or to what extent the Performance Vesting Requirements have been achieved.
|
(l)
|
Performance Period
: The period(s) specified in the attached Schedule, over which achievement of the Performance Vesting Requirements is to be measured.
|
(m)
|
Performance Shares
: The maximum number of Shares the Employee may receive under this Award based on the extent to which the Performance Vesting Requirements are achieved. In no event will the number of Performance Shares exceed 250% of the number of Units set forth in the first paragraph of this Agreement.
|
(n)
|
Performance Vesting Requirements
: The performance goals described in the attached Schedule, which must be achieved for Units to vest and the corresponding Shares to be delivered under this Award.
|
(o)
|
Program
: The AbbVie 2013 Incentive Stock Program.
|
(p)
|
Retirement
:
|
(i)
|
Except as provided under (ii) or (iii) below, Retirement means either of the following:
|
•
|
age 55 with 10 years of service; or
|
•
|
age 65 with at least three years of service.
|
(ii)
|
For Employees who (A) are not covered by (iii) below and (B) transferred to the Company directly from Abbott Laboratories either as a result of the Company’s spin-off from Abbott Laboratories or during the period from January 1, 2013 through June 30, 2015 with the consent of each company’s head of human resources and were hired into the Abbott Laboratories controlled group prior to January 1, 2004, Retirement means any of the following:
|
•
|
age 50 with 10 years of service;
|
•
|
age 65 with at least three years of service; or
|
•
|
age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.
|
(iii)
|
For participants in the AbbVie Pension Plan for Former BASF and Former Solvay Employees, Retirement means either of the following:
|
•
|
age 55 with 10 years of service; or
|
•
|
age 65 with at least three years of service.
|
(iv)
|
For purposes of calculating service under this Section 1(p), except as otherwise provided by the Committee or its delegate: (A) service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group; and (B) for Employees who transferred to the Company directly from Abbott Laboratories during the period from January 1, 2013 through June 30, 2015 either as a result of the Company’s spin-off from Abbott Laboratories or with the consent of each company’s head of human resources, service includes service with Abbott Laboratories that is counted for benefit calculation purposes under the AbbVie Pension Plan, the AbbVie Pension Plan for Former BASF and Former Solvay Employees, or another Company-sponsored pension plan, as applicable.
|
(q)
|
Termination
: A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries. Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.
|
2.
|
Delivery Dates and Shareholder Rights
. The Delivery Dates for Shares issuable with respect to the Units are the respective dates on which the Shares are distributable to the Employee if the Units vest pursuant to Section 4 below. Prior to the Delivery Date(s):
|
(a)
|
the Employee shall not be treated as a shareholder as to any Shares issuable under the Agreement, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;
|
(b)
|
the Employee shall not be permitted to vote any Shares issuable under the Agreement; and
|
(c)
|
the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.
|
3.
|
Restrictions
. The Units (encompassing all of the Performance Shares) are subject to the forfeiture provisions in Sections 6 and 7 below. Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “
Restrictions
”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) or Section 5 occurs.
|
4.
|
Vesting
. If the Company’s 2017 return on equity (as defined and approved by the Committee) is a minimum of 18 percent, the number of Shares that become issuable under this Award, as set forth in this Section 4 and subject to the provisions of Sections 5, 6 and 7 below, will be calculated based on the extent to which the Performance Vesting Requirements described in the attached Schedule are achieved. If the Company’s 2017 return on equity is less than 18 percent, no Units will vest and no Shares will become issuable under the Award. The Committee may equitably adjust the
|
(a)
|
Performance
. If the Employee remains employed with the Company or its Subsidiaries and has not experienced a Termination that triggers forfeiture as of the applicable vesting date specified below:
|
(i)
|
up to one third of the total number of Units may be earned on
«VESTING DATE 1»
, as determined in accordance with the Schedule; and
|
(ii)
|
up to an additional two thirds of the total number of Units may be earned on
«VESTING DATE 2»
, as determined in accordance with the Schedule.
|
(b)
|
Retirement
. In the event of the Employee’s Termination due to Retirement, the Award will remain in effect and any Units not previously vested may vest as set forth in subsection 4(a) above.
|
(c)
|
Death
. In the event of the Employee’s Termination due to death, any Units not previously vested will vest and be settled (for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution) in the form of Shares as soon as administratively possible after, and effective as of, the date of death. The extent to which the Units vest, and the number of Shares to be delivered as a result, will be determined as follows:
|
(i)
|
For any Performance Period that has begun but has not been completed as of the date of Termination due to death, the number of Shares to be delivered with respect to the applicable Award tranche will be determined based on the greater of (A) performance through the date of Termination measured against the Performance Vesting Requirements set forth in the Schedule using, as applicable, adjusted earnings per share calculated through the most recent quarterly earnings release preceding or coinciding with the date of Termination and relative Total Shareholder Return (TSR) calculated as of the date of Termination, and (B) the target vesting level for the applicable Award tranche.
|
(ii)
|
For any Performance Period that has not yet begun as of the date of Termination due to death, the number of Shares to be delivered will be determined using the target vesting level for the applicable Award tranche(s).
|
(d)
|
Disability.
In the event of the Employee’s Termination due to Disability, any Units not previously vested will vest and be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Termination due to Disability. The extent to
|
(i)
|
For any Performance Period that has begun but has not been completed as of the date of Termination due to Disability, the number of Shares to be delivered with respect to the applicable Award tranche will be determined based on the greater of (A) performance through the date of Termination measured against the Performance Vesting Requirements set forth in the Schedule using, as applicable, adjusted earnings per share calculated through the most recent quarterly earnings release preceding or coinciding with the date of Termination and relative TSR calculated as of the date of Termination, and (B) the target vesting level for the applicable Award tranche.
|
(ii)
|
For any Performance Period that has not yet begun as of the date of Termination due to Disability, the number of Shares to be delivered will be determined using the target vesting level for the applicable Award tranche(s).
|
5.
|
Change in Control
. In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “
Surviving Entity
”) may assume, convert or replace this Award with an award of at least equal value and terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement. If the Surviving Entity does not assume, convert or replace this Award, the Units will vest on the date of the Change in Control, as described below.
|
(i)
|
For any Performance Period that has begun but has not been completed as of the Applicable Vesting Date, the number of Shares to be delivered with respect to the applicable Award tranche will be determined based on the greatest of: (A) performance through the date of the Change in Control measured against the Performance Vesting Requirements set forth in the Schedule using the most recent earnings information released before or on the date of the Change in Control; (B) performance through the date of the Termination measured against the Performance Vesting Requirements set forth in the Schedule using the most recent earnings information released before or on the date of the Termination; and (C) the target vesting level for the applicable Award tranche.
|
(ii)
|
For any Performance Period that has not yet begun as of the Applicable Vesting Date, the number of Shares to be delivered will be determined using the target vesting level for the applicable Award tranche(s).
|
6.
|
Effect of Certain Bad Acts
.
Any Units not previously settled will be cancelled and forfeited immediately if the Employee engages in activity that constitutes Cause, as determined in the sole opinion and discretion of the Committee or its delegate, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.
|
7.
|
Forfeiture of Units
. In the event of the Employee’s Termination for any reason other than those set forth in subsection 4(b), (c) or (d) or Section 5, any Units that have not vested as of the date of Termination will be forfeited without consideration to the Employee or the Employee’s Representative. In the event that the Employee is terminated by the Company other than for Cause and in a situation not covered by Section 5, the Company may, in its sole discretion, cause some or all of the Units to remain in effect and subject to vesting in accordance with the provisions of subsection 4(a), in which case such Units will be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above as if the Employee had remained employed on such dates. In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will cease and will not be extended by any notice period mandated under local law (
e.g.
, active employment does not include a period of “garden leave” or similar period pursuant to local law) and that the Company shall have the exclusive discretion to determine when Termination occurs.
|
8.
|
Withholding Taxes
. To the extent permitted under applicable law and by the Company, the Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the vesting of Units or the delivery of Shares pursuant to this Agreement by:
|
(a)
|
tendering a cash payment;
|
(b)
|
having the Company withhold Shares from the Shares to be delivered to satisfy the applicable withholding tax;
|
(c)
|
tendering Shares received in connection with the Award back to the Company; or
|
(d)
|
delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.
|
9.
|
No Right to Continued Employment
. This Agreement and the Employee’s participation in the Program do not and shall not be interpreted to:
|
(a)
|
form an employment contract or relationship with the Company or its Subsidiaries;
|
(b)
|
confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or
|
(c)
|
interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.
|
10.
|
Nature of Grant
. In accepting this Award, the Employee acknowledges that:
|
(a)
|
The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
|
(b)
|
This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;
|
(c)
|
All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Company, in its sole discretion;
|
(d)
|
Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;
|
(e)
|
The Employee is voluntarily participating in the Program;
|
(f)
|
The Units and Shares subject to the Units are:
|
(i)
|
extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;
|
(ii)
|
not intended to replace any pension rights or compensation;
|
(iii)
|
not part of the Employee’s normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, holiday pay, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments and in no event should they be considered as compensation for, or relating in any way to, past services for the Company or any of its Subsidiaries;
|
(g)
|
The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;
|
(h)
|
In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;
|
(i)
|
The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and
|
(j)
|
Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.
|
11.
|
Data Privacy
.
|
(a)
|
Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program. The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program. As such (where required under applicable law), the Employee:
|
(i)
|
voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and
|
(ii)
|
authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.
|
(b)
|
Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program. Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Program and for the Employee’s participation in the Program.
|
(c)
|
The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program. These recipients may be located throughout the world.
|
(d)
|
The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:
|
(i)
|
obtain confirmation as to the existence of the Data;
|
(ii)
|
verify the content, origin and accuracy of the Data;
|
(iii)
|
request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and
|
(iv)
|
oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.
|
12.
|
Form of Payment.
The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (a) is prohibited under local law; (b) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (c) would result in adverse tax consequences for the Employee or the Company; or (d) is administratively burdensome. Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to sell such Shares immediately or within a specified period of time following the Employee’s Termination (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).
|
13.
|
Private Placement.
This Award is not intended to be a public offering of securities in the Employee’s country. The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Award is not subject to the supervision of the local securities authorities.
|
14.
|
Exchange Controls.
As a condition to this Award, the Employee agrees to comply with any applicable foreign exchange rules and regulations.
|
15.
|
Compliance with Applicable Laws and Regulations
.
|
(a)
|
The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.
|
(b)
|
Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“
Tax-Related Items
”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries. The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, vesting or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result. If the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction. If the Employee relocates to another country, the Company may establish special or alternative terms and conditions as necessary or advisable to comply with local laws, rules or regulations, to facilitate the operation and administration of the Award and the Program and/or to accommodate the Employee’s relocation.
|
(c)
|
The Employee’s country of residence may have insider trading and/or market abuse laws that may affect the Employee’s ability to acquire or sell Shares under the Program during such times the Employee is considered to have “inside information” (as defined under the laws in the Employee’s country). These laws may be the same or different from any Company insider trading policy. The Employee acknowledges that it is the Employee’s responsibility to be informed of and compliant with such regulations, and the Employee is advised to speak to the Employee’s personal advisor on this matter.
|
16.
|
Code Section 409A
. Payments made pursuant to this Agreement are intended to be exempt from or otherwise to comply with the provisions of Code Section 409A to the extent applicable. The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that any payments under this Agreement are subject to Code Section 409A and this Agreement fails to comply with that section’s requirements, the Company may, at the Company’s sole discretion, and without the Employee’s consent, amend this Agreement to cause it to comply with Code Section 409A or otherwise be exempt from Code Section 409A.
|
17.
|
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares. The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.
|
18.
|
Imposition of Other Requirements
. The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or any Subsidiary determines it is necessary or advisable to comply with local laws, rules and/or regulations or to facilitate the operation and administration of the Units and the Program, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. The Employee agrees to take any and all actions, and consents to any and all actions taken by the Company and its Subsidiaries, as may be required to allow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Employee’s country. In addition, the Employee agrees to take any and all actions as may be required to comply with the Employee’s personal obligations under local laws, rules and regulations in the Employee’s country.
|
19.
|
Determinations
. Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without
|
20.
|
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means. The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
|
21.
|
Addendum
. This Award shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country. Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and/or regulations or facilitate the operation and administration of the Units and the Program (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Employee’s relocation). The Addendum constitutes part of this Agreement.
|
22.
|
Severability
. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law. To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.
|
23.
|
Entire Agreement.
This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award. Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.
|
24.
|
Succession
. This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.
|
25.
|
Language
. If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
|
26.
|
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any state’s conflict of laws principles.
|
Vesting Tranche
|
Units Subject to Vesting
|
Performance Period
|
Tranche 1
|
1/3 of Units
|
January 1-December 31, 2017
|
Tranche 2
|
2/3 of Units
|
January 1, 2017-December 31, 2019
|
a.
|
EPS of $5.64 results in vesting at 200%;
|
b.
|
EPS of $5.49 results in vesting at 100%;
|
c.
|
EPS of $5.44 results in vesting at 50%; and
|
d.
|
EPS below $5.44 results in vesting at 0%.
|
1.
|
2017 EPS
: The Committee will determine the Company’s 2017 EPS. For purposes of determining 2017 EPS results, EPS means non-GAAP EPS disclosed in the Company’s annual earnings release for the year ended December 31, 2017.
|
a.
|
EPS of $5.64 results in a 200% adjustment;
|
b.
|
EPS of $5.49 results in a 100% adjustment;
|
c.
|
EPS of $5.44 results in a 50% adjustment; and
|
d.
|
EPS below $5.44 results in a 0% adjustment.
|
2.
|
Relative TSR
: The Committee will determine the Company’s 2017-2019 TSR relative to the 2017-2019 TSR of the Index Companies. For the purposes of determining TSR, for each company the beginning stock price will be the closing stock price on December 31, 2016 and the ending stock price will be the closing stock price on December 31, 2019. The TSR results of the individual Index Companies will be indexed by market capitalization.
|
a.
|
Company TSR more than 15 points above the index results in an adjustment of +25%;
|
b.
|
Company TSR more than 10 points above the index results in an adjustment of +20%;
|
c.
|
Company TSR more than 5 points above the index results in an adjustment of +15%;
|
d.
|
Company TSR more than 5 points below the index results in an adjustment of -15%; and
|
e.
|
Company TSR more than 15 points below the index results in an adjustment of -25%.
|
a)
|
The starting date of the offer will be the Grant Date (as defined in the Agreement), and this offer conforms to General Ruling no. 336 of the Chilean Superintendence of Securities and Insurance;
|
b)
|
The offer deals with securities not registered in the registry of securities or in the registry of foreign securities of the Chilean Superintendence of Securities and Insurance, and therefore such securities are not subject to its oversight;
|
c)
|
The issuer is not obligated to provide public information in Chile regarding the foreign securities, as such securities are not registered with the Chilean Superintendence of Securities and Insurance; and
|
d)
|
The foreign securities shall not be subject to public offering as long as they are not registered with the corresponding registry of securities in Chile.
|
a)
|
La fecha de inicio de la oferta será el de la fecha de otorgamiento (o “Grant Date”, según este término se define en el documento denominado “Agreement”) y esta oferta se acoge a la norma de Carácter General n° 336 de la Superintendencia de Valores y Seguros Chilena;
|
b)
|
La oferta versa sobre valores no inscritos en el registro de valores o en el registro de valores extranjeros que lleva la Superintendencia de Valores y Seguros Chilena, por lo que tales valores no están sujetos a la fiscalización de ésta;
|
c)
|
Por tratar de valores no inscritos no existe la obligación por parte del emisor de entregar en chile información pública respecto de esos valores; y
|
d)
|
Esos valores no podrán ser objeto de oferta pública mientras no sean inscritos en el registro de valores correspondiente.
|
1.
|
AbbVie Inc.’s most recent Annual Report (Form 10-K):
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
2.
|
AbbVie Inc.’s most recent published financial statements (Form 10-Q or 10-K) and the auditor’s report on those financial statements:
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
3.
|
The AbbVie 2013 Incentive Stock Program: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
4.
|
AbbVie 2013 Incentive Stock Program Prospectus: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
a.
|
AbbVie Inc.’s most recent Annual Report (Form 10-K):
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
b.
|
AbbVie 2013 Incentive Stock Program Prospectus: This document can be accessed in the library section of the UBS website
at
www.ubs.com/onesource/abbv
.
|
1.
|
Definitions
. To the extent not defined herein, capitalized terms shall have the same meaning as in the Program.
|
(b)
|
Cause
: Unless otherwise defined in the Employee’s Change in Control Agreement, cause shall mean the following, as determined by the Company in its sole discretion:
|
(i)
|
material breach by the Employee of the terms and conditions of the Employee’s employment, including, but not limited to:
|
(A)
|
material breach by the Employee of the Code of Business Conduct;
|
(B)
|
material breach by the Employee of the Employee’s Employee Agreement or employment contract, if any;
|
(C)
|
commission by the Employee of an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment;
|
(D)
|
wrongful disclosure by the Employee of secret processes or confidential information of the Company or any of its Subsidiaries; or
|
(E)
|
failure by the Employee to substantially perform the duties of the Employee’s employment (other than any such failure resulting from the Employee’s Disability); or
|
(ii)
|
to the extent permitted by applicable law, engagement by the Employee, directly or indirectly, for the benefit of the Employee or others, in any activity, employment or business which is competitive with the Company or any of its Subsidiaries.
|
(c)
|
Change in Control Agreement
: An agreement regarding Change in Control in effect between the Company (or the Surviving Entity) and the Employee.
|
(d)
|
Code of Business Conduct
: The Company’s Code of Business Conduct, as amended from time to time.
|
(e)
|
Controlled Group
: AbbVie and any corporation, partnership and proprietorship under common control (as defined under the aggregation rules of Code Section 414 (b), (c), or (m)) with AbbVie.
|
(f)
|
Data
:
Certain personal information about the Employee held by the Company and the Subsidiary that employs the Employee (if applicable), including (but not limited to) the Employee’s name, home address and telephone number, email address, date of birth, social security, passport or other identification number, salary, nationality, job title, any Shares held in the Company, details of all Awards or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Employee’s favor, for the purpose of managing and administering the Program.
|
(g)
|
Disability
:
Sickness or accidental bodily injury, directly and independently of all other causes, that disables the Employee so that the Employee is completely prevented from performing all the duties of his or her occupation or employment.
|
(h)
|
Employee Agreement
: The Employee Agreement entered into by and between the Company and the Employee as it may be amended from time to time.
|
(i)
|
Employee’s Representative
:
The Employee’s
legal
guardian or other legal representative.
|
(j)
|
Good Reason
: Unless otherwise defined in the Employee’s Change in Control Agreement, good reason shall mean the occurrence of any of the following circumstances without the Employee’s express written consent:
|
(i)
|
a significant adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Employee was, immediately prior to the Change in Control, an officer of a public company, the Employee ceasing to be an officer of a public company;
|
(ii)
|
the failure by the Company or a Subsidiary to pay the Employee any portion of the Employee’s current compensation, or to pay the Employee any portion of any installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date such compensation is due;
|
(iii)
|
a reduction in the Employee’s annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;
|
(iv)
|
the failure by the Company or a Subsidiary to award the Employee an annual bonus in any year which is at least equal to the annual bonus awarded to the Employee under the annual bonus plan of the Company or Subsidiary for the year immediately preceding the year of the Change in Control;
|
(v)
|
the failure by the Company to award the Employee equity-based incentive compensation (such as stock options, shares of restricted stock, restricted stock units, or other equity-based compensation) on a periodic basis consistent with the Company’s practices with respect to timing, value and terms prior to the Change in Control;
|
(vi)
|
the failure by the Company or a Subsidiary to continue to provide the Employee with the welfare benefits, fringe benefits and perquisites enjoyed by the Employee immediately prior to the Change in Control under any of the Company’s or Subsidiary’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, health and accident, disability and vacation;
|
(vii)
|
the relocation of the Employee’s base office to a location that is more than 35 miles from the Employee’s base office immediately prior to the Change in Control; or
|
(viii)
|
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform this Agreement as contemplated in Section 5.
|
(k)
|
Performance Determination Date
: The date on which the Committee determines whether or to what extent the Performance Vesting Requirements have been achieved.
|
(l)
|
Performance Period
: The period(s) specified in the attached Schedule, over which achievement of the Performance Vesting Requirements is to be measured.
|
(m)
|
Performance-Vested Shares
: The maximum number of Shares the Employee may receive under this Award based on the extent to which the Performance Vesting Requirements are achieved. In no event will the number of Performance-Vested Shares exceed 150% of the number of Units set forth in the first paragraph of this Agreement.
|
(n)
|
Performance Vesting Requirements
: The performance goals described in the attached Schedule, which must be achieved for Units to vest and the corresponding Shares to be delivered under this Award.
|
(o)
|
Program
: The AbbVie 2013 Incentive Stock Program.
|
(p)
|
Retirement
:
|
(i)
|
Except as provided under (ii) or (iii) below, Retirement means either of the following:
|
•
|
age 55 with 10 years of service; or
|
•
|
age 65 with at least three years of service.
|
(ii)
|
For Employees who (A) are not covered by (iii) below and (B) transferred to the Company directly from Abbott Laboratories either as a result of the Company’s spin-off from Abbott Laboratories or during the period from January 1, 2013 through June 30, 2015 with the consent of each company’s head of human resources and were hired into the Abbott Laboratories controlled group prior to January 1, 2004, Retirement means any of the following:
|
•
|
age 50 with 10 years of service;
|
•
|
age 65 with at least three years of service; or
|
•
|
age 55 with an age and service combination of 70 points, where each year of age is one point and each year of service is one point.
|
(iii)
|
For participants in the AbbVie Pension Plan for Former BASF and Former Solvay Employees, Retirement means either of the following:
|
•
|
age 55 with 10 years of service; or
|
•
|
age 65 with at least three years of service.
|
(iv)
|
For purposes of calculating service under this Section 1(p), except as otherwise provided by the Committee or its delegate: (A) service is earned only if performed for a member of the Controlled Group while that Controlled Group member is a part of the Controlled Group; and (B) for Employees who transferred to the Company directly from Abbott Laboratories during the period from January 1, 2013 through June 30, 2015 either as a result of the Company’s spin-off from Abbott Laboratories or with the consent of each company’s head of human resources, service includes service with Abbott Laboratories that is counted for benefit calculation purposes under the AbbVie Pension Plan, the AbbVie Pension Plan for Former BASF and Former Solvay Employees, or another Company-sponsored pension plan, as applicable.
|
(q)
|
Termination
: A severance of employment for any reason (including Retirement) from the Company and all Subsidiaries. Any Termination shall be effective on the last day the Employee performs services for or on behalf of the Company or its Subsidiary, and employment shall not be extended by any statutory or common law notice of termination period.
|
2.
|
Delivery Dates and Shareholder Rights
. The Delivery Dates for Shares issuable with respect to the Units are the respective dates on which the Shares are distributable to the Employee if the Restrictions lapse pursuant to Section 4 below. Prior to the Delivery Date(s):
|
(a)
|
the Employee shall not be treated as a shareholder as to any Shares issuable under the Agreement, and shall have only a contractual right to receive Shares, unsecured by any assets of the Company or its Subsidiaries;
|
(b)
|
the Employee shall not be permitted to vote any Shares issuable under the Agreement; and
|
(c)
|
the Employee’s right to receive such Shares will be subject to the adjustment provisions relating to mergers, reorganizations, and similar events set forth in the Program.
|
3.
|
Restrictions
. The Units (encompassing all of the Performance-Vested Shares) are subject to the forfeiture provisions in Sections 6 and 7 below. Shares are not earned and may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of (collectively, the “
Restrictions
”) until an event or combination of events described in subsections 4(a), (b), (c) or (d) or Section 5 occurs.
|
4.
|
Lapse of Restrictions
. If the Company’s 2017 return on equity (as defined and approved by the Committee) is a minimum of 18 percent, the number of Shares that become issuable under this Award, as set forth in this Section 4 and subject to the provisions of Sections 5, 6 and 7 below, will be calculated based on the extent to which the Performance Vesting Requirements described in the attached Schedule are achieved. If the Company’s 2017 return on equity is less than 18 percent, no Shares will become issuable under the Award. The Committee may equitably adjust the Performance
|
(a)
|
Performance
. If the Employee remains employed with the Company
or its Subsidiaries and has not experienced a Termination that triggers forfeiture as of the applicable vesting date specified below
:
|
(i)
|
the Restrictions on up to one-third of the total number of Units may lapse on
«VESTING DATE 1»
, as determined in accordance with the Schedule
;
|
(ii)
|
the Restrictions on up to an additional one-third of the total number of Units may lapse on
«VESTING DATE 2»
, as determined in accordance with the Schedule
; and
|
(iii)
|
the Restrictions on up to an additional one-third of the total number of Units may lapse on
«VESTING DATE 3»
, as determined in accordance with the Schedule
.
|
(b)
|
Retirement
. The Restrictions will continue to apply in the event of the Employee’s Termination due to Retirement, but may lapse thereafter in accordance with the provisions of subsection 4(a) above
,
in which case any Units not previously settled on a Delivery Date will be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above occurring after the date of such Termination due to Retirement.
|
(c)
|
Death
. The Restrictions will lapse on the date of the Employee’s Termination due to death, and any Units not previously settled on a Delivery Date will be settled
(for the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution)
in the form of Shares as soon as administratively possible after, and effective as of, the date of Termination due to death. The extent to which the Restrictions lapse, and the number of Shares to be delivered as a result, will be determined as follows:
|
(i)
|
For any Performance Period that has begun but has not been completed as of the date of Termination due to death, the number of Shares to be delivered with respect to the applicable Award tranche will be determined based on the greater of (A) performance through the date of Termination measured against the Performance Vesting Requirements set forth in the Schedule using the most recent earnings information released before the date of Termination, and (B) the target vesting level for the applicable Award tranche.
|
(ii)
|
For any Performance Period that has not yet begun as of the date of Termination due to death, the number of Shares to be delivered will be determined using the target vesting level for the applicable Award tranche(s).
|
(d)
|
Disability.
The Restrictions will lapse on the date of the Employee’s Termination due to Disability, and any Units not previously settled on a Delivery Date will be settled in the form of Shares as soon as administratively possible after, and effective as of, the date of Termination due to Disability. The extent to which the Restrictions lapse, and the number of Shares to be delivered as a result, will be determined as follows:
|
(i)
|
For any Performance Period that has begun but has not been completed as of the date of Termination due to Disability, the number of Shares to be delivered with respect to the applicable Award tranche will be determined based on the greater of (A) performance through the date of Termination measured against the Performance Vesting Requirements set forth in the Schedule using the most recent earnings information released before the date of Termination, and (B) the target vesting level for the applicable Award tranche.
|
(ii)
|
For any Performance Period that has not yet begun as of the date of Termination due to Disability, the number of Shares to be delivered will be determined using the target vesting level for the applicable Award tranche(s).
|
5.
|
Change in Control
. In the event of a Change in Control, the entity surviving such Change in Control or the ultimate parent thereof (referred to herein as the “
Surviving Entity
”) may assume, convert or replace this Award with an award of at least equal value and terms and conditions not less favorable than the terms and conditions provided in this Agreement, in which case the new award will vest according to the terms of the applicable award agreement. If the Surviving Entity does not assume, convert or replace this Award, the Restrictions will lapse on the date of the Change in Control, as described below.
|
(i)
|
For any Performance Period that has begun but has not been completed as of the Applicable Lapse Date, the number of Shares to be delivered with respect to the applicable Award tranche will be determined based on the greatest of: (A) performance through the date of the Change in Control measured against the Performance Vesting Requirements set forth in the Schedule using the most recent earnings information released before the date of the Change in Control; (B) performance through the date of the Termination measured against the Performance Vesting Requirements set forth in the Schedule using the most recent
|
(ii)
|
For any Performance Period that has not yet begun as of the Applicable Lapse Date, the number of Shares to be delivered will be determined using the target vesting level for the applicable Award tranche(s).
|
6.
|
Effect of Certain Bad Acts
.
Any Units not previously settled will be cancelled and forfeited immediately if the Employee engages in activity that constitutes Cause, as determined in the sole opinion and discretion of the Committee or its delegate, whether or not the Employee experiences a Termination or remains employed with the Company or a Subsidiary.
|
7.
|
Forfeiture of Units
. In the event of the Employee’s Termination
for any reason other than those set forth in
subsection 4(b), (c) or (d) or Section 5, any Units with respect to which Restrictions have not lapsed as of the date of Termination will be forfeited without consideration to the Employee or the Employee’s Representative. In the event that the Employee is terminated by the Company other than for Cause and in a situation not covered by Section 5, the Company may, in its sole discretion, cause some or all of the Units to continue to be subject to the Restrictions, provided such Restrictions may lapse thereafter in accordance with the provisions of subsection 4(a), in which case such Units will be settled in the form of Shares on the Delivery Date(s) set forth in subsection 4(a) above as if the Employee had remained employed on such dates.
In accepting this Award, the Employee acknowledges that in the event of Termination (whether or not in breach of local labor laws), the Employee’s right to vest in the Units, if any, will cease and will not be extended by any notice period mandated under local law (
e.g.
, active employment does not include a period of “garden leave” or similar period pursuant to local law) and that the
Company
shall have the exclusive discretion to determine when Termination occurs.
|
8.
|
Withholding Taxes
. To the extent permitted under applicable law and by the Company, the Employee may satisfy any federal, state, local or other applicable taxes arising from the grant of the Award, the lapse of Restrictions or the delivery of Shares pursuant to this Agreement by:
|
(a)
|
tendering a cash payment;
|
(b)
|
having the Company withhold Shares from the Shares to be delivered to satisfy the applicable withholding tax;
|
(c)
|
tendering Shares received in connection with the Award back to the Company; or
|
(d)
|
delivering other previously acquired Shares having a Fair Market Value approximately equal to the amount to be withheld.
|
9.
|
No Right to Continued Employment
. This Agreement and the Employee’s participation in the Program
do not and shall not be
interpreted to:
|
(a)
|
form an employment contract or relationship with the Company or its Subsidiaries;
|
(b)
|
confer upon the Employee any right to continue in the employ of the Company or any of its Subsidiaries; or
|
(c)
|
interfere with the ability of the Company or its Subsidiaries to terminate the Employee’s employment at any time.
|
10.
|
Nature of Grant
. In accepting this Award, the Employee acknowledges that:
|
(a)
|
The Program is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
|
(b)
|
This Award is a one-time benefit and does not create any contractual or other right to receive future grants of Units, benefits in lieu of Units, or other Program Benefits in the future, even if Units have been granted repeatedly in the past;
|
(c)
|
All decisions with respect to future Unit grants, if any, and their terms and conditions, will be made by the Company, in its sole discretion;
|
(d)
|
Nothing contained in this Agreement is intended to create or enlarge any other contractual obligations between the Company and the Employee;
|
(e)
|
The Employee is voluntarily participating in the Program;
|
(f)
|
The Units and Shares subject to the Units are:
|
(i)
|
extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or its Subsidiaries, and are outside the scope of the Employee’s employment contract, if any;
|
(ii)
|
not intended to replace any pension rights or compensation;
|
(iii)
|
not part of the Employee’s normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, holiday pay, bonuses, long-service awards, pension or retirement or welfare benefits, or similar payments
|
(g)
|
The future value of the Shares underlying the Units is unknown and cannot be predicted with certainty;
|
(h)
|
In consideration of the Award, no claim or entitlement to compensation or damages shall arise from the Units resulting from Termination (for any reason whatsoever) and the Employee irrevocably releases the Company and its Subsidiaries from any such claim that may arise; if any such claim is found by a court of competent jurisdiction to have arisen, then, by signing or electronically accepting this Agreement, the Employee shall be deemed irrevocably to have waived the Employee’s entitlement to pursue such claim;
|
(i)
|
The Units and the Benefits under the Program, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability; and
|
(j)
|
Neither the Company nor any of its Subsidiaries shall be liable for any change in value of the Units, the amount realized upon settlement of the Units or the amount realized upon a subsequent sale of any Shares acquired upon settlement of the Units, resulting from any fluctuation of the United States Dollar/local currency foreign exchange rate.
|
11.
|
Data Privacy
.
|
(a)
|
Pursuant to applicable personal data protection laws, the collection, processing and transfer of the Employee’s personal Data is necessary for the Company’s administration of the Program and the Employee’s participation in the Program. The Employee’s denial and/or objection to the collection, processing and transfer of personal Data may affect his or her ability to participate in the Program. As such (where required under applicable law), the Employee:
|
(i)
|
voluntarily acknowledges, consents and agrees to the collection, use, processing and transfer of personal Data as described herein; and
|
(ii)
|
authorizes Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee’s participation in the Program, including any requisite transfer of such Data as may be required for the administration of the Program and/or the subsequent holding of Shares on the Employee’s behalf to a broker or other third party with whom the Employee may elect to deposit any Shares acquired pursuant to the Program.
|
(b)
|
Data may be provided by the Employee or collected, where lawful, from third parties, and the Company and the Subsidiary that employs the Employee (if applicable) will process the Data for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Program. Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee’s country of residence. Data
|
(c)
|
The Company and the Subsidiary that employs the Employee (if applicable) will transfer Data as necessary for the purpose of implementation, administration and management of the Employee’s participation in the Program, and the Company and the Subsidiary that employs the Employee (if applicable) may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Program. These recipients may be located throughout the world.
|
(d)
|
The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to:
|
(i)
|
obtain confirmation as to the existence of the Data;
|
(ii)
|
verify the content, origin and accuracy of the Data;
|
(iii)
|
request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data; and
|
(iv)
|
oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Program and the Employee’s participation in the Program.
|
12.
|
Form of Payment.
The Company may, in its sole discretion, settle the Employee’s Units in the form of a cash payment to the extent settlement in Shares: (a) is prohibited under local law; (b) would require the Employee, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in the Employee’s country; (c) would result in adverse tax consequences for the Employee or the Company; or (d) is administratively burdensome. Alternatively, the Company may, in its sole discretion, settle the Employee’s Units in the form of Shares but require the Employee to sell such Shares immediately or within a specified period of time following the Employee’s Termination (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Employee’s behalf).
|
13.
|
Private Placement.
This Award is not intended to be a public offering of securities in the Employee’s country. The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and this Award is not subject to the supervision of the local securities authorities.
|
14.
|
Exchange Controls.
As a condition to this Award, the Employee agrees to comply with any applicable foreign exchange rules and regulations.
|
15.
|
Compliance with Applicable Laws and Regulations
.
|
(a)
|
The Company shall not be required to issue or deliver any Shares pursuant to this Agreement pending compliance with all applicable federal and state securities and other laws (including any registration requirements or tax withholding requirements) and compliance with the rules and practices of any stock exchange upon which the Company’s Shares are listed.
|
(b)
|
Regardless of any action the Company or its Subsidiaries take with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Employee’s participation in the Program and legally applicable to the Employee or deemed by the Company or its Subsidiaries to be an appropriate charge to the Employee even if technically due by the Company or its Subsidiaries (“
Tax-Related Items
”), the Employee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or its Subsidiaries. The Employee further acknowledges that the Company and/or its Subsidiaries: (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, lapse of Restrictions or settlement of the Units, the issuance of Shares upon payment of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or Dividend Equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items or achieve any particular tax result. If the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Employee acknowledges that the Company and/or its Subsidiaries may be required to withhold or account for Tax-Related Items in more than one jurisdiction. If the Employee relocates to another country, the Company may establish special or alternative terms and conditions as necessary or advisable to comply with local laws, rules or regulations, to facilitate the operation and administration of the Award and the Program and/or to accommodate the Employee’s relocation.
|
(c)
|
The Employee’s country of residence may have insider trading and/or market abuse laws that may affect the Employee’s ability to acquire or sell Shares under the Program during such times the Employee is considered to have “inside information” (as defined under the laws in the Employee’s country). These laws may be the same or different from any Company insider trading policy. The Employee acknowledges that it is the Employee’s responsibility to be informed of and compliant with such regulations, and the Employee is advised to speak to the Employee’s personal advisor on this matter.
|
16.
|
Code Section 409A
. Payments made pursuant to this Agreement are intended to be exempt from or otherwise to comply with the provisions of Code Section 409A to the extent applicable. The Program and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that any payments under this Agreement are subject to Code
|
17.
|
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Award, the Employee’s participation in the Program or the Employee’s acquisition or sale of the underlying Shares. The Employee is hereby advised to consult with the Employee’s own personal tax, legal and financial advisors regarding participation in the Program before taking any action related to the Program.
|
18.
|
Imposition of Other Requirements
. The Company reserves the right to impose other requirements on the Employee’s participation in the Program, on the Units and on any Shares acquired under the Program, to the extent the Company or any Subsidiary determines it is necessary or advisable to comply with local laws, rules and/or regulations or to facilitate the operation and administration of
|
19.
|
Determinations
. Each decision, determination, interpretation or other action made or taken pursuant to the provisions of this Agreement by the Company, the Committee or any delegate of the Committee shall be final, conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.
|
20.
|
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Program by electronic means. The Employee hereby consents to receive such documents by electronic delivery and agrees to participate in the Program through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
|
21.
|
Addendum
. This Award shall be subject to any special terms and conditions set forth in any Addendum to this Agreement for the Employee’s country. Moreover, if the Employee relocates to one of the countries included in the Addendum, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and/or regulations or facilitate the operation and administration of the Units and the Program (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Employee’s relocation). The Addendum constitutes part of this Agreement.
|
22.
|
Severability
. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law. To the extent a court or tribunal of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, in whole or in part, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.
|
23.
|
Entire Agreement.
This Agreement and the Program constitute the entire agreement between the Employee and the Company regarding the Award and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties regarding the Award. Except as expressly set forth herein, this Agreement (and any provision of this Agreement) may not be modified, changed, clarified, or interpreted by the parties, except in a writing specifying the modification, change, clarification, or interpretation, and signed by a duly authorized Company officer.
|
24.
|
Succession
. This Agreement shall be binding upon and operate for the benefit of the Company and its successors and assigns, and the Employee, the Employee’s Representative, and the person or persons to whom rights under the Award have passed by will or the laws of descent or distribution.
|
25.
|
Language
. If the Employee has received this Agreement or any other document related to the Program translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
|
26.
|
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any state’s conflict of laws principles.
|
Vesting Tranche
|
Units Subject to Vesting
|
Performance Period
|
Tranche 1
|
1/3 of Units
|
January 1-December 31, 2017
|
Tranche 2
|
1/3 of Units
|
January 1-December 31, 2018
|
Tranche 3
|
1/3 of Units
|
January 1-December 31, 2019
|
a.
|
A ranking at or above the 90th percentile results in vesting at 150% of target level;
|
b.
|
A ranking from the 75th percentile up to the 90th percentile results in vesting at target level;
|
c.
|
A ranking from the 50th percentile up to the 75th percentile results in vesting at 50% of target level; and
|
d.
|
A ranking below the 50th percentile results in 0% vesting.
|
a)
|
The starting date of the offer will be the Grant Date (as defined in the Agreement), and this offer conforms to General Ruling no. 336 of the Chilean Superintendence of Securities and Insurance;
|
b)
|
The offer deals with securities not registered in the registry of securities or in the registry of foreign securities of the Chilean Superintendence of Securities and Insurance, and therefore such securities are not subject to its oversight;
|
c)
|
The issuer is not obligated to provide public information in Chile regarding the foreign securities, as such securities are not registered with the Chilean Superintendence of Securities and Insurance; and
|
d)
|
The foreign securities shall not be subject to public offering as long as they are not registered with the corresponding registry of securities in Chile.
|
a)
|
La fecha de inicio de la oferta será el de la fecha de otorgamiento (o “Grant Date”, según este término se define en el documento denominado “Agreement”) y esta oferta se acoge a la norma de Carácter General n° 336 de la Superintendencia de Valores y Seguros Chilena;
|
b)
|
La oferta versa sobre valores no inscritos en el registro de valores o en el registro de valores extranjeros que lleva la Superintendencia de Valores y Seguros Chilena, por lo que tales valores no están sujetos a la fiscalización de ésta;
|
c)
|
Por tratar de valores no inscritos no existe la obligación por parte del emisor de entregar en chile información pública respecto de esos valores; y
|
d)
|
Esos valores no podrán ser objeto de oferta pública mientras no sean inscritos en el registro de valores correspondiente.
|
1.
|
AbbVie Inc.’s most recent Annual Report (Form 10-K):
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
2.
|
AbbVie Inc.’s most recent published financial statements (Form 10-Q or 10-K) and the auditor’s report on those financial statements:
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
3.
|
The AbbVie 2013 Incentive Stock Program: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
4.
|
AbbVie 2013 Incentive Stock Program Prospectus: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
a.
|
AbbVie Inc.’s most recent Annual Report (Form 10-K):
http://investors.abbvie.com/phoenix.zhtml?c=251551&p=irol-sec
.
|
b.
|
AbbVie 2013 Incentive Stock Program Prospectus: This document can be accessed in the library section of the UBS website at
www.ubs.com/onesource/abbv
.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of AbbVie Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of AbbVie as of, and for, the periods presented in this report;
|
4.
|
AbbVie’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for AbbVie and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to AbbVie, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of AbbVie’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in AbbVie’s internal control over financial reporting that occurred during AbbVie’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, AbbVie’s internal control over financial reporting; and
|
5.
|
AbbVie’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to AbbVie’s auditors and the audit committee of AbbVie’s board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect AbbVie’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in AbbVie’s internal control over financial reporting.
|
Date:
|
May 5, 2017
|
/s/ Richard A. Gonzalez
|
|
|
Richard A. Gonzalez, Chairman of the Board
|
|
|
and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of AbbVie Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of AbbVie as of, and for, the periods presented in this report;
|
4.
|
AbbVie’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for AbbVie and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to AbbVie, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of AbbVie’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in AbbVie’s internal control over financial reporting that occurred during AbbVie’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, AbbVie’s internal control over financial reporting; and
|
5.
|
AbbVie’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to AbbVie’s auditors and the audit committee of AbbVie’s board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect AbbVie’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in AbbVie’s internal control over financial reporting.
|
Date:
|
May 5, 2017
|
/s/ William J. Chase
|
|
|
William J. Chase, Executive Vice President,
|
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Richard A. Gonzalez
|
Richard A. Gonzalez
|
Chairman of the Board and Chief Executive Officer
|
May 5, 2017
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ William J. Chase
|
William J. Chase
|
Executive Vice President, Chief Financial Officer
|
May 5, 2017
|