AbbVie 2014 Annual Report Download - page 29

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Potential indemnification liabilities to Abbott pursuant to the separation agreement could materially
adversely affect AbbVie.
The separation agreement with Abbott provides for, among other things, the principal corporate
transactions required to effect the separation, certain conditions to the separation and provisions governing
the relationship between AbbVie and Abbott with respect to and resulting from the separation. Among
other things, the separation agreement provides for indemnification obligations designed to make AbbVie
financially responsible for substantially all liabilities, except certain tax liabilities, that may exist relating to
its business activities, whether incurred prior to or after AbbVie’s separation from Abbott, as well as those
obligations of Abbott assumed by AbbVie pursuant to the separation agreement, including those relating to
Depakote. If AbbVie is required to indemnify Abbott under the circumstances set forth in the separation
agreement, AbbVie may be subject to substantial liabilities.
Risks Related to AbbVie’s Common Stock
AbbVie cannot guarantee the timing, amount, or payment of dividends on its common stock.
Although AbbVie expects to pay regular cash dividends, the timing, declaration, amount and payment
of future dividends to stockholders will fall within the discretion of AbbVie’s board of directors. The board’s
decisions regarding the payment of dividends will depend on many factors, such as AbbVie’s financial
condition, earnings, capital requirements, debt service obligations, industry practice, legal requirements,
regulatory constraints, and other factors that the board deems relevant. For more information, see Item 5,
‘‘Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.’’ AbbVie’s ability to pay dividends will depend on its ongoing ability to generate cash from
operations and access capital markets. AbbVie cannot guarantee that it will continue to pay a dividend in
the future.
An AbbVie stockholder’s percentage of ownership in AbbVie may be diluted in the future.
In the future, a stockholder’s percentage ownership in AbbVie may be diluted because of equity
issuances for capital market transactions, equity awards that AbbVie will be granting to AbbVie’s directors,
officers and employees, acquisitions, or other purposes. AbbVie’s employees have options to purchase
shares of its common stock as a result of conversion of their Abbott stock options (in whole or in part) to
AbbVie stock options. AbbVie anticipates its compensation committee will grant additional stock options or
other stock-based awards to its employees. Such awards will have a dilutive effect on AbbVie’s earnings per
share, which could adversely affect the market price of AbbVie’s common stock. From time to time, AbbVie
will issue additional options or other stock-based awards to its employees under AbbVie’s employee
benefits plans.
In addition, AbbVie’s amended and restated certificate of incorporation authorizes AbbVie to issue,
without the approval of AbbVie’s stockholders, one or more classes or series of preferred stock having such
designation, powers, preferences and relative, participating, optional and other special rights, including
preferences over AbbVie’s common stock respecting dividends and distributions, as AbbVie’s board of
directors generally may determine. The terms of one or more classes or series of preferred stock could
dilute the voting power or reduce the value of AbbVie’s common stock. For example, AbbVie could grant
the holders of preferred stock the right to elect some number of AbbVie’s directors in all events or on the
happening of specified events or the right to veto specified transactions. Similarly, the repurchase or
redemption rights or liquidation preferences AbbVie could assign to holders of preferred stock could affect
the residual value of the common stock.
2014 Form 10-K 23