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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 5, 2024
Elanco
Animal Health Incorporated
(Exact name of registrant as specified
in its charter)
Indiana | |
001-38661 | |
82-5497352 |
(State
or other jurisdiction
of incorporation) | |
(Commission
File Number) | |
(I.R.S. Employer Identification No.) |
2500 Innovation Way
Greenfield, Indiana (Address of principal executive offices)
| |
46140 (Zip
Code) |
Registrant’s telephone number, including area code: (877)
352-6261
Not Applicable
(Former Name or Address, if Changed Since Last Report)
Check the appropriate
box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
| ¨ | Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each
class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which
registered |
Common stock, no par value |
|
ELAN |
|
New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
¨ Emerging
growth company
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01. |
Entry into a Material Definitive Agreement. |
On February 5, 2024, Elanco Animal Health
Incorporated, an Indiana corporation (“Elanco”), and Intervet International B.V., a Dutch private company with limited liability
(“Buyer”), entered into an Asset Purchase Agreement (the “Agreement”). The Agreement provides that, subject to
the satisfaction or waiver of certain conditions, Buyer will acquire assets from Elanco of Elanco’s aqua business (the “Business”)
for approximately $1.3 billion in cash payable at closing (the “Transaction”).
The assets to be acquired by Buyer include inventories
of certain products, owned and leased real properties, intellectual property and technology, books and records, contracts, permits and
authorizations, and equipment, in each case related to the Business as described in the Agreement. In connection with the Transaction,
Buyer has agreed to make offers of employment or engagement to certain employees and independent contractors of Elanco who work for the
Business. Buyer will assume the liabilities arising out of the conduct of the Business from and after the closing.
The Agreement contains certain representations,
warranties and covenants of each of Buyer and Elanco that are customary for transactions of this nature, including covenants by Elanco
relating to the operation of the Business prior to the closing and certain restrictions on Elanco and its subsidiaries from conducting
certain business activities that compete with the Business following the closing of the Transaction, subject to certain exceptions as
described in the Agreement.
Each of Buyer and Elanco has agreed to indemnify
the other for certain losses arising out of breaches of certain representations and post-closing covenants and for certain losses arising
out of excluded assets or transferred assets, or excluded liabilities or assumed liabilities, as applicable, subject to customary limitations.
The consummation of the Transaction is subject
to the satisfaction or waiver of all of the closing conditions, including the receipt of applicable antitrust approvals and the absence
of any law or order enjoining or otherwise prohibiting the Transaction in certain jurisdictions. Each party’s obligation to consummate
the Transaction is also subject to the accuracy of the other party’s representations and warranties contained in the Agreement (subject
to materiality standards specified in the Agreement) and the other party’s performance of and compliance with its covenants in all
material respects. Buyer’s obligation to consummate the Transaction is further subject to a condition that, since the date of the
Agreement, no “Material Adverse Effect” of the Business, as defined in the Agreement, has occurred. The parties have agreed
to certain obligations to promptly obtain the antitrust approvals required for the Transaction. Elanco expects to close the Transaction
by mid-year 2024.
The Agreement provides termination rights for
Buyer and Elanco under certain circumstances, including, subject to certain conditions, an uncured material breach by the other party
or if the Transaction is not consummated by November 5, 2024, subject to an automatic extension of ninety (90) days if the antitrust-related
conditions have not been satisfied by such date but all other conditions to closing have been satisfied or validly waived. If the Agreement
is terminated due to failure to obtain the antitrust approvals, subject to certain conditions, Buyer will be required to pay Elanco a
termination fee of $55 million in cash.
The foregoing description of the Agreement does
not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is attached
hereto as Exhibit 2.1, and the terms of which are incorporated herein by reference. The foregoing description of the Agreement is
not intended to provide any other factual information about Elanco, Buyer, the Business, or their respective businesses. The Agreement
contains representations, warranties and covenants that are the product of negotiations between the parties and that the parties made
to, and solely for the benefit of, each other as of the date of the Agreement or other specified dates. The assertions embodied in those
representations, warranties and covenants were made for purposes of the contract between the parties and are subject to important qualifications
and limitations agreed to by the parties in connection with negotiating such agreement. The representations, warranties and covenants
in the Agreement are also modified in important part by the underlying disclosure schedules which are not filed publicly and which are
subject to a contractual standard of materiality different from that generally applicable for securities law purposes and were used for
the purpose of allocating contractual risk between the parties rather than establishing matters as facts. Investors are not third-party
beneficiaries under the Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the parties thereto or any of their respective affiliates.
In connection with the Transaction, the parties
expect that they will also enter into a transition services agreement, an intellectual property license agreement, intellectual property
assignment agreements, a transitional trademark license agreement and a transitional manufacturing and supply agreement at the closing.
Item 7.01 | Regulation FD Disclosure. |
On February 5, 2024, Elanco issued a press
release announcing the Transaction, a copy of which is attached to this Current Report on Form 8-K as Exhibit 99.1.
The information
contained in the accompanying Exhibit 99.1 is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise subject to the liabilities of that section.
Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits
| * | Schedules and exhibits to the Agreement have been omitted pursuant to Item
601(b)(2) of Regulation S-K. The registrant will furnish copies of any such schedules to the U.S. Securities and Exchange Commission
upon request. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Elanco Animal Health Incorporated |
|
|
Date: February 5, 2024 |
By: |
/s/ Todd Young |
|
|
Name: Todd Young |
|
|
Title: Executive Vice President and Chief Financial Officer |
Exhibit 2.1
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ELANCO ANIMAL
HEALTH, INC.,
as
Seller
and
INTERVET
INTERNATIONAL B.V.,
as
Buyer
DATED AS OF FEBRUARY 5, 2024
Table of Contents
|
Page |
|
|
Article I
Definitions |
1 |
Section 1.01 |
Certain Defined
Terms |
1 |
|
|
|
Article II
Purchase and Sale; Closing |
1 |
Section 2.01 |
Purchase and Sale of Transferred
Assets |
1 |
Section 2.02 |
Assignment of Certain Transferred
Assets |
8 |
Section 2.03 |
Closing |
9 |
Section 2.04 |
Withholding |
9 |
Section 2.05 |
Structure of Transfers |
10 |
|
|
|
Article III
Purchase Price |
11 |
Section 3.01 |
Purchase Price |
11 |
Section 3.02 |
Certain Closing Deliverables |
11 |
Section 3.03 |
Estimated Closing
Statement; Closing Payment |
13 |
Section 3.04 |
Proposed Final Closing Statement
and Final Closing Statement |
14 |
Section 3.05 |
Post-Closing Adjustment |
16 |
Section 3.06 |
Certain Calculation Principles |
16 |
Section 3.07 |
Purchase Price Allocation |
16 |
Section 3.08 |
Local Purchase Price Payments
for Asset and Inventory Transfers |
17 |
|
|
|
Article
IV Representations and Warranties of Seller |
18 |
Section 4.01 |
Formation and Authority of the
Seller Parties; Enforceability |
18 |
Section 4.02 |
No Conflict |
19 |
Section 4.03 |
Consents and Approvals |
20 |
Section 4.04 |
Financial Information;
Absence of Undisclosed Liabilities |
20 |
Section 4.05 |
Absence of Certain Changes
or Events |
21 |
Section 4.06 |
Absence of Litigation |
21 |
Section 4.07 |
Compliance with Laws; Permits |
21 |
Section 4.08 |
Intellectual Property |
22 |
Section 4.09 |
Data Privacy |
25 |
Section 4.10 |
Environmental Matters |
25 |
Section 4.11 |
Material Contracts |
26 |
Section 4.12 |
Employment and Employee
Benefits Matters |
28 |
Section 4.13 |
Taxes |
30 |
Section 4.14 |
Personal Property |
31 |
Section 4.15 |
Real Property |
31 |
Section 4.16 |
Brokers |
32 |
Section 4.17 |
Sufficiency of Assets |
32 |
Section 4.18 |
Insurance |
33 |
Section 4.19 |
Intercompany Agreements |
33 |
Section 4.20 |
Customers, Suppliers and
Distributors |
33 |
Section 4.21 |
Veterinary Regulatory Compliance |
34 |
Section 4.22 |
Inventory |
36 |
Section 4.23 |
Product Liability |
36 |
Section 4.24 |
Shared Contracts |
37 |
Section 4.25 |
Transferred R&D Assets |
37 |
Section 4.26 |
No Other Representations
or Warranties |
37 |
Article V
Representations and Warranties of Buyer |
38 |
Section 5.01 |
Formation and
Authority of Buyer |
38 |
Section 5.02 |
No Conflict |
38 |
Section 5.03 |
Consents and Approvals |
38 |
Section 5.04 |
Compliance with Laws |
39 |
Section 5.05 |
Securities Matters |
39 |
Section 5.06 |
Financial Ability |
39 |
Section 5.07 |
Brokers |
39 |
Section 5.08 |
Investigation |
40 |
Section 5.09 |
No Other Representations
or Warranties |
40 |
|
|
|
Article VI
Additional Agreements |
41 |
Section 6.01 |
Conduct of Business Before
the Closing |
41 |
Section 6.02 |
Access to Information |
44 |
Section 6.03 |
Confidentiality |
45 |
Section 6.04 |
Regulatory and Other Authorizations;
Consents |
46 |
Section 6.05 |
[Reserved] |
49 |
Section 6.06 |
Cooperation; Notice |
49 |
Section 6.07 |
Permits and Product Authorizations |
50 |
Section 6.08 |
Recordation of Chain of
Title to Intellectual Property |
52 |
Section 6.09 |
IT Migration. |
52 |
Section 6.10 |
Data Protection. |
52 |
Section 6.11 |
Chile Site Visit and Environmental
Assessment |
53 |
Section 6.12 |
Pharmacovigilance |
53 |
|
|
|
Article VII
Post-Closing Covenants |
53 |
Section 7.01 |
Rights to Seller Names
and Seller Marks |
53 |
Section 7.02 |
Access |
53 |
Section 7.03 |
Insurance |
54 |
Section 7.04 |
Further Assurance Regarding
Intellectual Property and Technology. |
55 |
Section 7.05 |
Further Assurances |
57 |
Section 7.06 |
Local Transfer Agreements |
58 |
Section 7.07 |
Non-Solicitation of Employee;
Non-Competition |
59 |
Section 7.08 |
Litigation Support |
60 |
Section 7.09 |
Delivery of Data |
61 |
Section 7.10 |
Termination of Intercompany
Obligations |
61 |
Section 7.11 |
No Third Party Discussions |
62 |
Section 7.12 |
Wrong Pockets |
62 |
Section 7.13 |
License under Commingled
Marketing Materials |
62 |
Section 7.14 |
Commingled Records |
63 |
Section 7.15 |
Returned Products; Rebates |
63 |
Section 7.16 |
License to Sentinel Product
Data |
64 |
|
|
|
Article VIII
Employee Matters |
64 |
Section 8.01 |
Works Council Processes |
64 |
Section 8.02 |
Continuation of Employment |
64 |
Section 8.03 |
Terms and Conditions of
Employment/Service |
66 |
Section 8.04 |
Failure to Transfer/Unintended
Employee Transfers. |
67 |
Section 8.05 |
Assumed Employee Liabilities |
68 |
Section 8.06 |
Service Credit |
68 |
Section 8.07 |
Transfer to Buyer Plans |
68 |
Section 8.08 |
No Third Party Beneficiaries |
69 |
Article IX
Tax Matters |
69 |
Section 9.01 |
Straddle Periods |
69 |
Section 9.02 |
Post-Closing Actions |
69 |
Section 9.03 |
Transfer Taxes and VAT |
70 |
Section 9.04 |
Bulk Transfer |
72 |
|
|
|
Article X
Conditions to Closing |
72 |
Section 10.01 |
Conditions to Obligations
of Each Party |
72 |
Section 10.02 |
Conditions to Obligations
of Seller |
72 |
Section 10.03 |
Conditions to Obligations
of Buyer |
73 |
Section 10.04 |
Frustration of Closing
Conditions |
74 |
|
|
|
Article XI
Termination |
74 |
Section 11.01 |
Termination |
74 |
Section 11.02 |
Notice of Termination |
75 |
Section 11.03 |
Effect of Termination |
75 |
|
|
|
Article XII
Indemnification |
77 |
Section 12.01 |
Survival |
77 |
Section 12.02 |
Indemnification by Seller |
77 |
Section 12.03 |
Indemnification by Buyer |
78 |
Section 12.04 |
Notification of Claims |
79 |
Section 12.05 |
Exclusive Remedies |
81 |
Section 12.06 |
Additional Indemnification
Provisions |
81 |
Section 12.07 |
Mitigation |
82 |
Section 12.08 |
Limitation on Liability |
82 |
Section 12.09 |
Tax Treatment of Payments |
82 |
Section 12.10 |
Manner of Payment |
82 |
Section 12.11 |
Representation and Warranty
Insurance |
82 |
|
|
|
Article XIII
Miscellaneous |
82 |
Section 13.01 |
Rules of Construction |
82 |
Section 13.02 |
Expenses |
84 |
Section 13.03 |
Notices |
84 |
Section 13.04 |
Public Announcements |
86 |
Section 13.05 |
Severability |
86 |
Section 13.06 |
Assignment |
86 |
Section 13.07 |
No Third-Party Beneficiaries |
86 |
Section 13.08 |
Entire Agreement |
86 |
Section 13.09 |
Amendments |
87 |
Section 13.10 |
Waiver |
87 |
Section 13.11 |
Governing Law |
87 |
Section 13.12 |
Dispute Resolution; Consent
to Jurisdiction |
88 |
Section 13.13 |
Waiver
of Jury Trial |
88 |
Section 13.14 |
Admissibility into Evidence |
88 |
Section 13.15 |
Remedies; Specific Performance |
89 |
Section 13.16 |
Non-Recourse |
90 |
Section 13.17 |
Payments and Interest |
90 |
Section 13.18 |
Disclosure Schedules and
Exhibits |
90 |
Section 13.19 |
Provision Respecting Legal
Representation |
90 |
Section 13.20 |
Privilege |
91 |
Section 13.21 |
Counterparts |
91 |
Section 13.22 |
Release |
91 |
EXHIBITS
Exhibit A |
- |
Definitions |
Exhibit B |
- |
Form of Intellectual Property License Agreement |
Exhibit C |
- |
Form of EVAH License Agreement |
Exhibit D |
- |
Form of Transition Services Agreement |
Exhibit E |
- |
Transaction Accounting Principles |
Exhibit F |
- |
Form of Transitional Trademark License Agreement |
Exhibit G |
- |
Forms of Intellectual Property Assignment Agreements |
Exhibit G-1 |
- |
Form of Patent Assignment Agreement |
Exhibit G-2 |
- |
Form of Trademark Assignment Agreement |
Exhibit G-3 |
- |
Form of Domain Name Assignment Agreement |
Exhibit H |
- |
Form of Transitional Manufacturing and Supply Agreement |
Exhibit I |
- |
Form of Data Sharing Agreement |
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT
is made and entered into as of February 5, 2024 (the “Agreement Date”) by and between Elanco Animal Health, Inc.,
an Indiana corporation (“Seller” and, together with the Seller Divesting Entities (as hereinafter defined), the “Seller
Parties”), and Intervet International B.V., a Dutch private company with limited liability (“Buyer” and,
together with Seller, the “Parties”).
WITNESSETH:
WHEREAS, Seller owns or controls,
directly or indirectly, each of the other Seller Parties.
WHEREAS, the Seller Parties
are engaged in, or hold assets or liabilities relating to, the Business.
WHEREAS, the Seller Parties
desire to sell to Buyer, and Buyer (itself or through its designated Affiliates) desires to purchase from the Seller Parties, all of
the Transferred Assets (as hereafter defined), and Buyer (itself or through its designated Affiliates) desires to assume all of the Assumed
Liabilities (as hereafter defined), either directly or indirectly through the transfer of the Transferred Entities (as hereafter defined),
in each case on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration
of the foregoing and the representations, warranties, covenants and agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
Article I
Definitions
Section 1.01 Certain
Defined Terms. Capitalized terms used in this Agreement shall have the meanings specified
in Exhibit A.
Article II
Purchase
and Sale; Closing
Section 2.01 Purchase
and Sale of Transferred Assets
(a) Transferred
Assets. On the terms and subject to the conditions set forth in this Agreement and the Local Transfer Agreements and subject to the
exclusions set forth in Section 2.01(b) and to Section 2.02, at the Closing, Seller shall, and shall cause
each of the other Seller Parties to, sell, convey, assign, transfer and deliver to Buyer or one or more of Buyer’s Affiliates designated
by Buyer in writing to Seller, and Buyer shall, or shall cause one of such Affiliates to, purchase, acquire and accept from the Seller
Parties, all of the Seller Parties’ right, title and interest in, to and under the following assets, properties and rights owned
or held by the applicable Seller Party, free and clear of all Liens (other than Permitted Liens), as the same shall exist immediately
prior to the Effective Time (collectively, the “Transferred Assets”), whether directly or through the transfer of
a Transferred Entity as contemplated by Section 2.05:
(i) (A) the
owned real property set forth on Schedule 2.01(a)(i)(A) (the “Transferred Owned Real Property”),
together with all buildings, structures, improvements, easements thereon, therein or thereto, and other rights and interests appurtenant
thereto, and (B) the leasehold, subleasehold or license interests of the Seller Parties under the real property leases, subleases
or licenses set forth on Schedule 2.01(a)(i)(B) (the “Transferred Leased Real Property”);
(ii) all
rights, benefits and interests under (A) contracts or agreements set forth on Schedule 2.01(a)(ii) and all other
contracts or agreements Related to the Business to which any Seller Party is a party (excluding any Shared Contracts), (B) Shared
Contracts to the extent allocated or assigned to Buyer or an Affiliate of Buyer pursuant to Section 2.02(b) and (C) the
real property leases, subleases and licenses for the Transferred Leased Real Property (the “Transferred Real Property Leases”)
(clauses (A), (B) and (C) collectively, the “Assumed Contracts”);
(iii) all
Business Intellectual Property and Business Technology;
(iv) (A) all
Transferred Permits, Transferred Product Authorizations, transferable Product Authorization Data that is in the possession or control
of a Seller Party, (B) rights to apply and transferrable applications for Permits or Product Authorizations that are Related to
the Business, (C) all rights to develop, manufacture and commercialize in the Aqua Health Field Products that are not subject to
any Product Authorization that is in full force and effect (for the avoidance of doubt, excluding any right to real property, contracts
and agreements, Intellectual Property or tangible personal property other than as included in Transferred Assets), and (D) all
dossiers relating to any asset described in clause (A), (B) or (C) that are Related to the Business;
(v) Transferred
Inventory;
(vi) Transferred
Prepaid Expenses;
(vii) other
than Inventory, all tangible personal property of any kind, including machinery, equipment, furniture, fixtures, office equipment and
supplies, communications equipment, vehicles, leasehold improvements, goods, hardware, electronic devices (including computers) and related
equipment, repair, replacement and spare parts and tools, in each case Related to the Business;
(viii) subject
to compliance with applicable Law, the Transferred Books and Records and the Business Employee Records (it being understood that Seller
may retain copies of all such records subject to Section 6.03(b));
(ix) all
assets, rights and properties expressly to be transferred pursuant to Article VIII hereof;
(x) the
Transferred Equity Interests (if any);
(xi) labeling,
advertising, marketing, sales and promotional materials, in each case that are in the physical or electronic possession of or under the
control of, a Seller Party as of the Closing Date and that are Related to the Business (the “Specified Marketing Materials”);
provided that use of any and all Seller Names and Seller Marks included in the Specified Marketing Materials shall be subject
to the Transitional Trademark License Agreement;
(xii) the
assets listed on Schedule 2.01(a)(xii) (the “Transferred R&D Assets”);
(xiii) all
rights under all confidentiality agreements or any portion thereof, in each case to the extent related to the Business, Transferred Assets,
Assumed Liabilities, or Transferred Entities, including such agreements with prospective purchasers of the Business, Transferred Assets,
Assumed Liabilities, or Transferred Entities;
(xiv) all
net insurance proceeds received by a Seller Party (after deducting reasonable and documented out of pocket costs and expenses incurred
in obtaining such proceeds) prior to, on or following the Closing Date under any insurance policy written prior to the Closing in connection
with (A) the loss, damage, destruction or condemnation of any of the Transferred Assets from and after the date hereof or prior
to the Closing that is, or would have been but for such loss, damage, destruction or condemnation, included in the Transferred Assets
or (B) any Assumed Liability (other than, in the case of this clause (B), insurance proceeds that are directly or indirectly funded
by Seller or its Affiliates through self-insurance or a captive insurance entity);
(xv) to
the extent transferrable, all goodwill of the Business or of the Selling Parties Relating to the Business;
(xvi) all
causes of action (including counterclaims) and defenses against third parties to the extent relating to any of the Transferred Assets
or the Assumed Liabilities; and
(xvii) all
assets, properties, rights, Claims, lawsuits, judgments, defenses, indemnification rights, rights of recovery, rights of set-off and
legal privileges of any nature (including the right to sue for, collect and recover for past infringement or misappropriation of Business
Intellectual Property) and in each case, other than the categories of assets set forth above in clauses (i) through(xvi), whether
real, personal or mixed, tangible or intangible, of any Seller Party that are Related to the Business.
(b) Excluded
Assets. Notwithstanding anything to the contrary herein, the following assets and properties of or in the possession of any Seller
Party (the “Excluded Assets”) shall be retained by the Seller Parties and shall be excluded from the Transferred Assets
and, if applicable, shall be transferred out of the Transferred Entities (if held by a Transferred Entity) prior to the Closing notwithstanding
any other provision of this Agreement:
(i) all
cash and cash equivalents in any bank account of a Seller Party and all other cash and cash equivalents (except for any cash that is
a Transferred Prepaid Expense);
(ii) any
accounts receivables and Inventory, other than any Transferred Inventory and Transferred Prepaid Expenses, arising from the Business
prior to the Closing Date;
(iii) all
of the Seller Parties’ right, title and interest in the Retained Real Property;
(iv) all
Seller Intellectual Property and Seller Technology;
(v) all
rights to the Seller Names and Seller Marks, together with any contracts, agreements or understandings (other than any Assumed Contract)
granting rights to use the same (without limiting the rights granted to Buyer pursuant to the Transitional Trademark License Agreement);
(vi) all
nontransferable or nonassignable Permits, including nontransferable Environmental Permits, and any Permits held by a Seller Party that
are not Related to the Business other than, in any event, the assets described in Section 2.01(a)(iv);
(vii) other
than any loans or advances from one Transferred Entity to another Transferred Entity, all loans or advances among the Seller Parties;
(viii) other
than equity interests in the Transferred Entities, any equity securities or ownership interests;
(ix) all
Tax Returns relating to any Tax of Seller, all Tax refunds or Tax credits of any Seller Party (other than any Transferred Entity), and
any Tax refunds or Tax credits in respect of the Transferred Assets for taxable periods (or portions thereof) ending on or prior to the
Closing Date;
(x) other
than the Transferred Assets described in Section 2.01(a)(xiv), all policies and programs of or agreements for insurance that
are not exclusive to the Business or Transferred Assets and interests in insurance pools and programs (in each case including self-insurance,
captive insurance and insurance from Affiliates) (collectively, “Insurance Policies”) and, subject to Section 7.03(b),
all rights of any nature with respect to any Insurance Policy and any recoveries thereunder and any rights to assert Claims seeking any
such recoveries, including all net insurance proceeds received by a Seller Party prior to, on or following the Closing Date under any
Insurance Policy solely with respect to (A) the loss, damage, destruction or condemnation of any of the Excluded Assets that is,
or would have been but for such loss, damage, destruction or condemnation, included in the Excluded Assets or (B) any Excluded Liability;
(xi) all
causes of action (including counterclaims) and defenses against third parties to the extent relating to any of the Excluded Assets or
the Excluded Liabilities (excluding, for clarity, any right to make any claims in respect of the R&W Policy);
(xii) assets
of any Employee Plans;
(xiii) all
personnel and employment records for employees and former employees of a Seller Party (other than the Transferred Books and Records and
the Business Employee Records transferred pursuant to Section 2.01(a)(viii)); provided that any personnel and employment
records for any Transferred Employee that are not Business Employee Records will be subject to Section 6.03(b);
(xiv) all
assets, rights and properties expressly excluded from transfer to Buyer or any of its Affiliates pursuant to Article VIII
of this Agreement;
(xv) (A) all
corporate minute books (and other similar corporate records) and stock records of any Seller Party (other than the Transferred Books
and Records and Business Employee Records and corporate records of the Transferred Entities, which corporate records of the Transferred
Entities, for clarity, shall be obtained by Buyer by virtue of its purchase of the Transferred Equity Interests at the Closing pursuant
to Section 2.01(a)(x)), or (B) any books and records that are unrelated to the Transferred Assets (other than the Transferred
Books and Records and the Business Employee Records transferred pursuant to Section 2.01(a)(viii));
(xvi) (A) all
records and reports prepared or received by the Seller Parties in connection with the negotiation or execution of the Transaction Agreements
or the transactions contemplated thereby or the related sale process, including all analyses relating to the Business or Buyer so prepared
or received, (B) all bids and expressions of interest received from third parties with respect to prospective purchasers of the
Business or any portion thereof and (C) all Privileged Communications, and all other privileged communications, materials, documents
and records that are unrelated to the Business;
(xvii) all
rights of any Seller Party (other than the Transferred Entities) under the Transaction Agreements;
(xviii) subject
to Section 2.01(a)(ii)(B), Shared Contracts to the extent allocated to Seller or an Affiliate of Seller pursuant to Section 2.02(b);
(xix) any
assets used in the research or development function of Seller or its Affiliates other than the Transferred Assets and any assets that
constitute Transferred Assets following the Closing, including pursuant to Section 7.12 of this Agreement;
(xx) all
tangible personal property physically located at the premises of Retained Real Property at the Effective Time, except for (1) any
tangible personal property that is Related to the Business, (2) any Transferred Inventory, (3) the Transferred Books and
Records and the Business Employee Records transferred pursuant to Section 2.01(a)(viii) and (4) Transferred
R&D Assets; and
(xxi) all
of the assets set forth on Schedule 2.01(b)(xxi).
(c) Assumed
Liabilities. On the terms and subject to the conditions set forth in this Agreement and the Local Transfer Agreements, and subject
to the exclusions set forth in Section 2.01(d), Buyer shall assume or shall cause to be assumed, effective at the Effective
Time (whether directly or through an Equity Transfer as contemplated by Section 2.05) and thereafter pay, discharge and perform
in accordance with their terms (or, in the case of a Transferred Entity, cause to be so paid, discharged, and performed), the following
Liabilities of the Seller Parties (the “Assumed Liabilities”):
(i) all
Liabilities arising under any of the Assumed Contracts to the extent arising on or after the Closing Date;
(ii) all
Liabilities (A) under Environmental Laws, including those relating to a spill, release or disposal into the environment of Hazardous
Materials, or (B) relating to the use, application, malfunction, defect, design, operation, performance or suitability of any Product
or Product Candidates sold or distributed by or on behalf of Buyer or any of its Affiliates (in each case, regardless of whether Seller
or any of its Affiliates tested, invented, designed, modified, improved or formulated any such Product or Product Candidates), in each
case clause (A) and (B), (x) arising from or relating to the use, ownership, possession or operation of the Transferred Assets
on or after the Closing Date to the extent arising out of any fact, circumstance, occurrence, act or omission occurring on or after the
Closing Date or (y) to the extent arising from or relating to the conduct of the Business by Buyer or its Affiliates on or after
the Closing Date;
(iii) all
Liabilities expressly assumed by Buyer pursuant to Article VIII; provided, however, that no Employee Liabilities shall
be Assumed Liabilities;
(iv) any
Liabilities arising from any violations of Data Security Requirements, or cybersecurity incidents or breaches of the information system
of the Business, to the extent arising out of or related to any fact, circumstance, occurrence, act or omission occurring on or after
the Closing Date;
(v) any
accounts payable or other Current Liabilities of the Business incurred from or after the Closing Date;
(vi) all
Debt of the Business incurred from or after the Closing Date;
(vii) all
Taxes imposed in respect of the Transferred Assets or a Transferred Entity or the Business for any taxable period (or portion thereof)
from or after the Closing Date, and the portion of Transfer Taxes allocated to Buyer under Section 9.03; and
(viii) all
other Liabilities (A) arising from or relating to the use, ownership, possession or operation of the Transferred Assets on or after
the Closing Date to the extent arising out of any fact, circumstance, occurrence, act or omission occurring on or after the Closing Date
or (B) to the extent arising from or relating to the conduct of the Business by Buyer or its Affiliates on or after the Closing
Date.
(d) Excluded
Liabilities. Notwithstanding anything to the contrary contained herein, Buyer is not assuming or agreeing to pay, discharge or perform,
and the Seller Parties or their respective Affiliates shall retain and be responsible for and shall pay, discharge and perform when due,
any of the following Liabilities of any of the Seller Parties (including the Transferred Entities) (collectively, the “Excluded
Liabilities”), such Excluded Liabilities which shall be retained by the Seller Parties (other than the Transferred Entities)
and shall be excluded from the Assumed Liabilities or shall be assumed from the Transferred Entities (if it is an obligation or the responsibility
of a Transferred Entity) prior to the Closing Date:
(i) any
Liability to the extent arising out of or relating to any Excluded Asset, in each case of this Section 2.01(d)(i), whether
the same shall arise prior to, on, or following the Closing Date;
(ii) any
Liability arising from the employment of any Person other than as expressly assumed by Buyer pursuant to Article VIII and
any Liability expressly retained by the Seller Parties pursuant to Article VIII hereof (including all Employee Liabilities);
(iii) any
accounts payable or other Current Liabilities of the Business incurred prior to the Closing Date;
(iv) all
Debt of the Business or any Transferred Entity outstanding as of immediately prior to the Closing;
(v) other
than accounts payable exclusively between or among the Transferred Entities, any Liability for any accounts payable (including trade
accounts payable) to, or any other Liability to, any Seller Party with respect to the Business as of prior to the Closing Date, which
accounts payable or Liability shall be terminated without further payment or performance and shall cease to have further force or effect
at the Closing;
(vi) any
Liability arising in connection with the sale or disposition, prior to the Closing Date, of any assets, properties or rights Related
to the Business (other than the sale of Inventory in the ordinary course of business consistent with past practice);
(vii) any
Liability for (A) Taxes (other than Transfer Taxes) imposed in respect or arising out of Transferred Assets or the Business, or
imposed on the Transferred Entities, for any taxable period (or portion thereof) ending on or before the Closing Date; (B) the portion
of Transfer Taxes allocated to the Seller Parties under Section 9.03; (C) all Taxes of the Seller Parties, including
in connection with the consummation of the sale and transfer of the Transferred Assets hereunder, to the extent not described under clauses
(A) or (B); (D) Taxes imposed as a result of an obligation under any Tax sharing, Tax allocation, Tax indemnity or similar
agreements with respect to the Transferred Assets entered into prior to the Closing Date pursuant to customary commercial contracts not
primarily related to Taxes; and (E) any Taxes of a Person other than a Transferred Entity for which a Transferred Entity (or any
predecessor of the foregoing) is liable under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or
non-U.S. Tax Law) as a result of having been a member of an affiliated, consolidated, combined, unitary, or similar Tax group (including
any arrangement for group or consortium relief or similar arrangement) before the Closing;
(viii) any
obligations of Seller and its Affiliates (other than, from and after the Closing Date, the Transferred Entities) under this Agreement
and the Transaction Agreements;
(ix) any
costs or expenses for which Seller is responsible under Section 13.02;
(x) all
Liabilities (A) under Environmental Laws, including those relating to a spill, release or disposal into the environment of Hazardous
Materials, or (B) relating to the use, application, malfunction, defect, design, operation, performance or suitability of any Product
sold or distributed by or on behalf of Seller or any of its Affiliates in each case of clause (A) and (B), (x) arising from
or relating to the use, ownership, possession or operation of the Transferred Assets prior to the Closing Date to the extent arising
out of any fact, circumstance, occurrence, act or omission occurring prior to the Closing Date or (y) to the extent arising from
or relating to the conduct of the Business prior to the Closing Date; and
(xi) all
Liabilities (A) arising from or relating to the ownership, use, possession or operation of the Transferred Assets prior to the Closing
Date to the extent arising out of any fact, circumstance, occurrence, act or omission occurring prior to the Closing Date, or (B) to
the extent arising from or relating to the conduct of the Business prior to the Closing Date.
Section 2.02 Assignment
of Certain Transferred Assets.
(a) Without
limiting the applicability of Article XII but notwithstanding any other provision of this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign or transfer any Transferred Asset or Assumed Liability if an attempted assignment
or transfer thereof at the Closing, without the consent of a third party (including any Government Authority), would constitute a breach
of any agreement or contract or a violation of Law (such Transferred Asset, the “Delayed Transferred Asset”, and such
Assumed Liability, “Delayed Assumed Liability”). Notwithstanding anything to the contrary herein, no Seller Party,
nor any of their Subsidiaries, shall be required to compensate any third party, commence or participate in any Action or offer or grant
any concession or accommodation (financial or otherwise, including any accommodation or arrangement to indemnify, remain secondarily
liable or contingently liable for any Assumed Liability) to any third party in connection with the Seller Parties’ obligations
under this Section 2.02(a). From and after the date hereof, Seller shall, and shall cause each other Seller Party to, use
its commercially reasonable efforts to obtain any such consent as promptly as practicable after the date hereof, and in any event Seller
shall, and shall cause each other Seller Party to, request any such consent or provide any notice required for the Transfer of Assumed
Contracts no later than ten (10) Business Days following the Agreement Date. Subject to Section 6.04, Buyer shall, and
shall cause each of its applicable Subsidiaries to, use its commercially reasonable efforts to cooperate with the Seller Parties to obtain
any such consent. If, on the Closing Date, any such consent has not been obtained, or if an attempted transfer or assignment thereof
would be ineffective or a violation of Law, Seller (on behalf of itself and each of the Seller Parties) and Buyer agree that, subject
to Section 6.04 and Section 6.05, (i) Buyer will, subject to compliance with Law, obtain the benefits and
economic rights and assume the obligations and bear the economic burdens associated with such Delayed Transferred Asset or Delayed Assumed
Liability in accordance with this Agreement, including with respect to any risk of loss, costs, Taxes, income and gain thereof, by way
of subcontracting, sublicensing, subleasing or other arrangement, and (ii) the Seller Parties will, at Buyer’s request, enforce
for the benefit (and at the expense) of Buyer any and all of the rights of the Seller Parties against a third party associated with such
Delayed Transferred Asset or Delayed Assumed Liability. In furtherance of the foregoing sentence, the Seller Parties shall promptly pay
to Buyer when received all monies or other benefits and economic rights received by them with respect to any such Delayed Transferred
Asset or Delayed Assumed Liability (net of the Seller Parties’ reasonable and out-of-pocket expenses incurred in connection with
any assignment, collection or processing contemplated by this Section 2.02) and Buyer shall promptly pay to Seller the costs,
expenses, Taxes and other Losses incurred by Seller in connection with the Seller Parties’ holding, administration or operation
of the Delayed Transferred Asset or Delayed Assumed Liability. For the avoidance of doubt, neither the Closing Payment nor the Purchase
Price shall be reduced or otherwise adjusted in connection with the delayed transfer of any Delayed Transferred Asset or Delayed Assumed
Liability.
(b) Until
the date that is eighteen (18) months after the Closing Date, Seller shall, and shall cause each of the other Seller Parties to, use
commercially reasonable efforts to cause the counterparty to each Shared Contract to consent to the partial assignment from the applicable
Seller Party to Buyer or an Affiliate of Buyer of those rights and benefits of the applicable Seller Party under such Shared Contract
related to the Business, prior to, on or as promptly as practicable following, the Closing Date, and shall otherwise reasonably cooperate
with Buyer in good faith in respect of Buyer’s efforts to enter into a new contract or agreement with the counterparty to any Shared
Contract providing goods, services or rights from or to the Business (and in such case, such new contract or agreement shall thereafter
constitute a Transferred Asset hereunder) (the foregoing arrangements, the “Shared Contract Split”). Seller shall
consult with Buyer with respect to the partial assignment of such Shared Contracts and shall give Buyer the ability to comment thereon
and give due consideration to any reasonable comments provided by Buyer. Without limiting the foregoing, with respect to any Shared Contract
for which the Shared Contract Split has not been entered into prior to or on the Closing Date, until the date that is eighteen (18) months
after the Closing Date or the expiration or termination of such Shared Contract in accordance with its terms (whichever is earlier),
(i) Buyer or an Affiliate of Buyer shall receive the interest in the rights and benefits, and bear the responsibility for the obligations,
under such Shared Contract related to the Business (the “Buyer Portion of Shared Contracts”) and (ii) Seller
or an Affiliate of the Seller shall receive the interest in the rights and benefits, and bear the responsibility for the obligations,
under such Shared Contract Split not related to the Business (the “Seller Portion of Shared Contracts”). If any Shared
Contract Split cannot be effectuated by the date that is eighteen (18) months after the Closing Date and the applicable Shared Contract
has not then expired or been terminated, or if the Shared Contract Split would impair the rights and benefits that either the applicable
Seller Party, on the one hand, or Buyer or its applicable Affiliate, on the other hand, would expect to derive from such assigned Shared
Contract or such contract or agreement, then the Parties shall cooperate with each other to obtain for Buyer or its applicable Affiliate
an arrangement to provide Buyer or its applicable Affiliate with the rights and benefits of such Shared Contract in some other manner,
including the applicable Seller Party entering into such arrangements with Buyer or its applicable Affiliate to place Buyer or such Affiliate
in substantially the same position as if such assignments and new contracts or agreements were entered into in accordance with the foregoing.
Notwithstanding the foregoing, nothing in this Section 2.02(b) shall require any of the Seller Parties to make any payment
or other concession or accommodation to any counterparty of a Shared Contract, or commence or participate in any Action, in each case,
in connection with this Section 2.02(b), in each case, other than payment obligations that are borne by Buyer, and this Section 2.02(b) shall
not apply to any Shared Contract to the extent that the applicable Buyer Portion of Shared Contracts is contemplated to be supplied or
provided by Seller or any of its Affiliates under any Transaction Agreement.
Section 2.03 Closing.
The closing of the sale and purchase of the Transferred Equity Interests (if any) and the Transferred Assets and the assumption of the
Assumed Liabilities (the “Closing”) shall take place remotely and by electronic exchange of documents and other Closing
deliverables, (a) at 8:00 a.m. (New York City time) on the tenth Business Day following the satisfaction or waiver in
writing (to the extent permitted by applicable Law) of all Closing Conditions in accordance with Article X, other than those
Closing Conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver in writing (to the
extent permitted by applicable Law) of those conditions, or (b) at such other time as Buyer and Seller may mutually agree. The date
on which the Closing occurs is referred to in this Agreement as the “Closing Date”. For all purposes under this Agreement
and each other Transaction Agreement, if the Closing has taken place, the sale, conveyance, assignment, transfer and delivery to Buyer
of the Transferred Equity Interests (if any) and the Transferred Assets and the assumption by Buyer of the Assumed Liabilities (collectively,
the “Ownership Transfer”), shall be deemed to occur as of 12:01 a.m. (local time) in each applicable jurisdiction
on the Closing Date (the “Effective Time”). The payment of the Closing Payment on the Closing Date shall be effected
in accordance with the wire and payment schedule provided by Seller to Buyer at least five (5) Business Days prior to the Closing
Date.
Section 2.04 Withholding.
In the event Buyer determines that any portion of the Purchase Price or any amount otherwise payable under this Agreement would be subject
to withholding or deduction under applicable Law, Buyer and its Affiliates shall be entitled to deduct and withhold such amounts from
such payments to the extent required under applicable Law; provided that Buyer shall (a) use commercially reasonable efforts
to notify Seller as soon as reasonably practicable of such determination except in the case of a failure by any Seller Party to deliver
an Applicable Withholding Certificate to Buyer, and (b) reasonably cooperate with the Seller Parties in good faith to reduce or
mitigate any such withholding or deduction (including through the provision of forms or other relevant documentation by the Seller Parties)
to the extent permitted by applicable Law. If Buyer withholds any portion of the Purchase Price pursuant to the terms of this Section 2.04
and pays over such withheld amount to the appropriate Taxing Authority, such withheld amount shall be treated for all purposes of
this Agreement as having been paid to the applicable recipient of such amount otherwise payable. Notwithstanding anything to the contrary
in this Agreement, all compensatory amounts payable pursuant to or as contemplated by this Agreement that are subject to payroll reporting
and withholding shall be payable promptly to the applicable person through the applicable company’s payroll in accordance with
applicable payroll procedures. Notwithstanding the foregoing or anything to the contrary in this Agreement, no withholding shall be made
with respect to any entitlement or deemed payment pursuant to Section 7.14.
Section 2.05 Structure
of Transfers.
(a) Notwithstanding
anything to the contrary contained in Section 2.01 (and subject to the terms and conditions set forth in this Agreement),
each Transferred Asset and Assumed Liability shall at the Closing be sold, transferred, assumed or assigned (a “Transfer”)
by way of a direct Transfer of such Transferred Asset or Assumed Liability pursuant to a Transfer Agreement from the applicable Seller
Party to an Affiliate of Buyer as specified by Buyer (“Asset Transfer”); provided that in lieu of the foregoing,
at Buyer’s written request, Seller will (x) on or prior to the Closing Date, prior to the Closing, promptly Transfer the Assumed
Contracts that do not require third-party consent to Transfer such Assumed Contracts to an Affiliate of the applicable Seller Party,
as designated by Buyer, to a newly formed Subsidiary that is wholly-owned by Seller or another wholly-owned Subsidiary of Seller (any
such Subsidiary which is subject to the Equity Transfer, a “Transferred Entity”) and (y) at Closing, Transfer,
in accordance with Section 2.05(b), to Buyer all equity interests in each such Transferred Entity (the transfer referred
to in this proviso, an “Equity Transfer”); provided that (A) in no event shall the Closing be delayed
due to any of the foregoing transactions described in clauses (x) or (y) (and for clarity the consummation of such transactions
shall not constitute a Closing Condition), and (B) in the event that Seller is unable to effect the Transfer of any Transferred
Entity pursuant to this Section 2.05(a) prior to the Closing, such Transferred Entity shall be considered a Delayed
Transferred Asset and the provisions of Section 2.02(a) shall apply; provided further that all Transfer Taxes
incurred as a result of such Asset Transfer or Equity Transfer shall be apportioned between Buyer and the Seller Parties in accordance
with Section 9.03 and Buyer shall reimburse Seller for 50% of the reasonable costs and expenses incurred by Seller directly
relating to the forming the Transferred Entities. Nothing in this Section 2.05 shall supersede the Seller Parties’
obligation to Transfer the Assumed Contracts to Buyer at Closing, subject to Section 2.02.
(b) For
any Equity Transfer that is to be effected in accordance with Section 2.05(a), at the Closing, in lieu of the purchase and
sale of the applicable Assumed Contracts as set forth in Section 2.01(a), each of the applicable Seller Parties shall Transfer
to Buyer, and Buyer shall purchase, acquire and accept from each such Seller Party, all of such Seller Party’s right, title and
interest in and to the Transferred Equity Interests.
Article III
Purchase
Price
Section 3.01 Purchase
Price. The aggregate consideration to be paid by Buyer, or caused to be paid on behalf of
Buyer, to the Seller Parties (which consideration shall be allocated among the Seller Parties in the manner set forth in Section 3.07)
for the sale of all of the Transferred Assets and the assumption of Assumed Liabilities as set forth in this Agreement (the “Purchase
Price”) shall be an amount in cash equal to the sum of (a) one billion three hundred million dollars ($1,300,000,000)
(the “Base Purchase Price”), plus (b) the Final Purchase Price Adjustment (if the Final Purchase Price
Adjustment is positive), minus (c) the absolute value of the Final Purchase Price Adjustment (if the Final Purchase Price
Adjustment is negative), (d) minus the aggregate amount of Local Payments paid pursuant to Section 3.08(b).
Section 3.02 Certain
Closing Deliverables. At the Closing:
(a) Seller
shall deliver or cause to be delivered to Buyer the following:
(i) to
the extent the Transferred Equity Interests are certificated, certificates evidencing the Transferred Equity Interests, duly endorsed
in blank or accompanied by stock powers duly executed in blank or other duly executed instruments of transfer as required by applicable
Laws or otherwise to validly transfer title in and to the Transferred Equity Interests;
(ii) a
counterpart of the Intellectual Property License Agreement in the form attached hereto as Exhibit B (with such changes as
mutually agreed upon by the Parties, the “Intellectual Property License Agreement”), duly executed by Seller;
(iii) a
counterpart of the EVAH License Agreement in the form attached hereto as Exhibit C (with such changes as mutually agreed
upon by the Parties, the “EVAH License Agreement”), duly executed by Seller;
(iv) a
counterpart of a license agreement in the form of the Intellectual Property License Agreement, but with those modifications required
to comply with the terms and conditions and reflecting the requirements of the Explorer Intellectual Property Agreement, with respect
to a license from Seller to Buyer of Intellectual Property Used in the Business that is licensed to Seller under the Explorer Intellectual
Property Agreement (the “Explorer License Agreement”), duly executed by the Seller;
(v) a
counterpart of the Transition Services Agreement, in the form attached hereto as Exhibit D (with such changes as mutually
agreed upon by the Parties, the “Transition Services Agreement”), duly executed by Seller;
(vi) a
counterpart of the Transitional Trademark License Agreement, in the form attached hereto as Exhibit F (with such changes
as mutually agreed upon by the Parties, the “Transitional Trademark License Agreement”), duly executed by Seller;
(vii) a
counterpart of a bill of sale, assignment and assumption agreement in a form reasonably acceptable to Buyer and Seller (the “Bill
of Sale, Assignment and Assumption Agreement”), duly executed by the Seller Parties;
(viii) counterparts
to the Intellectual Property Assignment Agreements in the forms attached hereto as Exhibit G, including subsections thereof
(with such changes as mutually agreed upon by the Parties, the “IP Assignment Agreements”), duly executed by the applicable
Seller Parties;
(ix) an
IRS Form W-9 duly executed by each Seller Party that is a U.S. Person and that is to transfer Transferred Assets to Buyer at the
Effective Time and an IRS Form W-8BEN-E from each Seller Party that is not a U.S. Person and that is to transfer Transferred Assets
to Buyer at the Effective Time;
(x) counterparts
of the Local Transfer Agreements, if any, duly executed by the applicable Seller Parties;
(xi) counterparts
of assignments and assumptions of the Transferred Real Property Leases in a form reasonably acceptable to Buyer and Seller (the “Lease
Assignments”), duly executed by the applicable Seller Parties;
(xii) a
counterpart of the Transitional Manufacturing and Supply Agreement in the form attached hereto as Exhibit H (with such changes
as mutually agreed upon by the Parties, the “Transitional Manufacturing and Supply Agreement”), duly executed by Seller;
(xiii) all
tangible Transferred Assets, except as set forth in Section 3.02 of the Seller Disclosure Schedules, or as otherwise set forth in
the Transition Services Agreement; provided that with respect to certain Transferred Assets, delivery shall, unless the Parties
otherwise mutually agree, be in accordance with Section 3.02 of the Seller Disclosure Schedules, or as otherwise set forth in the
Transition Services Agreement;
(xiv) written
resignations, dated as of the Closing Date, of the directors and officers of each of the Transferred Entities in their capacity as such
in a form reasonably satisfactory to Buyer;
(xv) a
counterpart of the Data Sharing Agreement in the form attached hereto as Exhibit I (with such changes as mutually agreed
upon by the Parties, the “Data Sharing Agreement”), duly executed by Seller; and
(xvi) a
customary acknowledgement by the Collateral Agent (as defined in the Credit Agreement), in writing, and in form and substance reasonably
acceptable to Buyer, confirming that all Liens (as defined in the Credit Agreement) securing the Obligations (as defined in the Credit
Agreement) on any Collateral (as defined in the Credit Agreement) that constitutes a Transferred Asset will be unconditionally released
and terminated concurrently with the Closing.
(b) Buyer
shall deliver or cause to be delivered to Seller the following:
(i) the
Closing Payment, in U.S. dollars, as specified in the Estimated Closing Statement, by wire transfer of immediately available funds,
to an account or accounts as directed by Seller in the Estimated Closing Statement;
(ii) all
Transfer Tax stamps and transfer forms (if any) in Buyer’s possession in accordance with Section 9.03 and required
to be delivered to a Seller Party;
(iii) a
counterpart of the Intellectual Property License Agreement, duly executed by Buyer or its applicable Affiliate;
(iv) a
counterpart of the EVAH License Agreement, duly executed by Buyer or its applicable Affiliate;
(v) a
counterpart of the Explorer License Agreement, duly executed by Buyer or its applicable Affiliate;
(vi) a
counterpart of the Transition Services Agreement, duly executed by Buyer or its applicable Affiliate;
(vii) a
counterpart of the Transitional Trademark License Agreement, duly executed by Buyer or its applicable Affiliate;
(viii) counterparts
of the Local Transfer Agreements, if any, duly executed by Buyer or its applicable Affiliates;
(ix) counterparts
of the Lease Assignments, duly executed by Buyer or its applicable Affiliates;
(x) a
counterpart of the Bill of Sale, Assignment and Assumption Agreement, duly executed by Buyer or its applicable Affiliate;
(xi) a
counterpart of the IP Assignment Agreement, duly executed by Buyer or its applicable Affiliate;
(xii) a
counterpart of the Transitional Manufacturing and Supply Agreement, duly executed by Buyer or its applicable Affiliate; and
(xiii) a
counterpart of the Data Sharing Agreement, duly executed by Buyer.
Section 3.03 Estimated
Closing Statement; Closing Payment. No fewer than four (4) Business Days
before the Closing Date, Seller shall prepare and deliver to Buyer the Estimated Closing Statement. The Estimated Closing Statement shall
set forth (i) the Estimated Inventory and the amount of any Estimated Inventory Increase or Estimated Inventory Decrease and (ii) the
amount to be paid by Buyer to Seller (for the benefit of the Seller Parties) at Closing pursuant to Section 3.02(b)(i) (the
“Closing Payment”), which shall be equal to the sum of the following: (A) the Base Purchase Price, plus
(B) the Estimated Purchase Price Adjustment (if the Estimated Purchase Price Adjustment is positive), minus (C) the
absolute value of the Estimated Purchase Price Adjustment (if the Estimated Purchase Price Adjustment is negative), and (iii) the
account or accounts to which Buyer shall pay the Closing Payment, in each case of clauses (i) and (ii), including detailed calculations
of the components thereof and reasonably detailed supporting information (including any Work Papers relating thereto, provided
that the third-party auditors and accountants of Seller or any of its Affiliates shall not be obligated to make any Work Papers available
to any Person except in accordance with such auditors’ and accountants’ normal disclosure procedures and then only after
such Person has signed a customary agreement relating to such access to Work Papers in form and substance reasonably acceptable to such
auditors or accountants). Buyer shall be entitled to exercise its rights pursuant to Section 6.02 in connection with the
Estimated Closing Statement. If, prior to Closing, Buyer objects to the amounts set forth in the Estimated Closing Statement delivered
by Seller, Seller shall discuss with Buyer such objections in good faith; provided that such discussion shall not delay the Closing and
if Seller and Buyer cannot resolve their disagreements then for purposes of this Agreement the Closing Payment shall be the amount set
forth in the Estimated Closing Statement.
Section 3.04 Proposed
Final Closing Statement and Final Closing Statement.
(a) As
soon as practicable, but no later than the later of (x) ninety (90) days after the Closing Date and (y) sixty (60) days
after the date that Buyer received the last shipment of Transferred Inventory from Seller, Buyer shall provide to Seller the Proposed
Final Closing Statement, together with a detailed calculation of the components thereof and reasonable supporting documentation. The
Proposed Final Closing Statement shall (i) not include any changes in assets or liabilities as a result of purchase accounting adjustments,
(ii) be based on facts and circumstances as they exist on the Closing Date and (iii) exclude the effect of any event occurring
after the Closing. With respect to any component of the Purchase Price for which Buyer proposes an adjustment from the amounts set forth
in the Estimated Closing Statement, the Proposed Final Closing Statement shall set forth the amount of such adjustment.
(b) Upon
reasonable prior written notice by the other Party, each Party shall grant such other Party, and each of such other Party’s accountants
and other representatives, reasonable access during normal business hours to review the Business’s books and records, supporting
documents and any work papers related to the preparation of the Estimated Closing Statement, Proposed Final Closing Statement or any
Purchase Price Dispute Notice, as applicable, and the adjustments contemplated hereby (collectively, “Work Papers”);
provided however, that, such access shall not unreasonably interfere with the business, personnel or operations of such Party
providing such access or any of its Affiliates; provided further, that the third-party auditors and accountants of such Party
or any of its Affiliates shall not be obligated to make any Work Papers available to any Person except in accordance with such auditors’
and accountants’ normal disclosure procedures and then only after such Person has signed a customary agreement relating to such
access to Work Papers in form and substance reasonably acceptable to such auditors or accountants. Each Party and its accountants and
other representatives may make inquiries of such other Party and such other Party’s accountants regarding questions or disagreements.
Each Party shall cooperate with and respond promptly to such inquiries, and each Party shall use its commercially reasonable efforts
to cause any such accountants to cooperate with and respond promptly to such inquiries. At a Party’s reasonable request, such other
Party shall permit any appropriate person who is employed by such other Party or its Affiliates after the Closing to assist the requesting
Party in its review of the Proposed Final Closing Statement or any Purchase Price Dispute Notice, as applicable, and any objections or
disputes with respect thereto.
(c) Seller
shall have forty-five (45) days following receipt of the Proposed Final Closing Statement (the “Review Period”). Seller
may accept the Proposed Final Closing Statement by delivering written notice to that effect to Buyer, in which case such proposed Final
Closing Statement (x) shall be deemed finally determined and conclusive and binding on the Parties, (y) shall be deemed to
set forth the Final Inventory Decrease (or Final Inventory Increase, as applicable) and the Final Purchase Price Adjustment, and, (z) shall
constitute the “Final Closing Statement” for purposes of this Agreement. If Seller delivers a notice disputing the Proposed
Final Closing Statement (the “Purchase Price Dispute Notice”) to Buyer on or prior to the last day of the Review Period,
which Purchase Price Dispute Notice shall set forth in reasonable detail the basis for such disagreement and the dollar amounts thereof,
Buyer and Seller shall use commercially reasonable efforts to resolve any disputes set forth in the Purchase Price Dispute Notice in
good faith during the thirty (30)-day period commencing on the date Buyer receives the Purchase Price Dispute Notice from Seller. If
Seller does not deliver a Purchase Price Dispute Notice to Buyer on or prior to the last day of the Review Period, the Proposed Final
Closing Statement (x) shall be deemed finally determined and conclusive and binding on the Parties, (y) shall be deemed to
set forth the Final Inventory Decrease (or Final Inventory Increase, as applicable) and the Final Purchase Price Adjustment, and, (z) shall
constitute the “Final Closing Statement” for purposes of this Agreement. The Parties acknowledge and agree that the Federal
Rules of Evidence Rule 408 shall apply to Buyer and Seller during any negotiations and any subsequent dispute arising therefrom.
To the extent any of the items in dispute (such matters, the “Disputed Items”) are resolved and agreed to in writing
between Buyer and Seller during such thirty (30)-day period of negotiations, such resolution shall be final and binding on the Parties
with respect to the specific items so resolved. If Seller and Buyer do not agree upon a final resolution with respect to any Disputed
Items set forth in the Purchase Price Dispute Notice within such thirty (30)-day period, then the remaining items in dispute shall be
submitted promptly by the Parties to KPMG International Limited or, if such firm declines to be retained to resolve the dispute, another
nationally-recognized, independent accounting firm reasonably acceptable to Buyer and Seller (in either case, the “Accounting
Firm”). Any item not specifically submitted to the Accounting Firm for evaluation shall be deemed final and binding on Buyer
and Seller (as set forth in the Proposed Final Closing Statement, the Purchase Price Dispute Notice or as otherwise resolved in writing
by Buyer and Seller).
(d) The
Accounting Firm shall be requested to render a written determination of the applicable dispute and each Disputed Item (acting as an expert
and not as an arbitrator) within fifteen (15) Business Days after delivery of the documents specified in clauses (ii) and (iii) below,
which determination must be in writing and must set forth, in reasonable detail, the basis therefor and must be based solely on (i) the
definitions and other applicable provisions of this Agreement, (ii) a single presentation (which presentations shall be limited
to the items specifically submitted to the Accounting Firm for evaluation) submitted by each of Buyer and Seller to the Accounting Firm
within five (5) Business Days after the engagement thereof (which the Accounting Firm shall forward to Buyer or Seller, as applicable,
after both presentations have been received) and (iii) one (1) written response submitted to the Accounting Firm within five
(5) Business Days after receipt of each such presentation (which the Accounting Firm shall forward to Buyer or Seller, as applicable,
after both responses have been received), and not on independent review, which such determination shall be conclusive and binding on
each Party to this Agreement. Neither Buyer, Seller, nor any of their respective Affiliates or representatives, shall have any ex
parte conversations or meetings with the Accounting Firm without the prior consent of the other Party. The terms of appointment and
engagement of the Accounting Firm shall be as reasonably agreed upon between Buyer and Seller, and any associated engagement fees and
other associated fees and expenses payable to the Accounting Firm shall be initially borne fifty percent (50%) by Seller and fifty percent
(50%) by Buyer; provided that such fees and other fees and expenses shall ultimately be borne by Buyer and Seller in the same
proportion as the aggregate amount of the Disputed Items that is unsuccessfully disputed by each such Party (as determined by the Accounting
Firm) bears to the total amount of the Disputed Items submitted to the Accounting Firm. The Accounting Firm shall resolve each Disputed
Item by choosing a value not in excess of, nor less than, the greatest or lowest value, respectively, set forth in the presentations
(and, if applicable, the responses) delivered to the Accounting Firm pursuant to this Section 3.04(d). The Proposed Final
Closing Statement shall be deemed as revised as appropriate to reflect the resolution of any objections thereto pursuant to this Section 3.04
and, as so revised, such Proposed Final Closing Statement shall be deemed to set forth the Final Inventory Decrease (or Final Inventory
Increase, as applicable) and the Final Purchase Price Adjustment and, as so revised, shall constitute the “Final Closing Statement”
for purposes of this Agreement that is conclusive and binding on the Parties.
(e) The
Parties agree that any disputes and the determination of Purchase Price (and the components thereof) shall be solely and exclusively
resolved pursuant to this Article III, including the procedures set forth in this Section 3.04; provided
that this provision shall not prohibit Buyer or Seller from instituting litigation to enforce any final determination of the Purchase
Price by the Accounting Firm pursuant to this Section 3.04, or to compel any Party to this Agreement to submit any dispute
arising in connection with this Section 3.04 to the Accounting Firm pursuant to and in accordance with the terms and conditions
of this Section3.04(e), in any court or other tribunal of competent jurisdiction in accordance with Section13.12. The substance
of the Accounting Firm’s determination shall not be subject to review or appeal, absent a showing of fraud or manifest arithmetic
error. It is the intent of the Parties to have any final determination of the Purchase Price by the Accounting Firm proceed in an expeditious
manner; provided however, any deadline or time period contained herein may be extended or modified by the written agreement of
Buyer and Seller and the Parties agree that the failure of the Accounting Firm to strictly conform to any deadline or time period contained
herein shall not be a basis for seeking to overturn any determination rendered by the Accounting Firm which otherwise conforms to the
terms of this Section 3.04.
Section 3.05 Post-Closing
Adjustment. If the Post-Closing Adjustment is a positive amount, Buyer shall pay an amount
equal to the Post-Closing Adjustment to Seller. If the Post-Closing Adjustment is a negative amount, Seller shall pay an amount equal
to the absolute value of the Post-Closing Adjustment to Buyer. Any payment due under this Section 3.05 shall be paid by wire
transfer of immediately available funds to the bank account designated by Seller or the bank account designated by Buyer, as applicable,
within five (5) Business Days after the date on which the Final Closing Statement becomes conclusive and binding on the Parties
in accordance with the provisions of Section 3.04, and, if not paid within such period, shall bear interest at the Interest
Rate. All computations of interest shall be made in accordance with Section 13.17.
Section 3.06 Certain
Calculation Principles. Each Closing Statement shall be (a) prepared and determined
from the books and records of the Business in accordance with the Transaction Accounting Principles and (b) prepared in accordance
with the provisions of this Agreement.
Section 3.07 Purchase
Price Allocation. The Purchase Price shall be paid and allocated among the Seller Parties
in accordance with Schedule 3.07 and further allocated among the Transferred Assets based on the values set forth on Schedule
3.07. If the values set forth on Schedule 3.07 are disputed by any Taxing Authority, the Party receiving notice of such dispute
shall make reasonable efforts to notify the other Party concerning the existence of such dispute and the Parties shall, where and when
practicable, consult with each other with respect to all issues related to Schedule 3.07 in connection with such dispute.
Section 3.08 Local
Purchase Price Payments for Asset and Inventory Transfers(i) .
(a) At
least three (3) and not more than five (5) Business Days prior to the Closing, Seller shall deliver to Buyer a statement setting
out the jurisdictions in which Buyer and its Affiliates shall be required to pay the applicable Seller Party for any Transferred Inventory
or other Transferred Asset that will be transferred in such jurisdiction (and, for the avoidance of doubt, such amount shall be paid
by Buyer in accordance with this Agreement). If any Transferred Inventory or other Transferred Assets is to be transferred by a Seller
Party in a jurisdiction set forth on such statement, Buyer shall, or shall cause its applicable Affiliate to, pay such amount as set
forth on such statement to such Seller Party (a “Local Payment”) no later than the Closing Date The Parties agree
that the amount of any such Local Payments shall be determined in U.S. dollars; provided that, to the extent any Local Payment is to
be determined in a currency other than U.S. dollars as required by applicable Law or as mutually agreed by the Parties, the amount of
such Local Payment shall be converted into such other currency at the Reference Exchange Rate unless applicable Law requires conversion
into such other currency at a local exchange rate in which case the latest known local exchange rate will prevail. Any Local Payment
shall be deemed to partially satisfy (and, for clarity, shall not increase) the Purchase Price.
(b) If
a Local Payment is received by a Seller Party pursuant to Section 3.08(a), the dollar equivalent of such Local Payment (which,
if made in a currency other than the dollar, shall be converted into dollars at a Reference Exchange Rate) shall be included in the aggregate
amount of Local Payments described in clause (d) of Section 3.01.
(c) If
a Local Payment made pursuant to Section 3.08(a) with respect to Transferred Inventory or any other Transferred Asset
is increased after the Closing Date under Section 3.05, then Buyer shall, or shall cause its Affiliates to, pay to the applicable
Seller Party an amount equal to such excess (in the currency set forth in the relevant local invoice) no later than five (5) Business
Days following the determination of such increase, and the applicable Seller Party shall pay to Buyer in dollars an amount equal to such
increase in the Local Payment (converted into dollars at the same exchange rate as applied under Section 3.08(b)) by way
of an adjustment to the amounts paid by Buyer pursuant to Section 3.01 and Section 3.05.
(d) If
a Local Payment made pursuant to Section 3.08(a) with respect to Transferred Inventory or any other Transferred Asset
is decreased after the Closing Date under Section 3.05, then the applicable Seller Party shall pay to Buyer or its applicable
Affiliate an amount equal to such decrease (in the currency set out in the relevant local invoice) no later than five (5) Business
Days following the determination of such decrease, and Buyer shall pay to the applicable Seller in dollars an amount equal to such decrease
in the Local Payment (converted into dollars at the same exchange rate as applied under Section 3.08(b)) by way of an adjustment
to the amounts paid by Buyer pursuant to Section 3.01 and Section 3.05.
Article IV
Representations
and Warranties of Seller
Seller hereby represents
and warrants to Buyer, as of the Agreement Date and as of the Closing Date, that, except as set forth in the Seller Disclosure Schedules,
it being acknowledged and agreed that disclosure of any item in any section or subsection of the Seller Disclosure Schedules shall also
be deemed disclosure with respect to any other section or subsection of this Agreement to which the relevance of such item is reasonably
apparent from its face that such disclosure is applicable to such other sections or subsections:
Section 4.01 Formation
and Authority of the Seller Parties; Enforceability.
(a) Seller
is, and each other Seller Party is, a corporation or other entity duly incorporated, formed or organized, validly existing and, to the
extent legally applicable, in good standing under the Laws of its jurisdiction of incorporation, formation or organization. Seller has,
and each other Seller Party has, the requisite corporate or other appropriate power and authority to execute, deliver and perform its
obligations under the Seller Transaction Agreements (including the consummation of the Seller Transactions) to which it is a party. Seller
has, and each other Seller Party has, the requisite corporate or other power and authority to own the Transferred Assets or lease the
assets used in the Business and the qualification to operate the Business as a foreign corporation or other organization to do business
(if applicable), and to the extent legally applicable, is in good standing, with respect to the Business, in each jurisdiction in which
the character of its owned, operated or leased properties or the nature of its activities makes such qualification necessary, except
for jurisdictions where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be
expected to be material to the Business.
(b) The
execution, delivery and performance by each Seller Party of the Seller Transaction Agreements to which it is a party have been (or, in
the case of any Seller Party other than Seller or any Seller Transaction Agreement to be entered into after the Agreement Date, will
be prior to the Closing) duly authorized by all requisite corporate or organizational action on the part of such Seller Party, and no
shareholder or other similar approval is required in connection with such Seller Party’s execution, delivery and performance of
such Seller Transaction Agreements. This Agreement has been duly executed and delivered by Seller, and upon execution and delivery thereof,
the other Seller Transaction Agreements will be duly executed and delivered by the Seller Parties party thereto, and (assuming due authorization,
execution and delivery thereof by the other parties hereto and thereto) this Agreement constitutes, and upon execution and delivery thereof,
the other Seller Transaction Agreements will constitute, legal, valid and binding obligations of the Seller Parties party hereto or thereto,
enforceable against the Seller Parties party hereto or thereto in accordance with their respective terms, subject to the Bankruptcy and
Equity Exception.
(c) If
there is any Transferred Entity in existence as of the Closing Date, each Transferred Entity will as of the Closing be a corporation
or other organization duly incorporated, formed or organized, validly existing and, to the extent legally applicable, in good standing
under the Laws of its jurisdiction of incorporation, formation or organization and has the requisite corporate or other appropriate power
and authority to own and lease its properties and to operate its business as conducted as of the Closing and the qualification to operate
its business as a foreign corporation or other organization to do business (if applicable) and, to the extent legally applicable, will
as of the Closing be in good standing, in each jurisdiction where the character of its owned, operated, or leased properties or the nature
of its activities makes such qualification material to the operation of its business, except for jurisdictions where the failure to be
so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to be material to the Business.
All of the Transferred Equity Interests with respect to any Transferred Entity in existence as of the Closing Date will as of the Closing
be duly authorized and validly issued, fully paid and nonassessable and not issued in violation of any contract or agreement, any Governing
Documents of the Transferred Entities, applicable Law or any preemptive or similar rights. The Transferred Equity Interests with respect
to any Transferred Entity in existence as of the Closing Date will as of the Closing represent all of the issued and outstanding equity
interests of the Transferred Entities, be wholly-owned by Seller or one of its Subsidiaries, free and clear from any Lien (other than
applicable Liens under securities Laws), and will have been issued in compliance with applicable securities Laws or exemptions therefrom.
There are no options, warrants, other equity interests, “phantom” stock rights, stock based performance units or rights of
conversion or other similar rights, agreements, arrangements or commitments obligating any Transferred Entity in existence as of the
Closing Date to issue or sell or otherwise dispose of or redeem or otherwise acquire any shares of its capital stock, other equity interests
or securities convertible into or exchangeable for its shares of capital stock or other equity interests, other than as provided in this
Agreement or required by applicable Law. Other than the organizational documents of the Transferred Entities required by applicable Law,
there are no voting trusts, stockholder agreements, proxies or other agreements in effect with respect to the voting or transfer of the
Transferred Equity Interests with respect to any Transferred Entity in existence as of the Closing Date. No Transferred Entity in existence
as of the Closing Date owns or has owned, directly or indirectly, any capital stock, membership interest, partnership interest or other
equity interest in any Person. No Transferred Entity in existence as of the Closing Date has any declared and unpaid dividends on any
of the Transferred Equity Interests or any Debt. Upon delivery to Buyer of certificates representing the Transferred Equity Interests
at the Closing, Buyer shall acquire good and valid title to the Transferred Equity Interests, free and clear of any Liens (other than
applicable Liens under securities Laws). No Transferred Entity in existence as of the Closing has ever held any asset, property or right
other than contracts or agreements that, as of the Closing, will constitute Transferred Assets and that are transferred to such Transferred
Entity pursuant to the proviso in Section 2.05(a). As of the Closing, no Transferred Entity in existence as of the Closing
Date will have any (w) Excluded Liabilities, (x) any Liabilities that are not associated with Transferred Assets held by such
Transferred Entities, (y) any Liabilities that are not primarily related to the Business or (z) any Liabilities under Environmental
Laws.
Section 4.02 No
Conflict. Except for the consents or approvals contemplated in Section 4.03
or set forth on Section 4.02 of the Seller Disclosure Schedules, the consummation of the Transactions and the execution,
delivery and performance by the Seller Parties of the Seller Transaction Agreements do not and will not:
(a) violate
or conflict with any Governing Documents of any of the Seller Parties;
(b) conflict
with or violate any Law or Order applicable to any of the Seller Parties or the Business; or
(c) result
in any breach of, or constitute a default (or event which, with the giving of notice or lapse of time, or both, would become a default)
under, or give to any Person any right to terminate, amend, accelerate or cancel, or give rise to any Consent or notice right under,
or result in the creation of any Lien (other than a Permitted Lien) on, the Business or any Transferred Asset pursuant to any note, bond,
mortgage, indenture, contract or agreement, Permit, franchise, or other instrument to which any of the Seller Parties (with respect to
the Business or the Transferred Assets) is a party or by which any Transferred Assets are bound;
except, in each case of clauses (b) and
(c), as would not reasonably be expected to be material, individually or in the aggregate, to the Business.
Section 4.03 Consents
and Approvals. Except as set forth on Section 4.03 of the Seller Disclosure
Schedules, the consummation of the Transactions and the execution, delivery and performance by the Seller Parties of the Seller Transaction
Agreements do not and will not require any Consent, waiver or other action by, or any filing with or notification to, any Government
Authority by any Seller Party or any Transferred Entity, except for (a) with respect to any Transferred Entity, compliance with
the applicable requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and
regulations promulgated thereunder and state securities, takeover and “blue sky” laws, (b) any filings, notifications,
approvals or clearances required under applicable Antitrust Law, or (c) any such Consent, waiver, action, filing or notification
the failure of which to make or obtain would not be material, individually or in the aggregate, to the Business.
Section 4.04 Financial
Information; Absence of Undisclosed Liabilities.
(a) Section 4.04(a)(i) of
the Seller Disclosure Schedules sets forth an accurate, correct and complete copy of the (i) management-prepared unaudited statement
of assets and liabilities of the Business as of June 30, 2023 and (ii) the management-prepared unaudited income statements
of the Business for the year ended December 31, 2022 and the nine-months ended September 30, 2023 (the statement of assumed
assets and assumed liabilities and income statements referred to in clauses (i) and (ii), collectively, the “Unaudited
Statements of the Business”). The Unaudited Statements of the Business (A) have been prepared based on the books and records
of Seller and its Subsidiaries and other Seller Parties, which such books and records have been and are being prepared in the ordinary
course of business consistent past practice, and have been and are being maintained in accordance with GAAP and any other applicable
accounting requirements, (B) have been prepared in conformity with Seller’s accounting policies and in accordance with GAAP,
and (C) present fairly, in all material respects, the financial condition of the Business as of the applicable date, except with
respect to (1) the estimate for inventory reserves, (2) the allocation or estimation of costs or operating expenses that were
included therein as set forth on Section 4.04(a)(ii) of the Seller Disclosure Schedule, (3) allocations of corporate
expenses or rights to receive corporate services and intercompany charges as set forth on Section 4.04(a)(iii) of the
Seller Disclosure Schedule, (4) the financial performance of the Business had it been conducted as a stand-alone business, (5) the
presentation of statements of equity, comprehensive income and cash flows for the periods then ended as they are not prepared in their
entirety and (6) footnotes and normal and recurring year-end adjustments, the effect of which adjustments is not, individually or
in the aggregate, material. The Unaudited Statements of the Business present fairly, in all material respects, the financial condition
of the Business as of the applicable date; provided that Excluded Assets and Excluded Liabilities are not reflected in the Unaudited
Statements of the Business.
(b) Other
than (i) as specifically and adequately reflected in the latest statement of assets and liabilities forming part of the Unaudited
Statements of the Business, (ii) Liabilities incurred in the ordinary course of business consistent with past practice since June 30,
2023 (none of which is a Liability for breach of contract, breach of warranty, tort or infringement, violation of applicable Law, environmental,
health or safety matter, misappropriation or an Action), (iii) Excluded Liabilities, and (iv) Liabilities that would not be
material, individually or in the aggregate, to the Business, there are no Liabilities of the Business.
Section 4.05 Absence
of Certain Changes or Events. Except as contemplated by the Transaction Agreements or in
connection with the negotiation and execution of the Transaction Agreements, since June 30, 2023, (a) the Seller Parties have
conducted the Business in all material respects in the ordinary course of business consistent with past practice, (b) there has
not been any Material Adverse Effect, and (c) there has not occurred any event, change, circumstance, development, occurrence, effect,
fact, or condition that, if taken during the period from the Agreement Date through the Closing, would constitute a breach of Section 6.01(a)(i),
(ii), (iv), (vi), (vii), (viii), (ix), (xiii) or, solely with respect to the preceding
subclauses, (xviii).
Section 4.06 Absence
of Litigation. Except as set forth on Section 4.06 of the Seller Disclosure
Schedules, since January 1, 2021, (a) no Actions have been or are pending or, to the Knowledge of Seller, threatened in writing
or otherwise against any of the Seller Parties with respect to the Business, any of the Transferred Assets or any of the Assumed Liabilities
that individually or in the aggregate would reasonably be expected to be material to the Business, and (b) none of the Seller Parties
(with respect to the Business) nor any of the Transferred Assets has been or is subject to or bound by any outstanding Order that individually
or in the aggregate would reasonably be expected to be material to the Business.
Section 4.07 Compliance
with Laws; Permits.
(a) Except
as, individually or in the aggregate, would not reasonably be expected to be material to the Business, since January 1, 2021, each
of the Seller Parties has been in compliance, in all material respects and, in each case, with respect to the Business, with all Laws
and Orders applicable to the Business or by which any Transferred Asset or Assumed Liability is bound or affected. Since January 1,
2021, none of the Seller Parties has received any written notification of any pending or, to the Knowledge of Seller, threatened Action
from any Government Authority alleging potential or actual material noncompliance by, or Liability of, any of the Seller Parties under
any applicable Law or Order as it relates to the Business. Section 4.07 of the Seller Disclosure Schedules sets forth an
accurate, correct, and complete list of each Permit that is material to the Business. None of the Seller Parties has been in default
under or has violated any such Permit. The Seller Parties validly own, hold or possess all Permits that are necessary for the conduct
of the Business as conducted immediately prior to the Closing Date, except where the failure to validly own, hold or possess such Permit
would not reasonably be expected to be material, individually or in the aggregate, to the Business.
(b) None
of the Seller Parties, or any of their respective officers, directors, or employees, or to the Knowledge of Seller, any agents or other
Persons acting for or on behalf of any of the foregoing Persons, in each case with respect to the Business is currently, or since January 1,
2021 has been, (i) a Sanctioned Person, (ii) organized, resident, or located in a Restricted Country, (iii) engaged in
any dealings or transactions with or for the benefit of any Sanctioned Person or in any Restricted Country, (iv) otherwise in violation
of applicable Sanctions Laws or Ex-Im Laws, (v) convicted for a crime that could lead to debarment under 21 U.S.C. §335a(a) or
any similar Law or listed on the United States Food and Drug Administration Debarment List or similar list in any other jurisdiction,
(vi) debarred, excluded or suspended from participation in any healthcare program administered by a Government Authority or (vii) listed
on the United States General Services Administration or Department of Health and Human Services Office of Inspector General published
list of parties excluded from federal procurement programs and non-procurement programs.
(c) Since
January 1, 2018, with respect to the Business, none of the Seller Parties, or any of their directors, officers and employees or,
to the Knowledge of Seller, any other Representatives acting for or on behalf of any of the Seller Parties have, directly or indirectly,
(i) taken or are taking any action in violation of any Anti-Corruption Laws; (ii) authorized, facilitated, offered or promised
to make, or authorized the payment or giving of, directly or indirectly, any payment, contribution, gift, entertainment, bribe, rebate,
payoff, influence payment, kickback, financial or other advantage, or unlawful payment or gift of money or anything else of value, regardless
of form or amount, to any Person for the purpose of (A) securing an unlawful advantage, (B) corruptly influencing any act or
decision of any Government Official in his or her official capacity; (C) inducing any Person to perform or omit to perform any activity
related to his or her duties; or (D) corruptly inducing any Government Official or other Person to influence or affect any act or
decision of any Government Authority, in each case, in order to assist the Seller Parties in obtaining or retaining business for or with,
or in directing business to, the Seller Parties; (iii) established or maintained, or are maintaining, any unlawful or unrecorded
fund of corporate monies or other properties or used any funds for any unlawful contributions, gifts, entertainment, hospitality, travel
or other unlawful expenses; or (iv) made, and are not making, any false or fictitious entries on any Seller Parties’ accounting
books and records.
(d) None
of the Seller Parties, nor any of their respective officers, directors, or employees, nor, to the Knowledge of Seller, any of its agents
or other Persons acting for or on behalf of any of the Seller Parties, in each case with respect to the Business, is or has since January 1,
2018, been given notice of any investigation, inquiry or enforcement proceeding by any Government Authority, or received from any Government
Authority any written notice or inquiry, or made any voluntary or involuntary or directed disclosure to a Government Authority, in each
case concerning any actual or potential violation, breach, noncompliance, or wrongdoing by any of the Seller Parties or any of their
respective officers, directors, employees, agents or other Persons acting for or on behalf of any of the Seller Parties under Sanctions
Laws, Ex-Im Laws, or Anti-Corruption Laws.
Section 4.08 Intellectual
Property.
(a) Section 4.08(a)(i) of
the Seller Disclosure Schedules contains an accurate, correct and complete list of all Business Intellectual Property that constitutes
Registrable IP, including for each such item, as applicable, (i) the registration, issuance, grant and application numbers, (ii) the
registration, issuance, grant and filing dates, (iii) the identity of the legal and record owner(s) thereof (including any
co-owner(s) or joint owner(s)), and (iv) the jurisdiction where registered, issued, granted or filed. The Seller Parties have
maintained all Registrable IP in the ordinary course of business consistent with past practice. All required maintenance fees, annuity
fees or renewal fees for the maintenance of the Business Intellectual Property that are finally due or payable, without the possibility
of extension prior to Closing, and nonpayment of which would result in abandonment of the relevant Business Intellectual Property, will
be timely and fully paid prior to the Closing. None of the Patents that are Business Intellectual Property and none of the other material
Business Intellectual Property are jointly owned with any third Person, except as set forth on Section 4.08(a)(ii) of
the Seller Disclosure Schedules. The Business Intellectual Property that constitutes Registrable IP is subsisting and in full force and
effect and, except with respect to applications, to the Knowledge of Seller, valid and enforceable.
(b) All
Business Intellectual Property is exclusively owned by one of the Seller Parties, free and clear of all Liens (excluding Permitted Liens).
All Intellectual Property, Technology, Software and Data, in each case, necessary or sufficient for and Used in the operation of the
Business, as conducted by the Seller Parties as of Closing, will immediately after the Closing either be (i) (x) owned by Buyer
or a Transferred Entity and (y) available for use by Buyer in connection with the operation of the Business, on terms and conditions
that are in all material respects the same as those under which the Seller Parties owned or used such Intellectual Property, Technology,
Software and Data immediately prior to the Closing or (ii) made available to Buyer and its Affiliates (solely for use by the Business),
under the Transition Services Agreement, the Transitional Trademark License Agreement, the EVAH License Agreement, the Explorer License
Agreement or the Intellectual Property License Agreement. Except as set forth on Section 4.08(b) of the Seller Disclosure
Schedules, the Business Intellectual Property, together with the Intellectual Property licensed to Buyer and its Affiliates under the
Assumed Contracts, the Transition Services Agreement, the Transitional Trademark License Agreement, the EVAH License Agreement, the Explorer
License Agreement and the Intellectual Property License Agreement for the respective terms thereof, constitute all of the Intellectual
Property that is material to and necessary to operate and conduct the Business immediately following the Closing in all material respects
as it is and was conducted as of the Agreement Date and as of immediately prior to the Closing. Notwithstanding the foregoing, nothing
in this Section 4.08(b) shall be deemed to constitute a representation or warranty as to infringement or misappropriation
of Intellectual Property, Software or Data, which matters are addressed in Section 4.08(c), Section 4.08(d) and
Section 4.08(e).
(c) The
Operating Business, as conducted by the Seller Parties, and, to the Knowledge of Seller, the R&D Business as conducted by the Seller
Parties, does not infringe upon or misappropriate, or otherwise violate, and, since January 1, 2021, has not infringed upon or misappropriated,
or otherwise violated, the Intellectual Property, Technology, Software or Data of any third party (provided that the foregoing
representation and warranty with respect to any Product Candidate is made subject to the Knowledge of Seller).
(d) Except
as set forth on Section 4.08(d) of the Seller Disclosure Schedules, none of the Seller Parties has received any written
Claim or notice from any Person since January 1, 2021 (i) alleging that the conduct and operation of the Business by the Seller
Parties infringes upon, misappropriates or otherwise violates any Intellectual Property, Technology, Software or Data of any third party
or (ii) challenging the validity, enforceability, duration, scope, registrability, right to register, priority, ownership, right
to use or practice, or use or practice of any Business Intellectual Property. There are no Actions pending or, to the Knowledge of Seller,
threatened in writing or otherwise against any of the Seller Parties alleging that the conduct and operation of the Business by the Seller
Parties infringes upon, misappropriates or otherwise violates any Intellectual Property, Technology, Software or Data of any third party.
No item of Business Intellectual Property is subject to any outstanding Order imposing restrictions on the ownership, validity, registrability,
right to register, use, practice, duration, scope, priority, effectiveness or enforceability of such Business Intellectual Property.
(e) Except
as set forth on Section 4.08(e) of the Seller Disclosure Schedules, to the Knowledge of Seller, no Person is engaging
in any activity that infringes upon, misappropriates or otherwise violates any (i) Business Intellectual Property or (ii) Business
Technology, in each case except as, individually or in the aggregate, would not reasonably be expected to be material to the Business.
(f) None
of the Seller Parties (i) have disclosed, delivered, or have any duty or obligation (whether present, contingent or otherwise) to
disclose or deliver, any source code for any proprietary Software that is included in the Business Intellectual Property to any third
party, except subject to reasonable confidentiality agreements or otherwise as would not reasonably be expected to be material to the
Business, or (ii) use, or have used, any “open source” Software under a license and in a manner that would (x) grant
or purport to grant to any Person a license or other similar right to any of the material Business Intellectual Property or (y) require
the Business to disclose or distribute the source code to any of the material proprietary Software that is included in the Business Intellectual
Property, to provide such source code for the purpose of making derivative works, or to make available for redistribution to any Person
such source code at no or minimal charge.
(g) The
Seller Parties have taken security measures that are commercially reasonable in the industry in which it operates to maintain and protect
the confidentiality of all Trade Secrets and material confidential information included in the Business Intellectual Property. Except
as set forth on Section 4.08(g) of the Seller Disclosure Schedules, all current or former employees, consultants or
independent contractors of Seller or any of its Affiliates who have contributed, developed or conceived any Intellectual Property that
is Related to the Business or related to any Product or Product Candidate have, to the extent that rights in such contributions, developments
or conceptions of such Intellectual Property are not automatically conveyed to Seller or any of its Affiliates by operation of Law, executed
a valid and legally binding agreement with provisions under which each such Person assigns (as a present assignment) to a Seller Party
ownership of, and all rights, title and interest in and to, the Person’s contribution, development or conception. To the Knowledge
of Seller, no Trade Secrets or material confidential information included in the Business Intellectual Property has been disclosed to
any Person by Seller or any of its Affiliates except as authorized pursuant to commercially reasonable non-disclosure or license agreements.
To the Knowledge of Seller, no current or former employee, consultant or independent contractor of Seller or any of its Affiliates has
any claim of ownership in or to, or holds any rights, title or interest in and to, any Intellectual Property that is Business Intellectual
Property.
(h) The
execution of this Agreement and the consummation of the transactions contemplated hereby will not result in the loss or impairment of
the right to own or use any Business Intellectual Property, except as, individually or in the aggregate, would not reasonably be expected
to be material to the Business.
Section 4.09 Data
Privacy.
(a) None
of the Seller Parties is, or has been since January 1, 2021, in violation of Laws applicable to the conduct of the Business relating
to data privacy, data protection and data security or its published privacy policies, or any other Data Security Requirements applicable
to the Business, in each case except as, individually or in the aggregate, would not reasonably be expected to be material to the Business.
Since January 1, 2021, there have not been any actual security incidents, data security breaches, unauthorized access or unauthorized
use of any of the Business Systems, or unauthorized acquisition, destruction, damage, disclosure, loss, corruption, alteration, or use
of any Business Technology (“Data Breach”), in each case except as, individually or in the aggregate, would not reasonably
be expected to be material to the Business (for the avoidance of doubt, any notifiable Data Breach under applicable Laws shall be deemed
material to the Business).
(b) The
Seller Parties have taken security measures that are commercially reasonable in the industry in which it operates to maintain and protect
Personally Identifiable Information that is maintained by the Business.
(c) The
Seller Parties have taken security measures that are commercially reasonable in the industry in which it operates, and that are designed
to protect the integrity of the Business Systems and the Data stored or contained therein or transmitted thereby.
Section 4.10 Environmental
Matters
Except as would not reasonably
be expected to be material, individually or in the aggregate, to the Business (other than with respect to Section 4.10(e) and
Section 4.10(f)):
(a) each
of the Business, the Transferred Assets, and, with respect to the Business or any Transferred Assets, the Seller Parties, is and since
January 1, 2021 has been, in compliance with Environmental Laws, which compliance includes obtaining, maintaining and complying
with Environmental Permits;
(b) there
are no Actions pending or, to the Knowledge of Seller, threatened in writing, against the Business, the Transferred Assets, or any of
the Seller Parties with respect to the Business or the Transferred Assets, in each case, under Environmental Laws;
(c) none
of the Seller Parties has released any Hazardous Materials in quantities or concentrations that require active remediation under Environmental
Law on, at or under any facilities or properties currently or formerly owned by the Seller Parties with respect to the Business or the
Transferred Assets, which Environmental Release has resulted or would reasonably be expected to result in any of the Seller Parties,
or the Business or the Transferred Assets, incurring Liability under Environmental Laws;
(d) to
the Knowledge of Seller, there have been no other Environmental Releases, or other handling or management of Hazardous Materials, that
would reasonably be expected to result in any of the Seller Parties with respect to the Business, or the Business or the Transferred
Assets, incurring Liability under Environmental Laws;
(e) none
of the Seller Parties has assumed by contract or operation of law any obligation or Liability of any other Person arising under Environmental
Laws with respect to the Business; and
(f) Seller
has made available to Buyer prior to the Agreement Date accurate, correct and complete copies of all material environmental audits, environmental
assessments, correspondence with Government Authorities, and other material documents relating to environmental, health, or safety issues,
relating to the Business or any facility currently owned, leased or used by the Seller Parties with respect to the Business, which are
in the Seller’s possession and were prepared since January 1, 2021.
Section 4.11 Material
Contracts.
(a) The
following contracts and agreements with respect to the Business shall constitute “Material Contracts” for the purposes
of this Agreement:
(i) any
contract or agreement with any Material Customer or any Material Supplier, including purchase orders or service level agreements open
as of the Agreement Date;
(ii) any
contract or agreement (A) that restricts the ability of the Business to compete in any line of business or with any Person or in
any geographic area during any period of time, (B) pursuant to which the Business or any Transferred Entity has granted exclusive
rights, (C) that contains “most favored nation” provisions in favor of any Person, or (D) that contains any exclusivity,
standstill or material non-solicitation obligations in favor of any Person;
(iii) any
contract or agreement that contains an option or grants to any Person any right of first refusal, right of first negotiation, right of
first offer, or other similar right in favor of any person with respect to any portion of the Business or the Transferred Assets;
(iv) any
contract in which any of the Seller Parties have (A) granted development rights, or marketing or distribution rights relating to
any Product or Product Candidate or (B) agreed to purchase a minimum quantity of goods in a material amount, or include a “take-or-pay”
provision involving a material amount, relating to any Product or Product Candidate or has agreed to purchase Inventories relating to
any Product or Product Candidate exclusively from a certain party;
(v) any
contract or agreement related to the acquisition, transfer, sale or other disposition of or investment in any business or any equity
interests of any Person or any material assets (whether by merger, sale of stock, sale of assets or otherwise), other than the acquisition
or disposition of Inventory in the ordinary course of business consistent with past practice;
(vi) any
contract or agreement that is a settlement, conciliation or similar agreement with respect to any Action, pursuant to which the Seller
Parties or the Transferred Entities will have any payment obligation that would reasonably be expected to result in payments in excess
of $1,000,000 or will be subject to any limitations on the conduct of operations, after the Closing;
(vii) any
joint venture, partnership, strategic alliance, collaboration or other similar contract or agreement with any third party;
(viii) any
collective bargaining agreement or other contract or agreement with any labor union or organization or works council (each, a “CBA”);
(ix) all
employment, bonus, severance, retention, termination, or change in control contracts or agreements or other compensatory contracts or
agreements with any Business Employee at the level of senior director or above, and any contract or agreement with any Business Contractor
that involves annual aggregate payments to or from the Seller Parties of at least $50,000;
(x) any
contract or agreement pursuant to which any Seller Party (A) has been granted an inbound license, sublicense, covenant not to sue
or other right, option or interest in or to any Intellectual Property, Technology, Software or Data (other than licenses of generally
commercially available Intellectual Property, Technology, Software or Data) that is material to the Business, any Product or Product
Candidate, or (B) has granted a third party (1) an exclusive outbound license or sublicense in or to any Business Intellectual
Property or Business Technology or (2) an outbound license, sublicense, covenant not to sue or other right, option or interest with
respect to any Intellectual Property, Technology, Software or Data (other than any licenses granted to customers, suppliers or service
providers in the ordinary course of business consistent with past practice) that is material to the Business, any Product or Product
Candidate;
(xi) any
contract or agreement for the development of any Intellectual Property Used in and necessary for the operation of the Business (other
than confidentiality, inventor assignment and other Intellectual Property assignment agreements with employees, consultants, subcontractors,
and independent contractors entered into in the ordinary course of business consistent with past practice);
(xii) any
contract or agreement with a third party that involves annual aggregate payments to or from the Seller Parties of at least $1,000,000
with respect to the warm water Products or $2,000,000 with respect to the cold water Products and, in each case, cannot be terminated
without penalty by Seller or the applicable Transferred Entity upon less than 60 days’ notice;
(xiii) any
Transferred Real Property Lease;
(xiv) any
contract or agreement which impose a Lien, other than a Permitted Lien, on any of the Transferred Assets;
(xv) any
contract or agreement containing any provision requiring any of the Seller Parties to indemnify any other party (excluding indemnities
contained in agreements for the purchase, sale, or license of products or product candidates or services in the ordinary course of business
consistent with past practice);
(xvi) any
contract with any Government Authority;
(xvii) any
contract or agreement relating to capital expenditures under which there are outstanding payment obligations of the Seller Parties (whether
or not contingent) that would reasonably be expected to result in payments in excess of $250,000; and
(xviii) any
other contract or agreement that, if terminated prior to the Closing, would reasonably be expected to be material to the Business.
(b) Section 4.11(a) of
the Seller Disclosure Schedules sets forth an accurate, correct and complete list of each Material Contract in effect as of the Agreement
Date, and Seller has made available to Buyer accurate, correct and complete copies of, each Material Contract. (i) Each Material
Contract is a legal, valid and binding obligation of the Seller Party party thereto, as the case may be, and, to the Knowledge of Seller,
each other party to such Material Contract, and is enforceable against such Seller Party and, to the Knowledge of Seller, each other
party to such Material Contract, in accordance with its terms, subject, in each case, to the Bankruptcy and Equity Exception, (ii) none
of the Seller Parties or, to the Knowledge of Seller, any other party to a Material Contract is in material default under or breach of
a Material Contract, (iii) none of the Seller Parties has received any written notice of breach of a Material Contract, and (iv) each
Seller Party has performed in all material respects all obligations required to be performed by it under the Material Contracts to which
it is a party and, to the Knowledge of Seller, each other party to a Material Contract has performed in all material respects all obligations
required to be performed by it.
Section 4.12 Employment
and Employee Benefits Matters.
(a) Section 4.12(a) of
the Seller Disclosure Schedules sets forth an accurate, correct and complete list as of the Agreement Date of each material Business
Employee Plan. With respect to each material Business Employee Plan, Seller will have made available, an accurate, correct and complete
copy, to the extent applicable, of the current plan document (with all amendments thereto), or if unwritten, a written summary of the
material terms of such plan and the most recent summary plan description (and any summaries of material modifications thereto), or for
any employment agreements, offer letters, or similar individualized agreements having terms consistent in all material respects with
a “template” or “form” agreement, a copy of such template or form.
(b) Except
as set forth on Section 4.12(b) of the Seller Disclosure Schedules, no Business Employee Plan provides, and no Transferred
Entity has any liability to provide, for post-termination or post-employment welfare benefits for any Business Employee (or any other
Person) beyond those for which the covered Person pays the full cost of coverage. No Transferred Entity has any Liability by reason of
at any time being considered a single employer under Section 414 of the Code with any other Person, and no Transferred Entity sponsors,
maintains, contributes to, or could be required to contribute to an Employee Plan. No Transferred Entity employs any person or retains
any individual as an independent contractor.
(c) Except
as set forth on Section 4.12(c) of the Seller Disclosure Schedules, with respect to each Business Employee Plan: (i) each
Business Employee Plan that is required to be registered has been registered in all respects (and, where applicable, accepted for registration)
except as individually or in aggregate, would not reasonably be expected to be material to the Business and (ii) no Business Employee
Plan is a “defined benefit plan”, a multiemployer plan (as defined in Section 4001(a)(3) of ERISA), or a multiple
employer plan (as defined in Section 4063 or 4064 of ERISA).
(d) Except
as, individually or in the aggregate, would not reasonably be expected to be material to the Business, (i) each Business Employee
Plan has been established, funded, administered and operated in accordance with its terms and all applicable Law and, (ii) with
respect to each Business Employee Plan, all contributions, premiums or payments required to be made have been made on or before their
due dates.
(e) No
Claims or Actions are pending or, to the Knowledge of Seller, threatened in connection with any Business Employee Plan that could result
in a Liability to Buyer or its Affiliates (including, after the Closing, the Transferred Entities).
(f) To
the Knowledge of Seller, there are no and, since January 1, 2021, have been no pending or threatened organizational activities,
petitions or other unionization activities seeking recognition or certification of a bargaining unit in the Business. No unfair labor
practice charges or other complaints or union representation questions before any labor board or Government Authority are pending or,
to the Knowledge of Seller, threatened by or on behalf of current or former employees of Seller Parties who provide or provided services
to the Business. No (i) strikes, lockouts, slowdowns, work stoppages, or (ii) labor-related grievances, labor-related arbitrations
or other labor disputes are, in each case, pending or, to the Knowledge of Seller, threatened with respect to any current or former employees
of the Seller Parties who provide or provided services to the Business, or against or affecting any Transferred Entities or the Business,
and no such strike, lockout, slowdown or work stoppage, labor-related grievance, labor-related arbitration or other dispute has occurred
within the last three (3) years.
(g) Except
as, individually or in the aggregate, would not reasonably be expected to be material to the Business, (i) the Transferred Entities
and, with respect to the Business and any current or former employees and independent contractors of the Seller Parties or workers or
employees of third party staffing or labor provision businesses who provide or provided services to the Business, the Seller Parties,
are and since January 1, 2021, have been in compliance with all applicable Laws relating to labor, employment and employment practices
including, without limitation, all Laws respecting terms and conditions of employment, health and safety, wages and hours (including
the classification of independent contractors and exempt and non-exempt employees), immigration, human rights (including human trafficking
and child labor), employment discrimination, disability rights or benefits, equal opportunity, plant closures and layoffs, workers’
compensation, labor relations, employee leave issues, affirmative action and unemployment insurance and have paid in full all wages,
wage premiums, salaries, commissions, bonuses, fees other compensation and benefits and all fines, Taxes, interest, levies, penalties
assessments, contributions and payments to third parties due to or on behalf of any current or former employees or independent contractors
of the Seller Parties or workers or employees of third party staffing or labor provision businesses who provide or provided services
to the Business, (ii) none of the Transferred Entities, or with respect to the Business, the Seller Parties is subject to any pending
or, to the Knowledge of Seller, threatened, non-routine investigation from any labor inspection or similar Government Authority, and
no Action is currently pending against the Transferred Entities or any Seller Party with respect to any Business Employee or former employees
or independent contractor of the Business or workers or employees of third party staffing or labor provision businesses who provide or
provided services to the Business and (iii) no obligations of any Transferred Entity or any Seller Party to comply with any Order
in respect of any Business Employees or former employee or independent contractors of the Business or workers or employees of third party
staffing or labor provision businesses who provide or provided services to the Business are outstanding or unsatisfied.
(h) Except
as set forth on Section 4.12(h) of the Seller Disclosure Schedules, and other than with respect to any equity awards
granted by Seller to any Business Employee prior to the Agreement Date, the execution and delivery of this Agreement and the consummation
of the Transactions will not (either alone or in conjunction with any other event) (i) cause the accelerated vesting, funding or
delivery of, or increase the amount or value of, any payment or benefit to any Business Employee, (ii) result in any payment (whether
in cash, property or vesting of property) or benefit becoming due to any Business Employee, or (iii) result in an obligation to
fund or otherwise set aside assets to secure, in each case of the foregoing clauses (i) through (iii), only to the extent that any
of the obligations are being assumed by Buyer or its Affiliates as a result of this Agreement. No Seller Party has any obligation to
“gross-up” or otherwise indemnify any Business Employee for the imposition of any Taxes, including Taxes imposed under Section 4999
or Section 409A of the Code.
(i) Except
as set forth on Section 4.12(i) of the Seller Disclosure Schedules, no Seller Party is party to, or bound by, any CBA
covering any Business Employees that impacts any terms and conditions of employment, and no Business Employees of the Seller Parties
are represented by any labor union, works council, or other labor organization with respect to such employment.
(j) Since
January 1, 2021, (i) no allegations of sexual harassment or other unlawful discrimination have been made to the Seller Parties
against any Business Employee with annual base compensation above $50,000 and, to the Knowledge of Seller, there have not been any such
allegations and (ii) no Seller Party has entered into any settlement agreement related to allegations of sexual harassment or misconduct
by any Business Employee with annual base compensation above $50,000.
(k) The
Transactions will not be a change in ownership or control within the meaning of Section 280G of the Code.
Section 4.13 Taxes.
Except as would not be material to the Business:
(a) (i) Each
Seller Party has duly and timely filed, or has had duly and timely filed on its behalf, all Tax Returns required to be filed by such
Seller Party with respect to the Business (taking into account valid extensions to file such Tax Returns that are automatically granted),
(ii) such Tax Returns are true, correct and complete in all material respects and (iii) all amounts of Taxes, whether or not
shown due on such Tax Returns, owed by the Seller Parties (with respect to the Business) or the Transferred Entities have been duly and
timely paid in full.
(b) Within
the past three (3) years, no Seller Party has received written notice of any deficiencies for any Taxes by a Taxing Authority with
respect to the Business that are still pending.
(c) There
are no liens for Taxes on the Transferred Assets, other than Permitted Liens.
(d) The
Seller Parties (with respect to the Business) have complied in all material respects with all applicable withholding obligations for
Taxes required to have been withheld in connection with amounts paid to any employee or independent contractor of the Business or other
Person.
(e) As
of the Closing, each Transferred Entity is a newly formed entity that is not the successor of any other entity for any Tax purpose.
Section 4.14 Personal
Property. One or more of the Seller Parties, as applicable, has and, as of the Closing,
will have good, valid and enforceable title (or valid lease, license or other applicable right of use) to all material Transferred Assets
(other than the leasehold estate (as lessee or sublessee) in the Transferred Leased Real Properties and the fee estate in the Transferred
Owned Real Properties, which are addressed by Section 4.15 and other than Business Intellectual Property, which matters are
addressed in the first and second sentences of Section 4.08(b)), free and clear of all Liens (other than Permitted Liens)
and, except as has not been and would not be reasonably expected to be, individually or in the aggregate, material to the Business, good,
valid and enforceable title (or valid lease, license or other applicable right of use) to all other Transferred Assets.
Section 4.15 Real
Property.
(a) One
or more of the Seller Parties, as applicable, has good and marketable fee simple (or equivalent) title to the Transferred Owned Real
Property and good and valid title to the leasehold estate or license interest (as lessee, sublessee or licensee) in the Transferred Leased
Real Property, in each case, free and clear of all Liens, except for Permitted Liens.
(b) Schedules 2.01(a)(i)(A) and
2.01(a)(i)(B) sets forth the address of all Transferred Real Properties, and an accurate, correct, and complete list of all
Transferred Real Property Leases (including all amendments and guaranties with respect thereto), for each Transferred Leased Real Property.
The Transferred Real Properties identified in Schedules 2.01(a)(i)(A) and 2.01(a)(i)(B) comprise all of
the real property that is Related to the Business.
(c) With
respect to each Transferred Owned Real Property: (i) except as set forth in of Section 4.15(c) the Seller Disclosure
Schedules, none of the Seller Parties has leased or otherwise granted to any Person, and no Person other than the Seller Party that is
identified as the owner thereof in Schedule 2.01(a)(i)(A) leases or has, the right to use or occupy such Transferred
Owned Real Property or any portion thereof and (ii) other than the right of Buyer pursuant to this Agreement, none of the Seller
Parties has granted, and no Person has, any outstanding options, rights of first offer or rights of first refusal to purchase or lease
such Transferred Owned Real Property or any portion thereof or interest therein.
(d) None
of the Seller Parties is a party to any agreement or option to purchase or sell any real property or interest therein that is used or
contemplated to be used in the Business.
(e) Seller
has made available to Buyer an accurate, correct, and complete copy of each Transferred Real Property Lease (including all amendments
and guaranties with respect thereto). All leases, subleases or licenses for the Transferred Leased Real Property under which any of the
Seller Parties is a lessee, sublessee or licensee are in full force and effect and are enforceable as against such Seller Party, and
to the Knowledge of Seller, as against any other counterparty thereto in accordance with their respective terms, subject to the Bankruptcy
and Equity Exception.
(f) Except
as set forth in Section 4.15(f) of the Seller Disclosure Schedules, with respect to each of the Transferred Real Property
Leases: (i) none of the Seller Parties nor, to the Knowledge of Seller, any other party to the Transferred Real Property Lease is
in breach or default in any material respect under such Transferred Real Property Lease; (ii) none of the Seller Parties has subleased,
licensed or otherwise granted any Person, and no Person other than Seller or its Subsidiary that is identified as the tenant thereof
in Schedule 2.01(a)(i)(B) subleases, licenses or otherwise or has, the right to use or occupy such Transferred Leased Real
Property or any portion thereof; and (iii) none of the Seller Parties has collaterally assigned or granted any other security interest
in such Transferred Real Property Lease or any interest therein.
(g) There
is no condemnation, expropriation or other proceeding in eminent domain or zoning, building code or other moratorium Action pending or,
to the Knowledge of Seller, otherwise threatened affecting any Transferred Real Property or any portion thereof or interest therein.
None of the Seller Parties’ current uses of the Transferred Real Property violates in any material respect any restrictive covenant
or zoning ordinance that affects any of the Transferred Real Property. There have been no special assessments filed or proposed against
the Transferred Real Property or any portion thereof that would have a materially adverse effect on the Transferred Real Property subject
thereof.
(h) None
of the Transferred Real Property has been damaged or destroyed by fire or other casualty that has not been restored to substantially
the same condition as before such damage or destruction. The buildings and other improvements constituting the Transferred Real Properties
are in good condition and repair (ordinary wear and tear excepted) in all material respects and are fit for use in the ordinary course
of the Business as currently conducted. All such buildings and improvements have been installed and maintained in all material respects
accordance with all applicable Laws. All Transferred Real Properties are supplied with utilities necessary for the operation thereof
as the same are currently operated, all of which utilities are provided via public roads or via irrevocable appurtenant easements benefitting
the Transferred Real Property. Each parcel of Transferred Real Property has direct, or by irrevocable appurtenant easement benefitting
such parcel, access to a public right of way. There are no parties in possession of the Transferred Real Property except the Seller or
its Subsidiary that is the owner listed in Schedule 2.01(a)(i)(A) or the tenant listed in Schedule 2.01(a)(i)(B) thereof,
except as set forth in Section 4.15(f) of the Seller Disclosure Schedules.
Section 4.16 Brokers.
Except for fees and expenses of BofA Securities, Inc. (the “Seller Bankers”), no broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or commission from the Seller Parties, or any of their respective Affiliates
in connection with any Transaction. Seller is solely responsible for the investment advisory fees and expenses of the Seller Bankers
and any other such broker, finder or investment bank.
Section 4.17 Sufficiency
of Assets. On the Closing Date, the Transferred Assets will, after taking into account all
Transaction Agreements (and the rights granted and services to be performed thereunder), constitute all of the assets, rights and properties
(other than Intellectual Property, Software or Data, which matters are addressed in the second and third sentences of Section 4.08(b))
necessary and sufficient for Buyer and its Affiliates to (x) conduct the Business immediately following the Closing in all material
respects as it is and was conducted by or on behalf of the Seller Parties as of the Agreement Date and as of immediately prior to the
Closing, except for general corporate and back office services not primarily related to the Business or the Transferred Entities; provided
however, that nothing in this Section 4.17 shall be deemed to constitute a representation or warranty as to (i) the
adequacy of amounts of cash or working capital (or the availability of the same), (ii) infringement, misappropriation, or other
violation of Intellectual Property, Software or Data, which matters are addressed in Section 4.08(c), Section4.08(d) and
Section 4.08(e), or (iii) the performance of any R&D services by employees of Seller or Seller’s Affiliates
who will not be employed by Buyer or Buyer’s Affiliates after Closing, (y) perform all of Buyer’s and its Affiliates’
(including, after the Closing, the Transferred Entities) post-Closing obligations under the Transaction Agreements and (z) enable
Buyer and its Affiliates to successfully transfer the operation and ownership of each of the facilities located at the Transferred Real
Property.
Section 4.18 Insurance.
All Insurance Policies maintained for, at the expense of or for the benefit of, the Business or any Transferred Assets (the “Business
Insurance Policies”) are in full force and effect and all premiums due to date thereunder have been paid in full. The Seller
Parties have complied in all material respects with the provisions of each Business Insurance Policy. No claim under any Business Insurance
Policy is outstanding or unpaid. No insurer under any Business Insurance Policy has provided written notice to any Seller Party that
it has cancelled or generally disclaimed liability under any such Business Insurance Policy or indicated any intent to do so or not to
renew any such policy or increase any premium for such policy.
Section 4.19 Intercompany
Agreements. As of the Closing Date, there are no contracts or agreements or arrangements
between the Business or any Transferred Entity, on the one hand, and any of the Seller Parties (other than the Transferred Entities),
on the other hand (each, an “Intercompany Obligation”) (other than (i) the Transaction Agreements and (ii) any
intercompany obligations exclusively between or among the Transferred Entities).
Section 4.20 Customers,
Suppliers and Distributors.
(a) Section 4.20(a) of
the Seller Disclosure Schedules sets forth a list of (i) the ten (10) largest distributors or direct customers of the
cold water Products (each, a “Cold Water Material Customer”), as measured by the dollar amount of purchases thereby,
for the twelve (12) months ended as of September 30, 2023 and (ii) the ten (10) largest suppliers or vendors of the
cold water Products (each, a “Cold Water Material Supplier”), as measured by the dollar amount of purchases therefrom,
for the twelve (12) months ended as of September 30, 2023.
(b) Section 4.20(b) of
the Seller Disclosure Schedules sets forth a list of (i) the ten (10) largest distributors or direct customers of the
warm water Products (each, a “Warm Water Material Customer” and together with the Cold Water Material Customers, the
“Material Customers”), as measured by the dollar amount of purchases thereby, for the twelve (12) months ended as
of September 30, 2023, and (ii) the ten (10) largest suppliers or vendors of the warm water Products (each, a “Warm
Water Material Supplier” and together with the Cold Water Material Suppliers, the “Material Suppliers”),
as measured by the dollar amount of purchases therefrom, for the twelve (12) months ended as of September 30, 2023.
(c) Since
January 1, 2023, no Material Customer or Material Supplier has (i) expressed in writing its intention to cancel or otherwise
terminate the relationship of such Material Customer or Material Supplier with the Business, or (ii) expressed in writing its intention
to decrease materially its purchases from, or its services or supplies to, the Business.
Section 4.21 Veterinary
Regulatory Compliance. Without limiting Section 4.07:
(a) Since
January 1, 2021, each of the Seller Parties has been in compliance, in all material respects, with all Veterinary Care Laws applicable
to the Business, or by which any Transferred Asset or Assumed Liability is bound or affected. Since January 1, 2021, none of the
Seller Parties has received any written notification of any pending or, to the Knowledge of Seller, threatened Action from any Government
Authority alleging potential or actual material noncompliance by, or Liability of, the Seller Parties under any Veterinary Care Laws
as it relates to the Business.
(b) All
Products and Product Candidates are being, and since January 1, 2021 have been, developed, researched, manufactured, packaged, labeled,
stored, tested and distributed in compliance, in all material respects, with all applicable Veterinary Care Laws. All research programs
with respect to any Products and Product Candidates have been, and if still pending are being, conducted in compliance in all material
respects with all applicable Laws. All manufacturing operations conducted by or on behalf of the Seller Parties with respect to any Products
and Product Candidates have been and are being conducted in compliance in all material respects with all applicable Laws.
(c) Each
of the Seller Parties holds all Product Authorizations, Facility Permits and other Permits required for the conduct of the Business as
currently conducted and all such Product Authorizations, Facility Permits and other Permits are valid and in full force and effect and
are reasonably expected to be renewable. Each of the Seller Parties has fulfilled and performed all of its obligations with respect to
the Product Authorizations in all material respects, and no event has occurred that allows, or with or without notice or lapse of time
or both would, or would reasonably be expected to, allow revocation or termination thereof or results, or would reasonably be expected
to result, in any other impairment of the rights of the holder of any Product Authorization. Each of the Seller Parties has filed with
all applicable Government Authority all material reports, documents, forms, notices, applications, records, claims, submissions, and
supplements or amendments thereto, including adverse event reports and all other material data relating to the Business, as required
by any Veterinary Care Laws or Product Authorizations and all such material reports, documents, forms, notices, applications, records,
claims, submissions, and supplements or amendments were complete, correct and not misleading on the date filed (or were corrected or
supplemented by a subsequent submission) in all material respects, and no written notice (or, to the Knowledge of Seller, any oral notice)
of material deficiencies has been issued or asserted by any applicable Government Authority with respect to any such material reports,
documents, forms, notices, applications, records, claims, submissions or any supplements or amendments thereto. The Products are marketed
in all material respects in accordance with Veterinary Care Laws and the applicable Product Authorizations. All data has been generated,
analyzed, reviewed, appropriately disclosed and stored, and manufacturing, sale, supply, importation and distribution has been conducted,
in each case with respect to the Products and the Product Candidates, in compliance in all material respects with applicable Veterinary
Care Laws. The Seller Parties have instituted and maintain policies and procedures reasonably designed to ensure the integrity of data
generated or used in any research, testing, development, use, handling, packaging, storage, safety, efficacy, reliability or manufacturing
of the Products and the Product Candidates and to encourage employees to report any material compliance issues related thereto (and the
Seller Parties have made available to Buyer copies or written summaries of any such reports).
(d) Except
as set forth on Section 4.21(d)(i) of the Seller Disclosure Schedules, since January 1, 2021, (i) no Seller
Party has received any FDA Form 483, USDA inspection reports, or similar reports from any Government Authority reflecting observations,
citations, notice of adverse finding or equivalent USDA notification or notification from any Government Authority (including notifications
of license restrictions, suspension, revocation, or termination, or that a product or product candidate is dangerous, worthless, contaminated,
harmful or unsatisfactory), notice of violation, civil action, criminal action administrative action, untitled letter, warning letter
or other correspondence or notice from the FDA, USDA or any other Government Authority, and (ii) there is no investigation, action
or proceeding pending or threatened (including any prosecution, injunction, seizure, civil fine, debarment, suspension or recall), in
each case of the foregoing clauses (i) and (ii), alleging or asserting material noncompliance of the Seller Parties with any applicable
Veterinary Care Laws or Product Authorization in respect of the Business. Except as set forth on Section 4.21(d)(ii) of
the Seller Disclosure Schedules no Seller Party has either voluntarily or involuntarily initiated, conducted or issued, or caused to
be initiated, conducted or issued, any recall, field notifications, field corrections, market withdrawal or replacement, safety alert,
warning, “dear doctor” letter, investigator notice, safety alert or other notice or action relating to an alleged lack of
safety, efficacy or regulatory compliance of any Products or any Product Candidate. To the Knowledge of Seller, there are no facts that
are reasonably likely to cause (i) the recall, market withdrawal or replacement of any Products sold or intended to be sold by the
Seller Parties, (ii) a change in the marketing classification or a material change in the labeling of any such Product, or (iii) a
termination or suspension of the marketing of any such Product. Seller has made available to Buyer each and every material complaint
and notice of alleged material defect or adverse reaction that the Seller Parties have received with respect to the Products since January 1,
2021.
(e) No
Seller Party has distributed, marketed, imported, introduced or caused the introduction into commerce of any Products, and does not hold
any Transferred Inventory, which are or were in any material respect “adulterated,” “misbranded,” an article
which may not be introduced into interstate commerce under Section 505, 512, or any other provision of the Federal Food, Drug, and
Cosmetic Act, or otherwise violative within the meaning of such act or under any other applicable Laws.
(f) The
master seeds, master cells, working seeds, working cells, reagents, challenge material and other such raw materials for the biological
Products comply with the provisions of the Virus, Serum, Toxin Act, 21 U.S.C. Section 151, et seq. and 9 C.F.R. Parts 101, et seq.
and similar Laws applicable in any jurisdiction, and are fit and, as appropriate, viable for the intended purpose of manufacturing or
performing statutorily- and regulatorily-required testing in connection with obtaining or maintaining the Product Authorizations in all
material respects and are, with respect to any particular existing Product Authorization for a biological Product, those master seeds,
master cells, working seeds, working cells, reagents, or challenge material, as applicable, that have been designated or approved by
USDA or any other Government Authority for use in connection with that Product Authorization, subject to any pending requalifications.
(g) In
respect of the Business, no Seller Party has received any written communication that would reasonably be expected to lead to the denial
of any marketing approval currently pending before the FDA, USDA or any other Government Authority.
(h) Seller
has made available to Buyer accurate, correct and complete copies of (i) all material correspondence to or from any Government Authority,
and all other material documents (including meeting minutes) concerning communications to or from any Government Authority, in each case
concerning (A) the Products and the Product Candidates, and (B) the likelihood or timing of, or requirements for, regulatory
approval of Products and the Product Candidates; and (ii) all material information concerning the safety, efficacy, side effects,
toxicity, or manufacturing quality and controls of the Products and the Product Candidates.
Section 4.22 Inventory.
(a) Subject
to applicable reserves, the Transferred Inventory is of a quality and quantity useable or saleable in the ordinary course of business
consistent with past practice, is not obsolete, defective, damaged or slow moving, and is merchantable and fit, for the purpose for which
it was procured or manufactured. No Transferred Inventory is held on a consignment basis.
(b) The
Transferred Inventory has been manufactured in all material respects in accordance with all applicable Laws relating to good manufacturing
practices, and in compliance in all material respects with the applicable quality specifications for the manufacture, release and final
testing of the Product, if applicable.
(c) Since
June 30, 2023, the Seller Parties have not, with respect to the Business, (i) materially altered their activities and practices
with respect to levels of Inventory maintained at the wholesale, chain, institutional or retail levels, including their practices with
respect to Product samples, or (ii) sold, transferred or given any supplies or samples of such Inventory to any third party except
in the ordinary course of business consistent with past practice.
(d) Since
December 31, 2022, except as would not, individually or in the aggregate, reasonably be expected to be material to the Business,
the Seller Parties have not, and, to the Knowledge of Seller, none of the employees or sales Representatives of the Business has, engaged
in (i) any trade loading practices or any other promotional sales or discount activity or other practice with the intent and effect
of accelerating sales to the trade or otherwise that would otherwise be expected (in the ordinary course of business) to occur in later
periods, (ii) any practice with the intent and effect of accelerating collections of receivables that would otherwise be expected
in the ordinary course of business to be in later periods, (iii) any practice with the intent and effect of postponing payments
by any Seller Party that would otherwise be expected in the ordinary course of business to be made in earlier periods or (iv) any
Inventory overstocking or understocking activity, in each case in this clause (iv), in a manner outside the ordinary course of business.
Section 4.23 Product
Liability. No product Liability claims have been received in writing by the Seller Parties
and, to the Knowledge of Seller, no such claims have been threatened against the Seller Parties relating to any of the Products. There
is no Order outstanding against the Seller Parties relating to Liability claims with respect to the Products.
Section 4.24 Shared
Contracts. All of the Shared Contracts that are Material Contracts are set forth on Schedule
A-8 and none of such Shared Contracts are exclusively related to the Business. Seller has made available to Buyer accurate, correct and
complete copies of, each Shared Contract set forth on Schedule A-8 and (i) each such Shared Contract is a legal, valid and binding
obligation of the Seller Party party thereto, as the case may be, and, to the Knowledge of Seller, each other party to such Shared Contract,
and is enforceable against such Seller Party and, to the Knowledge of Seller, each other party to such Shared Contract, in accordance
with its terms, subject, in each case, to the Bankruptcy and Equity Exception, (ii) none of the Seller Parties or, to the Knowledge
of Seller, any other party to a Shared Contract is in material default under or breach of any such Shared Contract, (iii) none
of the Seller Parties has received any written notice of breach of any such Shared Contract, and (iv) each Seller Party has performed
in all material respects all obligations required to be performed by it under such Shared Contracts to which it is a party and, to the
Knowledge of Seller, each other party to each such Shared Contracts has performed in all material respects all obligations required to
be performed by it.
Section 4.25 Transferred
R&D Assets. All of the ongoing research and development programs of the Business are
set forth on Schedule 2.01(a)(xii).
Section 4.26 No
Other Representations or Warranties. Except for the representations and warranties expressly
set forth in this Article IV (as modified by the Seller Disclosure Schedules) or the other Transaction Agreements, none of
the Seller Parties or any other Person has made, makes or shall be deemed to make any other representation or warranty of any kind whatsoever,
express or implied, written or oral, at law or in equity, on behalf of the Seller Parties, the Transferred Entities or any of their respective
Affiliates, including any representation or warranty regarding any Seller Party, any Transferred Entity or any other Person, the Transferred
Equity Interests, any Transferred Assets, any Liabilities of any Seller Party or Transferred Entity, any Assumed Liabilities, the Business,
any Transaction, any other rights or obligations to be transferred pursuant to the Transaction Agreements or any other matter, and the
Seller Parties hereby disclaim all other representations and warranties of any kind whatsoever, express or implied, written or oral,
at law or in equity, whether made by or on behalf of any Seller Party, any Transferred Entity or any other Person. Except for the representations
and warranties expressly set forth in this Article IV or the other Transaction Agreements, each Seller Party hereby disclaims
all Liability and responsibility for all projections, forecasts, estimates, financial statements, financial information, appraisals,
statements, promises, advice, data or information made, communicated or furnished (orally or in writing, including electronically) to
Buyer or any of Buyer’s Affiliates or any Representatives or Buyer or any of Buyer’s Affiliates, including omissions therefrom.
Notwithstanding anything else to the contrary in Article IV, those representations or warranties of the Seller Parties regarding
any Product Candidates that are the subject of the EVAH Agreement or the Oreo Agreement (each as defined in Section 4.25
of the Seller Disclosure Schedules) are made (a) to the Knowledge of the Seller and (b) solely to the extent related to (i) any
research and development activities that are performed by or on behalf of EVAH or Oreo (each as defined in Section 4.25 of
the Seller Disclosure Schedules) pursuant to the EVAH Agreement or the Oreo Agreement; or (ii) any Intellectual Property Rights
that are owned or otherwise developed by or on behalf of EVAH or Oreo pursuant to the EVAH Agreement or the Oreo Agreement.
Article V
Representations
and Warranties of Buyer
Buyer hereby represents and
warrants to Seller, as of the Agreement Date and as of the Closing Date, that:
Section 5.01 Formation
and Authority of Buyer. Each of Buyer and its Affiliates that are party to the Buyer Transaction
Agreements is a corporation or other entity duly incorporated, formed or organized, validly existing and, to the extent legally applicable,
in good standing under the Laws of its jurisdiction of incorporation, formation or organization and has the requisite corporate or other
appropriate power and authority to execute, deliver and perform its obligations under the Buyer Transaction Agreements (including the
consummation of the Buyer Transactions). The execution, delivery and performance of the Buyer Transaction Agreements by Buyer and each
of its Affiliates that are party to the Buyer Transaction Agreements have been duly authorized by all requisite corporate or organizational
action on the part of Buyer or such Affiliates, and no shareholder or other similar approval is required in connection with Buyer’s
or such Affiliate’s execution, delivery and performance of the Buyer Transaction Agreements. This Agreement has been, and upon
execution and delivery thereof, the other Buyer Transaction Agreements will be, duly executed and delivered by Buyer and its Affiliates
that are party to the Buyer Transaction Agreements, and (assuming due authorization, execution and delivery by the other parties hereto
and thereto) this Agreement constitutes, and upon execution and delivery thereof, the other Buyer Transaction Agreements will constitute,
legal, valid and binding obligations of Buyer and such Affiliates enforceable against Buyer and such Affiliates in accordance with their
respective terms, subject to the Bankruptcy and Equity Exception.
Section 5.02 No
Conflict. Except for the consents or approvals contemplated in Section 5.03,
the execution, delivery and performance by Buyer and its Affiliates that are party to the Buyer Transaction Agreements of the Buyer Transaction
Agreements do not and will not:
(a) violate
or conflict with any Governing Documents of Buyer or such Affiliates;
(b) conflict
with or violate in any material respect any Law or Order applicable to Buyer or such Affiliates; or
(c) result
in any breach of, or constitute a default (or event which, with the giving of notice or lapse of time, or both, would become a default)
under, or give to any Person any right to terminate, amend, accelerate or cancel, or give rise to any Consent or notice right under,
or result in the creation of any Lien (other than a Permitted Lien) on any assets or properties of Buyer or such Affiliates pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other material instrument to which
Buyer or any of its Subsidiaries or Affiliates is a party or by which any of such assets or properties is bound;
except, in each case of clauses (b) and
(c), as has not had and would not reasonably be expected to have a Buyer Material Adverse Effect.
Section 5.03 Consents
and Approvals. The consummation of the Transactions and the execution, delivery and performance
by Buyer and its Affiliates that are party to any of the Buyer Transaction Agreements of the Buyer Transaction Agreements do not and
will not require any material Consent, waiver or other action by, or any material filing with or notification to, any Government Authority,
except for (a) compliance with the applicable requirements of the Exchange Act and the rules and regulations promulgated
thereunder and state securities, takeover and “blue sky” laws, (b) any filings, notifications, approvals or clearances
required under applicable Antitrust Law or (c) any such Consent, waiver, action, filing or notification the failure of which to
make or obtain would not have a Buyer Material Adverse Effect.
Section 5.04 Compliance
with Laws. As of the Agreement Date, Buyer is not in violation of any Laws or Orders applicable
to the conduct of its business, except for violations the existence of which would not reasonably be expected to have a Buyer Material
Adverse Effect.
Section 5.05 Securities
Matters. Buyer is an “accredited investor” (as such term is defined in Rule 501
of Regulation D under the Securities Act). Any Transferred Equity Interests are being acquired by Buyer for its own account, and not
with a view to, or for the offer or sale in connection with, any public distribution or sale of the Transferred Equity Interests or any
interest in them. Buyer has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits
and risks of its investment in the Transferred Equity Interests, and Buyer is capable of bearing the economic risks of such investment,
including a complete loss of its investment in the Transferred Equity Interests. Buyer acknowledges that the Transferred Equity Interests
have not been registered under the Securities Act, or any securities Laws of any state or other jurisdiction (U.S. or non-U.S.),
and understands and agrees that it may not sell or dispose of any Transferred Equity Interests except pursuant to a registered offering
in compliance with, or in a transaction exempt from, the registration requirements of the Securities Act and any other applicable securities
Laws of any state or other jurisdiction (U.S. or non-U.S.).
Section 5.06 Financial
Ability.
(a) Buyer
will have at the Closing, (x) sufficient immediately available funds in U.S. dollars and the financial ability to pay the Purchase
Price and to pay any expenses incurred by Buyer in connection therewith and (y) the resources and capabilities (financial and otherwise)
to perform its obligations at the Closing under the Transaction Agreements (including all payments to be made by it in connection herewith).
Buyer has not incurred, and is not contemplating or aware of, any obligation, commitment, restriction or other circumstances of any kind,
in each case, that would impair or adversely affect such resources, funds or capabilities.
(b) Immediately
after giving effect to the Closing, and assuming the accuracy of the representations and warranties of Seller (determined without giving
effect to materiality or Material Adverse Effect qualifications therein), except as provided in Section 4.05(b), each of
the Buyer and its Subsidiaries, on a consolidated basis, shall be solvent and shall (a) be able to pay their debts as they become
due, (b) own property that has a fair saleable value greater than the amounts required to pay their debts (including a reasonable
estimate of the amount of all contingent liabilities), and (c) have adequate capital to carry on their respective businesses. No
transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated hereby with the
intent to hinder, delay or defraud either present or future creditors of the Buyer or its Subsidiaries.
Section 5.07 Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Buyer or any of Buyer’s
Affiliates in connection with any Transaction for which the Seller Parties would have any Liability.
Section 5.08 Investigation.
Buyer acknowledges and agrees that it has completed such inquiries and investigations as it has deemed appropriate into, and based thereon,
has formed an independent judgment concerning, the Transferred Assets, any Transferred Entities, the Transferred Equity Interests, the
Assumed Liabilities, the Business and Transactions, and any other rights or obligations to be transferred, directly or indirectly, pursuant
to the Transaction Agreements. Buyer further acknowledges and agrees that (x) the only representations and warranties made by Seller
are the representations and warranties expressly set forth in Article IV (as modified by the Seller Disclosure Schedules)
or the other Transaction Agreements and Buyer has not relied upon any other express or implied representations, warranties or other projections,
forecasts, estimates, appraisals, statements, data or information made, communicated or furnished by or on behalf of Seller or any of
its Affiliates, any Representatives of Seller or any of its Affiliates or any other Person, including any projections, forecasts, estimates,
appraisals, statements, advice, data or information made, communicated or furnished by or through the Seller Bankers, or management presentations,
data rooms (electronic or otherwise) or other due diligence information, and that, except for the representations and warranties expressly
set forth in Article IV or the other Transaction Agreements, Buyer will not have any right or remedy arising out of any such
representation, warranty or other projections, forecasts, estimates, appraisals, statements, advice, data or information and (y) any
claims Buyer may have for breach of any representation or warranty shall be based solely on the representations and warranties of Seller
expressly set forth in Article IV (as modified by the Seller Disclosure Schedules) or the other Transaction Agreements. Except
as otherwise expressly set forth in this Agreement and the other Transaction Agreements, Buyer understands and agrees that the Transferred
Entities, any Transferred Equity Interests, the Business, the Transferred Assets and the Assumed Liabilities are being furnished subject
only to the representations and warranties contained in Article IV (as modified by the Seller Disclosure Schedules) or the
other Transaction Agreements without any other representations or warranties of any nature whatsoever.
Section 5.09 No
Other Representations or Warranties. Except for the representations and warranties expressly
set forth in this Article V or the other Transaction Agreements, Buyer nor its Affiliates nor any other Person has made,
makes or shall be deemed to make any other representation or warranty of any kind whatsoever, express or implied, written or oral, at
law or in equity, on behalf of Buyer or its respective Affiliates, including any representation or warranty regarding any Buyer or its
Affiliates or any other Person, any Transaction, or any other matter, and Buyer hereby disclaims all other representations and warranties
of any kind whatsoever, express or implied, written or oral, at law or in equity, whether made by or on behalf of Buyer its Affiliates
or any other Person.
Article VI
Additional
Agreements
Section 6.01 Conduct
of Business Before the Closing.
(a) During
the Pre-Closing Period, except (i) as required or prohibited (as applicable) by applicable Law, (ii) as expressly contemplated
by the Transaction Agreements, (iii) as set forth on Schedule 6.01, (iv) in connection with any COVID-19 Measure
(provided that, in the case of this clause (iv), unless doing so is impracticable due to emergency or urgent circumstances, Seller
shall provide advance notice to and reasonably consult with Buyer prior to (A) the taking of any action that would be prohibited
or otherwise restricted by this Section 6.01(a) or (B) any failure to take any action if such failure would violate
this Section 6.01(a)) or (v) as Buyer otherwise requests or consents to in writing in advance, which consent shall not
be unreasonably withheld, conditioned or delayed, Seller will, and will cause its Subsidiaries to, (x) conduct the Business in the
ordinary course of business consistent with past practice, (y) use commercially reasonable efforts to (A) preserve substantially
intact the existing material relationships of the Business with its employees, customers, vendors, suppliers, contractors and other material
business partners in the ordinary course of business consistent with past practice, (B) keep available the services of the Business
Employees and any Business Contractors of the Seller Parties who provide service to the Business in the ordinary course of business consistent
with past practice, (C) pay all maintenance and similar fees and take such other actions required in connection with the prosecution,
registration, protection, enforcement and maintenance of Business Intellectual Property in the ordinary course consistent with past practice,
(D) maintain in effect, in all material respects, all Permits Related to the Business, including Product Authorizations, and (E) maintain
the Transferred Books and Records in the ordinary course consistent with past practice, and (z) solely with respect to the Business
and any Transferred Entities, not do any of the following:
(i) sell,
lease, license, transfer, acquire or dispose of any Transferred Asset (excluding Business Intellectual Property) other than (A) sales
of Inventory in the ordinary course of business consistent with past practice, (B) other sales, assignments, licenses, expirations
or dispositions of assets, rights or properties with a value not exceeding $1,000,000 individually or $3,000,000 in the aggregate or
(C) expiration of any contract or agreement pursuant to the terms thereof, provided that clauses (A)-(C) shall not include
(i) the sale, lease, license, transfer, acquisition or disposal
of any Transferred Real Property beyond the expiration of a Transferred Real Property Lease pursuant to the terms thereof or any sale,
lease, license, transfer, acquisition or disposal of any Product Authorization;
(ii) acquire
any business or entity, other than (A) for an amount not exceeding $1,000,000 individually or $3,000,000 in the aggregate (but which
shall not include any real property) or (B) purchases of Inventory in the ordinary course of business consistent with past practice
or pursuant to existing contracts made available to Buyer prior to the Agreement Date;
(iii) (A) increase
or commit to increase the wages, salaries, compensation, severance, bonuses, deferred compensation or incentives payable to any Business
Employee with an annual base salary above $50,000 or (B) establish, adopt, terminate, amend, increase or promise to increase any
benefits, or accelerate any vesting or time of payment, under any Business Employee Plan or to any Business Employee, except, in each
case, as required by Law or pursuant to the written terms of any Business Employee Plan in existence on the Agreement Date and made available
to Buyer;
(iv) make
any change in any method of accounting or accounting methodology, practice or policy used by the Business in the preparation of its financial
statements, other than such changes as are consistent with the Transaction Accounting Principles or changes required by GAAP or applicable
Law or other changes adopted by Seller to generally apply to all or substantially all of its businesses;
(v) enter
into any settlement or release with respect to any Action other than (A) any settlement or release of any Action reflected or reserved
against in the Unaudited Statements of the Business to the extent that, with respect to any such matter, the settlement payment does
not exceed the applicable amount reflected or reserved against in the Unaudited Statements of the Business and (B) any other
settlement or release that contemplates only the payment of money in an amount not exceeding $1,000,000 individually and $3,000,000 in
the aggregate;
(vi) after
formation of any Transferred Entity, amend any Governing Documents thereof;
(vii) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, bankruptcy or other reorganization
under applicable Law of any of the Transferred Entities;
(viii) acquire
by merging or consolidating with, or by purchasing a substantial equity interest in or substantial portion of the assets of, any Person
or division thereof, in each case if the assets of such entity would be included in the Transferred Assets;
(ix) (A) issue,
sell, grant, deliver, dispose of or otherwise transfer, or offer to do any of the foregoing with respect to, any shares of capital stock
or other equity interests of any of the Transferred Entities, or any securities convertible into or exchangeable or exercisable for,
or options with respect to, or warrants to purchase or rights to subscribe for, any shares of capital stock or other equity interests
of any of the Transferred Entities, (B) split, combine, redeem or reclassify any shares of capital stock or other equity interests
of any of the Transferred Entities, or any securities convertible into or exchangeable or exercisable for, or options with respect to,
or warrants to purchase or rights to subscribe for, any shares of capital stock or other equity interests of any of the Transferred Entities
or (C) declare or pay any non-cash dividends or make non-cash distributions or other transfers in respect of any shares of capital
stock or other equity interests of any of the Transferred Entities;
(x) grant
any Lien on the Transferred Equity Interests or, except for Permitted Liens, grant any Lien on any Transferred Asset (whether tangible
or intangible);
(xi) sell,
lease, transfer, assign, license, sublicense or allow to lapse, expire or abandon or otherwise relinquish or dispose of any Business
Intellectual Property, except for the expiration of Business Intellectual Property in accordance with its statutory terms and except
pursuant to any agreement entered into by a Seller Party granting a non-exclusive license to the Business Intellectual Property in the
ordinary course of business consistent with past practices where the grant of rights to such Business Intellectual Property is incidental,
and not material, to performance under such agreement;
(xii) make
aggregate capital expenditures in excess of 110 % of the applicable capital expenditure budget set forth on Schedule 6.01(a)(xii) (the
“Capex Budget”), except for unanticipated capital expenditures that are necessary to maintain the value or functionality
of the facilities of the Business (whether as a result of casualty or otherwise and whether or not covered by insurance);
(xiii) (A) incur
any Debt with respect to the Business, any of the Transferred Entities, or any of the Transferred Assets other than any Debt that constitutes
Excluded Liabilities or (B) make any loans or advances to any other Person in connection with the Business, in each case, in excess
of $1,000,000 individually or $4,000,000 in the aggregate, other than routine advances to employees and consultants for business expenses,
or extensions of trade credit and supplier advances, in each case, in the ordinary course of business consistent with past practice;
(xiv) (A) enter
into, amend, extend or terminate any CBA (other than ordinary course of business negotiations consistent with past practice involving
any labor union, works council, or equivalent Employee Representative Body representing any Business Employees) or (B) voluntarily
recognize or certify any labor union or organization, works council, or group of employees as the bargaining representative for any Business
Employees;
(xv) (A) hire
or terminate (other than for “cause”) any Business Employee with annual base compensation above $50,000 or (B) implement
or effect any reduction in force, lay-off, early retirement program, severance or other program concerning the termination of employment
of Business Employees;
(xvi) (A) accelerate
the delivery or sale of Products (including in any manner constituting “channel stuffing” or “front loading”
of products), or offer material discounts or material price protection on the sale of Products, other than such offer discounts or price
protection similar in value to those outstanding at Closing or such offer discounts or price protection similar to those offered by competitors,
(B) make any material changes in the selling, distribution, advertising, promotion, terms of sale or collection, purchase or payment
practices with respect to any of the Products, or (C) purchase, order or otherwise acquire Inventory in excess of reasonably forecasted
requirements;
(xvii) (A) assign,
amend any material term of, or waive any material right under, or voluntarily terminate any Material Contract, or (B) enter into
any agreement that, if existing on the Agreement Date, would be a Material Contract, in each case of clauses (A) and (B), other
than (x) entering into a purchase order with a Material Customer or Material Supplier or (y) renewing any such Material Contract
upon the same terms and conditions as in effect as of the date hereof, in each case clause (x) and (y), in the ordinary course of
business consistent with past practice;
(xviii) transfer
any tangible Transferred Asset physically located at the premises of a Transferred Real Property to any Retained Real Property, other
than in the ordinary course of business consistent with past practice; or
(xix) enter
into any legally binding agreement with respect to, or commit to do, any of the foregoing.
(b) Notwithstanding
anything in this Agreement to the contrary, the bank accounts maintained by the Seller Parties in connection with the Business shall
continue to be subject to the Seller Parties daily cash sweep in its sole discretion.
(c) Notwithstanding
the foregoing, nothing contained herein will give Buyer, directly or indirectly, rights to control or direct the operations of the Seller
Parties or the Business during the Pre-Closing Period. During the Pre-Closing Period, Seller will exercise, consistent with the terms
and conditions hereof, complete control and supervision of its and the other Seller Parties’ respective operations.
Section 6.02 Access
to Information.
(a) Subject
to Section 6.02(b), during the Pre-Closing Period, upon reasonable prior written notice, Seller shall, and shall cause each
of the other Seller Parties to, promptly (i) afford the Representatives of Buyer and its Affiliates reasonable access, during normal
business hours, to the properties, books, contracts or agreements, commitments, personnel, and records or the portions thereof that relate
to the Business, as Buyer may reasonably request, and (ii) furnish to the Representatives of Buyer and its Affiliates such additional
financial and operating data and other information regarding the Business as Buyer, its Affiliates or their respective Representatives
may from time to time reasonably request, in each case of clauses (i) and (ii), in connection with consummating the Transactions
or preparing to operate the Business following the Closing. All requests for information made pursuant to this Section 6.02(a) shall
be directed to the executive officer or other Person designated by Seller.
(b) Notwithstanding
anything in this Agreement to the contrary, during the Pre-Closing Period:
(i) (A) in
no event shall the Seller Parties be obligated to provide any (1) access or information in violation of any applicable Law, (2) information
with respect to bids, the identity of any bidder, confidentiality or non-disclosure agreements, letters of intent, expressions of interest
or other proposals received in connection with transactions comparable to those contemplated by this Agreement or any information or
analysis relating to any such communications, (3) information the disclosure of which would jeopardize any applicable legal privilege
(including the attorney-client privilege) available to the Seller Parties relating to such information, (4) information the disclosure
of which would cause any of the Seller Parties to breach a confidentiality obligation to which it is bound (provided in the case
of clauses (1), (3) and (4), that (x) Seller shall, and shall cause its Affiliates to, use commercially reasonable efforts
to obtain any required consents to permit such access or disclosure and to work in good faith to develop substitute arrangements for
providing information to Buyer, its Affiliates and their respective its Representatives that do not result in the loss of such privilege
or the breach of such applicable Law or obligations, including, to the extent commercially reasonable, by providing redacted information
and using “clean room” arrangements to grant access to select Representatives of Buyer and its Affiliates), (5) consolidated
Tax Return of Seller or any of its Subsidiaries or (6) information that does not relate to the Business, and (B) the portion
of such access and such information contemplated by Section 6.02(a) shall not (i) unreasonably interfere with any
of the businesses, personnel or operations of the Seller Parties or otherwise result in any significant interference with the prompt
and timely discharge by such officers, employees and other authorized Representatives of their normal duties or (ii) require the
creation or delivery of financial statements other than as required by other provisions of this Agreement;
(ii) except
in accordance with or otherwise contemplated by this Agreement, the third-party auditors and accountants of any of the Seller Parties
shall not be obligated to make any Work Papers available to any Person except in accordance with such auditors’ and accountants’
normal disclosure procedures and then only after such Person has signed a customary agreement relating to such access to Work Papers
in form and substance reasonably acceptable to such auditors or accountants;
(iii) Except
as set forth in Section 6.11, Buyer shall not conduct, without the prior written consent of Seller in its sole discretion,
any intrusive environmental investigation at any property affiliated with the Business or with Seller or any of its Subsidiaries, including
any sampling, testing or other intrusive indoor or outdoor investigation of soil, subsurface strata, surface water, groundwater, sediments
or ambient air at or in connection with any property associated or affiliated in any way with the Business, Seller or any of its Subsidiaries;
and
(iv) without
the prior consent of Seller or its Representatives, which consent may not be unreasonably withheld, conditioned, or delayed, neither
Buyer nor any of its Representatives shall contact any employees of, suppliers to, or customers of the Seller Parties in connection with
or with respect to this Agreement, any other Transaction Agreement or any Transaction, or to otherwise discuss the business or operations
of any Transferred Entity or the Business.
(c) Seller
and Buyer shall promptly after the Agreement Date cooperate in good faith to agree in writing on the method and content of the notifications
to customers and suppliers of the sale of the Transferred Assets to Buyer hereunder; provided that Seller shall have the sole
right to deliver such notifications to customers prior to the Closing.
(d) If
so reasonably requested by Seller, Buyer shall enter into a customary and mutually acceptable joint defense agreement or common interest
agreement with one or more of the Seller Parties with respect to any information provided to Buyer, or to which Buyer gains access, pursuant
to this Section 6.02.
Section 6.03 Confidentiality.
(a) The
terms of the Confidentiality Agreement are incorporated into this Agreement by reference and shall continue in full force and effect
until the Closing, at which time the confidentiality obligations under the Confidentiality Agreement shall terminate; provided however,
that Buyer’s confidentiality obligations shall terminate only in respect of that portion of the Material (as defined in the Confidentiality
Agreement) to the extent related to the Business or constituting a Transferred Asset or Assumed Liability, and, for all other Material,
the Confidentiality Agreement shall continue in full force and effect until terminated in accordance with the terms thereof.
(b) Following
the Closing and for a period of five (5) years thereafter (other than with respect to Trade Secrets, to which such limit shall not
apply), except as required by Law, Seller shall not, and shall cause each of its Affiliates and Representatives not to, disclose, or
permit the disclosure of, to any other Person, or use in any manner, any Buyer Confidential Information, except solely as required (i) to
perform their obligations or exercise or enforce their rights under this Agreement or the Transaction Agreements, (ii) to perform
any routine audit, accounting, regulatory reporting or tax filing, (iii) to comply with applicable Law, or (iv) by any deposition,
interrogatory, request for documents, subpoena, civil investigative demand or similar legal process initiated by any tribunal or other
governmental or judicial authority (each, a “Legal Process”), and for no other purpose. Following the Closing and
for a period of five (5) years thereafter, Seller shall, and shall cause its Affiliates and Representatives to, treat as confidential
and safeguard any and all Buyer Confidential Information by using the same degree of care, but no less than a reasonable standard of
care, to prevent the unauthorized use, dissemination, or disclosure of such Buyer Confidential Information as Seller used with respect
thereto prior to the execution of this Agreement; provided, that Seller and its Affiliates and Representatives may use the Buyer
Confidential Information for the purpose of consummating the transactions contemplated by this Agreement and the other Transaction Agreements.
In the event that Seller or any of its Affiliates is requested pursuant to, or required by, applicable Law or a Legal Process to disclose
any Buyer Confidential Information, it will use reasonable efforts to notify Buyer in a timely manner so that Buyer may, at Buyer’s
cost, seek a protective order or other appropriate remedy or, in Buyer’s sole discretion, waive compliance with the confidentiality
provisions of this Section 6.03. Seller will, and will cause its Affiliates to, at Buyer’s cost, cooperate in all reasonable
respects in connection with any reasonable actions to be taken for the foregoing purpose. In any event, to the extent that a protective
order is not obtained within a reasonable time with respect to the Buyer Confidential Information required or requested to be disclosed,
Seller or its applicable Affiliate may furnish such Buyer Confidential Information as requested or required pursuant to applicable Law
or a Legal Process without liability, and, if confidential treatment is available, Seller or such Affiliate exercises commercially reasonable
efforts to, at Buyer’s cost, obtain reliable assurances that confidential treatment will be accorded such Buyer Confidential Information.
(c) Following
the Closing and for a period of five (5) years thereafter (other than with respect to Trade Secrets, to which such limit shall not
apply), except as required by Law, Buyer shall not, and shall cause each of its Affiliates and Representatives not to, disclose, or permit
the disclosure of, to any other Person, or use in any manner, any Seller Confidential Information, except solely as required (i) to
perform their obligations or exercise or enforce their rights under this Agreement or the Transaction Agreements, (ii) to perform
any routine audit, accounting, regulatory reporting or tax filing, (iii) to comply with applicable Law, or (iv) by any Legal
Process, and for no other purpose. Following the Closing and for a period of five (5) years thereafter, Buyer shall, and shall cause
its Affiliates and Representatives to, treat as confidential and safeguard any and all Seller Confidential Information by using the same
degree of care, but no less than a reasonable standard of care, to prevent the unauthorized use, dissemination, or disclosure of such
Seller Confidential Information as Buyer used with respect thereto prior to the execution of this Agreement; provided, that Buyer
and its Affiliates and Representatives may use the Seller Confidential Information for the purpose of consummating the transactions contemplated
by this Agreement and the other Transaction Agreements. In the event that Buyer or any of its Affiliates is requested pursuant to, or
required by, applicable Law or a Legal Process to disclose any Seller Confidential Information, it will use reasonable efforts to notify
Seller in a timely manner so that Seller may, at Seller’s cost, seek a protective order or other appropriate remedy or, in Seller’s
sole discretion, waive compliance with the confidentiality provisions of this Section 6.03. Buyer will, and will cause its
Affiliates to, at Seller’s cost, cooperate in all reasonable respects in connection with any reasonable actions to be taken for
the foregoing purpose. In any event, to the extent that a protective order is not obtained within a reasonable time with respect to the
Seller Confidential Information required or requested to be disclosed, Buyer or its applicable Affiliate may furnish such Seller Confidential
Information as requested or required pursuant to applicable Law or a Legal Process without liability and, if confidential treatment is
available, Buyer or such Affiliate exercises commercially reasonable efforts to, at Seller’s cost, obtain reliable assurances that
confidential treatment will be accorded such Seller Confidential Information.
Section 6.04 Regulatory
and Other Authorizations; Consents.
(a) Subject
to the terms and conditions set forth in this Agreement, each of the Parties shall, and shall cause each of its Affiliates to, use its
reasonable best efforts (subject to compliance with applicable Law) to promptly take, or cause to be taken, all actions, and to promptly
do, or cause to be done, and to assist and cooperate with the other Party in doing, all things necessary, proper or advisable permitted
by applicable Laws, including Antitrust Laws, to consummate and make effective the Transactions, including (i) promptly obtaining
all authorizations, consents, Orders, approvals, licenses, Permits and waivers of, or the expiration or termination of waiting periods
from, all Government Authorities and officials that may be or become necessary for the performance of its obligations pursuant to this
Agreement or the consummation of the Transactions (collectively, the “Government Approvals”), (ii) cooperating
fully with the other Party in promptly seeking to obtain all Government Approvals, (iii) providing such other information to any
Government Authority as such Government Authority may request in connection herewith and (iv) obtaining all consents, approvals
or waivers from third parties that are necessary to consummate the Transactions; provided that, notwithstanding the foregoing,
neither Seller nor any Subsidiary of Seller shall be required to make any payments, financial accommodations or concessions (other than
advisory fees or other ancillary expenses) in connection with the fulfillment of its obligations in this Section 6.04(a).
As promptly as practicable following the Agreement Date (with respect to each Government Approval set forth on Schedule 6.04(a), in no
event later than the corresponding date set forth on Schedule 6.04(a), which may be extended following Seller’s prior written consent
(which shall not be unreasonably withheld, delayed or conditioned)), each Party shall make its respective filing, if necessary, pursuant
to the applicable Antitrust Law set forth on Schedule 6.04(a) with respect to the Transactions and shall supply as promptly
as reasonably practicable thereafter to the appropriate Government Authorities any additional information and documentary material that
may be requested pursuant to the applicable Antitrust Law. Each of the Parties shall cooperate with one another in good faith to (i) promptly
determine whether any filings not set forth on Schedule 6.04(a) are required to be made, and whether any other Government
Approval not set forth on Schedule 6.04(a) is required to be obtained, from any Government Authority under any applicable
Laws, including Antitrust Laws, in connection with the Transactions, and (ii) promptly make any filings, furnish information required
in connection therewith and seek to obtain timely any such Government Approval that the parties determine are required to be made or
obtained in connection with the Transactions. Buyer shall be responsible for the payment of all filing fees under any Antitrust Law.
(b) Without
limiting the generality of the undertaking of each Party pursuant to Section 6.04(a), each Party, shall, and shall cause
each of its Subsidiaries and Affiliates to, use its and their reasonable best efforts, and promptly take any and all steps necessary
to avoid or eliminate each and every impediment under any Antitrust Law or any objection that may be asserted by any Government Authority,
and to avoid the commencement of any Action by any Government Authority or any other Person under Antitrust Laws, and to avoid the entry
of, or to effect the dissolution of, any Order in any Action under Antitrust Laws which would otherwise have the effect of preventing
or delaying the consummation of the Transactions (“Antitrust Law Impediment”), provided that, notwithstanding
anything to the contrary contained in this Agreement, under no circumstance will Buyer or any of its Affiliates be required to, and Seller
shall not, and shall cause its Affiliates not to, without Buyer’s prior written consent, (i) propose, negotiate, commit to
or effect, by consent decree, hold separate orders, or otherwise, the sale, divestiture, license, lease or other disposition of any assets,
properties, products or businesses of the Business or Buyer or any of its Affiliates pursuant hereto, (ii) terminate existing relationships,
contractual rights or obligations of the Business or Buyer or any of its Affiliates, (iii) terminate any venture or other arrangement
of the Business or Buyer or any of its Affiliates, (iv) create any relationship, contractual rights or obligations of the Business
or Buyer or any of its Affiliates, (v) effectuate any other change or restructuring of the Business or Buyer or any of its Affiliates
or (vi) otherwise take or commit to take any actions with respect to the businesses, product lines or assets of the Business or
Buyer or any of its Affiliates, including in order to obtain the Government Approvals or avoid any Antitrust Law Impediment; provided,
further, that in no event shall any Party or any of its Subsidiaries or Affiliates be required to agree to any action, concession, or
undertaking unless such action, concession or undertaking is conditioned on the Closing. Each Party shall vigorously defend, contest
and resist any Claim asserted in court by any Government Authority or any other Person under Antitrust Laws in order to avoid entry of,
or to have vacated or terminated, any Order (whether temporary, preliminary or permanent) that would prevent the Closing prior to the
Outside Date or in order to obtain the applicable Government Approval.
(c) Buyer
and Seller shall discuss and in good faith agree on the strategy to obtain the Government Approvals and direct the defense of this Agreement
and the transactions contemplated hereby before any Government Authority; provided that Buyer shall, following reasonable consultation
with Seller and in consideration of Seller’s views in good faith, ultimately be entitled to direct the defense of this Agreement
and the transactions contemplated hereby before any Government Authority and to take the lead in the scheduling of, and strategic planning
for, any meetings with, and conducting of negotiations with, Government Authorities regarding (i) the expiration or termination
of any applicable waiting period relating to the Transactions or (ii) obtaining any consent, approval, waiver, clearance, authorization,
or permission from a Government Authority, provided however, that it shall afford Seller a reasonable opportunity to, and Seller
shall be entitled to (to the extent practicable), participate therein. Notwithstanding the foregoing provisions of this Section 6.04(c),
(A) each Party shall keep the other Party apprised of the content and status of any substantive communications with, and substantive
communications from, any Government Authority with respect to the Transactions, including promptly notifying the other Party of any material
communication it or any of its Affiliates receives from any Government Authority relating to any review or investigation of the Transactions
under any Antitrust Laws and shall permit the other Party to review in advance (and to implement any reasonable comments made by the
other Party in relation to) any proposed substantive communication by such Party to any Government Authority relating to such matters,
(B) each Party shall not make any filings or amendments thereto with respect to the Government Approvals without the other Party’s
prior written consent (which shall not be unreasonably delayed, conditioned or withheld) except as required by any other provision of
this Agreement, (C) none of the Parties shall agree to participate in any non-ministerial meeting, telephone call or discussion
with any Government Authority in respect of any submissions, filings, investigation (including any settlement of the investigation),
litigation or other inquiry relating to the matters that are the subject of this Agreement unless it consults with the other Party in
advance and, to the extent permitted by such Government Authority, gives the other Party the opportunity to attend and participate at
such meeting, telephone call or discussion, and (D) no Party shall agree to any extension of any waiting period under any regulatory
Law or otherwise enter into any arrangement with any Government Authority, in each case (clause (D)) in connection with any Government
Approvals, without the other Party’s written consent. The Parties will coordinate and cooperate fully with each other in exchanging
such information and providing such assistance as the other Party may reasonably request in connection with the foregoing and in seeking
any Government Approval. The Parties shall provide each other with copies of all material correspondence, filings or communications between
them or any of their representatives, on the one hand, and any Government Authority or members of its staff, on the other hand, with
respect to this Agreement and the transactions contemplated by this Agreement; provided, however, that materials may be redacted
(i) to remove references concerning the valuation of the Business, (ii) as necessary to comply with contractual arrangements
and (iii) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns; provided, further,
that each Party may reasonably designate materials, including materials submitted with that Party’s regulatory filings, as “Outside
Counsel Only” or “Outside Advisors Only,” in which case access to such materials shall be restricted accordingly.
(d) Until
that date that is twenty-four (24) months following the Closing Date, each of the Parties shall, and shall cause their respective Affiliates
to, cooperate with each other to prepare and file any registrations, license requests, amendments to existing authorizations or other
filings required to ensure that all licenses, exemptions, or other authorizations relating to Sanctions Laws and Ex-Im Laws used by the
Business continue to be valid and effective following the Closing.
(e) Notwithstanding
the foregoing, this Section 6.04 shall not apply to the transfer of the Transferred Permits and Transferred Product Authorizations
to Buyer, which is governed by Section 6.07.
Section 6.05 [Reserved].
Section 6.06 Cooperation;
Notice.
(a) During
the Pre-Closing Period, each of Seller and Buyer shall, and shall cause their respective Affiliates to, (i) except where greater
efforts or outright non-efforts based obligations are expressly required by the terms of this Agreement, use reasonable best efforts
to cause all Closing Conditions of the other Party to be met as promptly as practicable after the Agreement Date and in any event on
or before the Outside Date and (ii) without limiting any other obligations set forth in this Agreement, keep the other Party reasonably
apprised of the status of the matters relating to the completion of the Transactions, including with respect to the satisfaction of the
Closing Conditions of the other Party. Notwithstanding the foregoing, this Section 6.04(a) shall not apply with respect
to Government Approvals, which are governed by Section 6.04(a).
(b) During
the Pre-Closing Period, subject to applicable Law and to the extent not prohibited by the applicable Government Authority, Seller shall
provide Buyer with advance notice of any scheduled meetings, scheduled videoconferences or scheduled calls with respect to the Business
taken as a whole or any Key Product, that any Seller Party has with any Government Authority or any advisory committee thereof other
than in the ordinary course of business consistent with past practice, and (i) provide Buyer the opportunity to attend or participate
in any such meeting or any substantive conversation with any such Government Authority or advisory committee thereof and (ii) prior
to attending any such meeting or scheduled videoconference or call, the applicable Seller Party shall, and shall, as necessary, cause
its Representatives to, consult with Buyer and consider in good faith the views and comments of Buyer in connection with, and reasonably
in advance of, any such meeting or scheduled videoconference or call. During the Pre-Closing Period, subject to applicable Law and to
the extent not prohibited by the applicable Government Authority, Seller shall also promptly (x) notify Buyer of any notice or other
communication to any Seller Party from any Government Authority or any advisory committee thereof with respect to the Business taken
as a whole or any Key Product; (y) provide Buyer with prior written notice and the opportunity to consult with the applicable Seller
Party with respect to any substantive notice, submission, response or other communication to any Government Authority or any advisory
committee thereof with respect to the Business taken as a whole or any Key Product from the applicable Seller Party, and shall consider
in good faith any comments or other input provided by Buyer in respect of the foregoing and (z) furnish Buyer with copies of all
such substantive correspondence, filings and written communications between the applicable Seller Party on one hand, and any such Government
Authority or its staff on the other hand, made during the Pre-Closing Period. Notwithstanding the foregoing, in no event shall the Seller
Parties be required to violate any Law or take any action or refrain from taking any action pursuant to this Section 6.06(b) that
would cause the Seller Parties to fail to meet a specific submission deadline, if any, imposed by any Government Authority or any advisory
committee thereof.
Section 6.07 Permits
and Product Authorizations
(a) Within
five (5) days following the Agreement Date, the Parties shall establish a transition management team consisting of an equal number
of representatives of each Party that will be responsible for creating a written plan (the “Transfer Plan”) for transfer
of the Transferred Product Authorizations and the Transferred Permits from the Seller Parties to Buyer and its Affiliates. The Transfer
Plan shall set forth the action items that each Party will be responsible for initiating, reviewing, approving and otherwise supporting
for each jurisdiction where the Business or any Transferred Entity operates, including with respect to safety and regulatory management
for the Products and Product Candidates. In consultation with Seller, Buyer shall provide Seller an initial draft of the Transfer Plan
no later than thirty (30) days following the Agreement Date. Seller shall provide comments to such initial draft within ten (10) Business
Days following receipt by Buyer of such initial draft. The Parties shall discuss and use commercially reasonable efforts to mutually
agree upon the Transfer Plan within thirty (30) days following receipt by Buyer of Seller’s comments to the Transfer Plan but in
any event prior to ten (10) Business Days prior to Closing; provided that Buyer shall have the final decision making authority
on any contents of the Transfer Plan.
(b) Except
to the extent provided otherwise in the Transition Services Agreement, Buyer and Seller shall (and shall cause their respective Affiliates
to) (i) perform, or cause to be performed, all designated actions assigned to such Party in the Transfer Plan, (ii) cooperate
with one another in such performance and (iii) complete and execute all documentation required, in each case of clause (i) through
(iii), to effect the transfer of the Business, including the Transferred Product Authorizations and the Transferred Permits, as soon
as reasonably practicable following the Closing, subject to the Transfer Plan. Following the Closing Date, the Parties may amend the
Transfer Plan in accordance with the Transition Services Agreement.
(c) With
respect to each Transferred Product Authorization and each Transferred Permit, and except as otherwise provided in any other Transaction
Agreement, until the earlier of (i) the date upon which such Transferred Product Authorization or Transferred Permit is transferred
to Buyer’s, its Affiliates’ or its or their designees’ name and (ii) the date which is three (3) years following
the Closing Date (the “Regulatory Deadline”), Seller shall, and shall cause each of the other Seller Parties to, use
best efforts to (A) keep current and in full force and effect, or to apply for or renew, any Transferred Product Authorization and
Transferred Permit that is not yet transferred to Buyer, (B) continue the maintenance of all Transferred Product Authorizations
and Transferred Permits that are not yet transferred to Buyer, (C) comply with the terms of any Transferred Product Authorization
and Transferred Permits, and (D) submit any filings relating to the progress of any variation filed prior to the Closing Date to
the Transferred Product Authorizations to the extent that the submissions must be made by Seller; provided that Buyer shall be
solely responsible for the regulatory strategy with respect to the Products and the Transferred Product Authorization; provided
further that the Regulatory Deadline may be extended with respect to any Transferred Product Authorization or Transferred Permit for
one (1) additional year upon Buyer’s request, such request to be made to Seller at least thirty (30) days prior to the Regulatory
Deadline. Notwithstanding anything to the contrary in the Transaction Agreements, if (x) Seller’s cost to perform, or cause
to be performed, any designated action assigned to Seller in the Transfer Plan would increase solely due to Seller following Buyer’s
instruction or request when reasonable lower cost alternatives exist, (y) Seller promptly notifies Buyer of such increase in cost
prior to performing, or causing to be performed, such action and (z) Buyer thereafter confirms to Seller to proceed with such instruction
or request despite such increase in cost, then Buyer shall bear any such increase in cost.
(d) Except
as otherwise contemplated by Section 6.07(c) or provided in any other Transaction Agreement, (i) upon the transfer
of the Transferred Product Authorizations and the Transferred Permits to Buyer or its Affiliates, Buyer, its Affiliates or its or their
designees shall be responsible for the maintenance of all Transferred Product Authorizations (including the generation of any new Product
Authorization Data, if applicable, and the determination of the regulatory strategy) and the Transferred Permits, as applicable, at its
or their own expense and (ii) neither Seller nor any of its Affiliates shall have any obligation to support or maintain the Transferred
Product Authorizations or the Transferred Permits, as applicable, except that Seller shall, and shall cause each of its Affiliates to,
for five (5) years following the Closing Date, forward to Buyer any written communications received from a Government Authority
with respect to the Business, a Transferred Product Authorization or a Transferred Permit and forward any documents or communication
with respect to the Business, a Transferred Product Authorization or a Transferred Permit to a Government Authority as reasonably requested
by Buyer, including any complaints and product safety information. Seller shall, and shall cause its Affiliates to, following the Closing
Date, transfer, or cause to be transferred, to Buyer or its Affiliates any Product Authorization Data with respect to the Business or
a Transferred Product Authorization that comes into the possession or control of Seller or such Affiliate.
(e) The
Party that is required to make the applicable filing shall bear the filing or similar fees payable to the applicable Government Authority
with respect to the transfer of any Permits or Product Authorizations to Buyer or any of its Affiliates pursuant to this Agreement, and
Buyer shall bear any reasonable and out-of-pocket fees and expenses with respect to the maintenance of any such Permits or Product Authorization
from the Closing Date; provided, however, that Seller shall bear any such fees and expenses required to be incurred to ensure
such Permits or Product Authorizations are in full force and effect, including the maintenance thereof, and sufficiently updated and
renewed for transfer as of Closing. If, following the Closing, a change in applicable Law requires Seller to perform any studies or generate
any data in connection with such Permits or Product Authorizations, Buyer shall bear any of Seller’s reasonable and out-of-pocket
fees and expenses that it incurs in connection with the performance of such studies and generation of data to the extent such fees and
expenses are attributable solely to such change in applicable Law (and not, for clarity, otherwise attributable to the activities identified
in the proviso in the preceding sentence which shall be borne by Seller). The process and administration for the payment and reimbursement
(to the extent necessary) of such fees and expenses shall be set forth in the Transition Services Agreement.
(f) During
the period from the Closing Date until the date on which all Transferred Product Authorizations have been transferred to Buyer or one
of its Affiliates in accordance with the Transfer Plan, Buyer and its Affiliates are appointed as worldwide exclusive distributors to
exploit the Products, and Buyer hereby accepts such appointment on behalf of itself and its Affiliates. Buyer shall be authorized to
grant rights of distribution to sub-distributors or to hire or engage one or more of its Affiliates or third parties to perform or cause
to be performed the exploitation of the Products at Buyer’s own discretion. Seller and its Affiliates will execute and deliver
such additional declarations and documents as may be necessary to evidence such appointment of Buyer and its Affiliates. For clarity,
nothing contained in this Section 6.07(f) shall be construed to limit or prohibit any third party distributor or wholesaler
from exploiting any inventory of any Product sold to such distributor or wholesaler by Seller or its Affiliates prior to the Closing.
Section 6.08 Recordation
of Chain of Title to Intellectual Property. Prior to or at the Closing, for each item of
the Registrable IP (other than as set forth in the proviso of this sentence), Seller shall, and shall cause its Affiliates to submit
for recordation to the respective Government Authority all documents necessary to complete the chain of title from the inventor(s) (or
other original holder of rights to said item) to Seller or its respective Affiliate from which, under this Agreement, Buyer will receive
the rights to said item; provided that with respect to the patents, patent applications and priority patent applications set forth
on Section 4.08(b) of the Disclosure Schedules, Seller shall, and shall cause its Affiliates, to use reasonable best efforts
to submit for such recordation. Seller shall furnish to Buyer at or prior to Closing copies of all documents filed with any Government
Authority in connection with the chain of title updates required under this Section 6.08 with respect to the Registrable
IP. If, after the Closing, any Government Authority requires further documentation in order to successfully record any such submissions,
Seller shall, and shall cause its Affiliates to submit such further documentation. Until such time as such chain of title updates have
been completed, Seller shall bear the costs and expenses associated with the submissions described in this Section 6.08.
Section 6.09 IT
Migration. As soon as reasonably practicable after the Agreement Date, Buyer shall develop
in consultation with Seller a written plan (the “Migration Plan”), which shall outline Buyer’s plan and timetable
for an orderly transfer of the Transferred Books and Records and the Business Employee Records at or after the Closing and the migration
to Buyer of information technology services for the Business (the “IT Migration”), in each case in a manner in compliance
with applicable Law. Buyer and Seller shall discuss and agree in good faith the Migration Plan within thirty (30) days of receipt by
Seller of the Migration Plan. Except to the extent provided otherwise in the Transition Services Agreement, Buyer and Seller shall (and
shall cause their respective Affiliates to) use commercially reasonable efforts to (i) perform, or cause to be performed, all designated
actions assigned to such Party in the Migration Plan, (ii) cooperate with one another in such performance and (iii) complete
and execute all documentation required, in each case of clause (i) through (iii), to effect the IT Migration, as soon as reasonably
practicable following the Closing, subject to the Migration Plan. Following the Closing Date, the Parties may amend the Migration Plan
in accordance with the Transition Services Agreement. Notwithstanding the foregoing, the failure of Buyer and Seller to agree on the
Migration Plan or carry out the Migration Plan in any respect shall not be deemed as a failure of any Closing Condition.
Section 6.10 Data
Protection. The Parties shall (a) during the Pre-Closing Period, comply with all applicable
Laws relating to privacy, security, or security breach notification requirements, and (b) after the Closing, comply with the terms
and conditions set forth in the Data Sharing Agreement. Notwithstanding anything to the contrary in this Agreement, no Party shall be
required to take any action that would constitute a violation of applicable Laws relating to privacy, security, or security breach notification
requirements.
Section 6.11 Chile
Site Visit and Environmental Assessment. Prior to the Closing Date, Seller shall grant Buyer
access, during normal business hours (and at such other times as may be agreed), to Seller’s facility located in Puerto Varas,
Chile for the purpose of Buyer conducting a noninvasive environmental assessment, which shall not include any sampling, testing or other
indoor or outdoor investigation of soil, subsurface strata, surface water, groundwater, sediments or ambient air.
Section 6.12 Pharmacovigilance
. Prior to the Closing Date, the Parties shall negotiate in good faith and use their respective
reasonable best efforts to finalize and enter into an agreement to outline responsibility for safety and regulatory management for the
Products and Product Candidates, including exchange of safety information, labeling responsibilities, safety surveillance, signal detection
and reporting to Government Authorities, on commercially reasonable and customary terms and conditions (the “Pharmacovigilance
Agreement”).
Article VII
Post-Closing
Covenants
Section 7.01 Rights
to Seller Names and Seller Marks.
(a) With
respect to the licensing of the Seller Names and Seller Marks, the Parties shall enter into the Transitional Trademark License Agreement.
Except as otherwise provided in this Section 7.01 or the Transitional Trademark License Agreement, Buyer and its Affiliates
(which for purposes of this Section 7.01, shall include the Transferred Entities) shall cease and discontinue all uses of
the Seller Names and Seller Marks in connection with the operation of the Business as promptly as reasonably practicable, and, in any
event, prior to or upon the expiration of the periods expressly provided therefor in the Transitional Trademark License Agreement.
(b) Buyer,
for itself and its Affiliates, acknowledges and agrees that, except to the extent expressly provided in this Section 7.01
or in the Transitional Trademark License Agreement, neither Buyer nor any of its Affiliates shall have any rights in any of the Seller
Names and Seller Marks.
Section 7.02 Access.
From and after the Closing and until three (3) years from and after the Closing Date, upon reasonable prior notice, and except as
otherwise provided in this Agreement and solely to the extent necessary to ensure compliance with any applicable Law and subject to any
applicable legal privilege (including the attorney-client privilege) and any contractual confidentiality obligations, Buyer shall, and
shall cause each of the Transferred Entities and its and their Affiliates to (A) afford each Seller Party and its Representatives
reasonable access, during normal business hours, to the books and records of the Business (including the Transferred Entities) and (B) furnish
to each Seller Party and its Representatives such additional existing financial and other existing information regarding the Business,
the Transferred Entities, the Transferred Assets and the Assumed Liabilities as any Seller Party or its Representatives may from time
to time reasonably request, in each case of clauses (A) and (B), to the extent such books, records and information relate to the
Pre-Closing Period; provided however, that, in each case of clauses (A) and (B), such access shall not unreasonably interfere
with the business, personnel or operations of Buyer or any of its Affiliates and shall be subject in all respects to the provisions of
Section 6.03(b); provided further, that the third-party auditors and accountants of Buyer or any of its Affiliates
shall not be obligated to make any Work Papers available to any Person except in accordance with such auditors’ and accountants’
normal disclosure procedures and then only after such Person has signed a customary agreement relating to such access to Work Papers
in form and substance reasonably acceptable to such auditors or accountants. If so reasonably requested by Buyer, Seller shall enter
into a customary and mutually acceptable joint defense agreement or common interest agreement with one or more of Buyer or any of its
Affiliates with respect to any information provided to Seller, or to which Seller gains access, pursuant to this Section 7.02
or otherwise. Seller shall promptly reimburse Buyer for Buyer’s reasonable out-of-pocket expenses associated with requests
made by any Seller Party or any of their respective Affiliates under this Section 7.02.
Section 7.03 Insurance.
(a) Subject
to Section 7.03(b), from and after the Closing Date, the Transferred Entities and the Business shall cease to be in any manner
insured by, entitled to any benefits or coverage under or entitled to seek benefits or coverage from or under any current or historical
Insurance Policies of Seller and its Subsidiaries. Subject to Section 7.03(b), Seller or any of its Subsidiaries may amend,
following the Closing, any Insurance Policies and ancillary arrangements in the manner they deem appropriate to give effect to this Section 7.03;
provided that, if a material Transferred Asset suffers a casualty loss or there is a loss to the Business prior to the Closing
Date that is covered by insurance (other than self-insurance) maintained by Seller or its Affiliates, Seller shall promptly forward to
Buyer the net insurance proceeds received in respect of such loss (net of costs and expenses incurred in pursuing the insurance claim).
(b) For
three (3) years after the Closing, with respect to any event which occurred, or conditions which were in existence, prior to the
Closing Date or claims to the extent they relate to events which occurred, or conditions which were in existence, prior to the Closing
Date, in each case, relating to the Business, Transferred Assets, Assumed Liabilities or Transferred Employees that would be covered
by any of Seller’s or any of its Affiliates’ occurrence-based insurance policies (but not claims-made or occurrence-reported
insurance policies, self-insurance or insurance provided by a captive insurance entity) (such policies, the “Available Insurance
Policies” and such occurrences or claims, the “Coverage Claims”), Buyer, on behalf of itself and any of
its Affiliates, may require Seller to submit claims and seek coverage for, and shall have the right to receive from Seller the net insurance
proceeds received with respect to, such Coverage Claims under the Available Insurance Policies, subject to and to the extent permitted
by the terms and conditions of such Available Insurance Policies; provided however, that (i) Buyer shall exclusively bear
the amount of any “deductibles” associated with claims under such Available Insurance Policies; (ii) Buyer shall be
solely responsible for preparing the notification to any and all insurance companies of such claims and complying with all policy terms
and conditions for pursuit and collection of such claims (and Seller shall cooperate with Buyer to comply with such) and shall not, without
the written consent of Seller, such consent not to be unreasonably withheld, amend, modify or waive any rights of Seller, any of its
Affiliates or other insureds under any such insurance policies and programs; (iii) with respect to coverage claims or requests for
benefits asserted by Buyer under the Available Insurance Policies, Seller shall have the right, but not the obligation, to associate
with Buyer with respect to such claims, provided that Seller shall associate with Buyer with respect to such claims upon the request
of Buyer, provided further that if Seller associates with Buyer with respect to any such claim, Buyer will control all decisions
relating to such claim; (iv) Buyer shall be liable for any reasonable and out-of-pocket fees, costs or expenses incurred by Seller
or any of its Affiliates and any increased premium (including any retroactive premium) paid by Seller pursuant to the Available Insurance
Policies to the insurers or reinsurers thereunder to the extent relating to any coverage claims and (v) Buyer shall not assign any
Available Insurance Policies or any rights or claims under the Available Insurance Policies.
(c) Subject
to this Section 7.03, nothing in this Agreement shall limit, waive or abrogate in any manner any rights of Seller to insurance
coverage for any matter and Seller shall retain the exclusive right to control its Insurance Policies, including the right to exhaust,
settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its Insurance Policies and to amend, modify or
waive any rights under any such Insurance Policies. Seller shall not, and shall cause each of its Affiliates not to, exercise its rights
under this Section 7.03(c) to limit or extinguish coverage for any Coverage Claims prior to the resolution of such Coverage
Claims by judgment or settlement.
Section 7.04 Further
Assurance Regarding Intellectual Property and Technology.
(a) If,
after the Closing Date, Seller or Buyer identifies any item of Seller Intellectual Property or Seller Technology or Business Intellectual
Property or Business Technology that was (i) in the case of any item of Seller Intellectual Property or Seller Technology, (A) transferred
by a Seller Party to Buyer or any Transferred Entity, or (B) owned by any Transferred Entity prior to the Closing Date and that
was not transferred to a Seller Party prior to the Closing Date, or (ii) in the case of any item of Business Intellectual Property
or Business Technology, retained by a Seller Party at Closing, Buyer or Seller, as applicable, shall, or shall cause the applicable Transferred
Entity or Seller Party to, promptly transfer such Seller Intellectual Property or Seller Technology to Seller or its designated Subsidiary
or such Business Intellectual Property or Business Technology to Buyer or its designated Transferred Entity, in each case, for no additional
consideration.
(b) Until
such time that Buyer transfers such Seller Intellectual Property or Seller Technology to Seller or its designated Subsidiary, (i) Buyer
shall hold such Seller Intellectual Property or Seller Technology in trust for Seller and subject to the obligations under Section 6.03
and Section 7.07, and (ii) Buyer hereby grants to Seller and its Subsidiaries (A) a non-exclusive, royalty-free,
fully paid-up, worldwide, irrevocable, sub-licensable through multiple tiers and transferable right and license (or sub-license through
multiple tiers, as the case may be) to fully use, practice and otherwise exploit such Seller Intellectual Property or Seller Technology
Controlled (as such term is defined in the Intellectual Property License Agreement) by Buyer and (B) to the extent such Seller Intellectual
Property or Seller Technology is not Controlled by Buyer, a covenant that Buyer and the Transferred Entities will not assert any claim
of infringement, misappropriation or other violation of such Seller Intellectual Property or Seller Technology against Seller or any
of its Subsidiaries solely with respect to the use, practice or other exploitation of such Seller Intellectual Property or Seller Technology
in accordance with this Agreement or any applicable Transaction Agreement, in each case under clauses (i) and (ii), effective as
of the Closing Date and solely for the duration commencing on the Closing Date and ending on the date when such Seller Intellectual Property
or Seller Technology (as applicable) is transferred to Seller or its designated Subsidiary.
(c) Until
such time that Seller transfers such Business Intellectual Property or Business Technology to Buyer or its designated Transferred Entity
or other Subsidiary, (i) Seller shall hold such Business Intellectual Property or Business Technology in trust for Buyer and subject
to the obligations under Section 6.03, and (ii) Seller hereby, on behalf of itself and the other Seller Parties, grants
to Buyer and the Transferred Entities and their Affiliates (A) a non-exclusive, royalty-free, fully paid-up, worldwide, irrevocable,
sub-licensable through multiple tiers and transferable right and license (or sub-license through multiple tiers, as the case may be)
to fully use, practice and otherwise exploit such Business Intellectual Property or Business Technology Controlled (as such term is defined
in the Intellectual Property License Agreement) by such Seller Party and (B) to the extent such Business Intellectual Property or
Business Technology is not Controlled by such Seller Party, a covenant that each Seller Party will not assert any claim of infringement,
misappropriation or other violation of such Business Intellectual Property or Business Technology against Buyer or any of the Transferred
Entities or any of their Affiliates solely with respect to the use, practice or other exploitation of such Business Intellectual Property
or Business Technology in accordance with this Agreement or any applicable Transaction Agreement, in each case under clauses (i) and
(ii), effective as of the Closing Date and solely for the duration commencing on the Closing Date and ending on the date when such Business
Intellectual Property or Business Technology (as applicable) is transferred to Buyer or its designated Transferred Entity.
(d) After
the Closing, upon the request of Buyer, Seller shall, and shall cause its Affiliates to, assist Buyer with the recordation with any Government
Authority of documents relating to the Buyer’s or its applicable Affiliate’s title or license to any of the Business Intellectual
Property, including by providing or executing confirmatory assignments, confirmatory licenses and any other documentation as may be needed
by any Government Authority to effect the recordation of Buyer’s or such Affiliate’s title or license to any of the Business
Intellectual Property. Buyer shall bear all reasonable and out-of-pocket costs and expenses incurred by Seller or its Affiliates to provide
the assistance described in this Section 7.04(d). To the extent that a Government Authority does not permit prosecution or
maintenance of any item of the Business Intellectual Property (including any Registrable IP addressed under Section 6.08)
other than by the owner of record, and if any item of the Business Intellectual Property is not yet recorded with the relevant Government
Authority in the name of the Buyer or its applicable Affiliate as of the Closing, Seller shall, and shall cause its Affiliates to, hold
such item in trust and shall take direction from Buyer as to all necessary prosecution or maintenance thereof. Buyer shall bear all reasonable
and out-of-pocket costs and expenses incurred by Seller for such prosecution or maintenance.
(e) After
the Closing, upon the request of Seller, Buyer shall, and shall cause its Affiliates to, assist Seller with the recordation with any
Government Authority of documents relating to the Seller’s or its applicable Affiliate’s title or license to any of the Seller
Intellectual Property, including by providing or executing confirmatory assignments, confirmatory licenses and any other documentation
as may be needed by any Government Authority to effect the recordation of Seller’s or such Affiliate’s title or license to
any of the Seller Intellectual Property. Seller shall bear all reasonable and out-of-pocket costs and expenses incurred by Buyer or its
Affiliates to provide the assistance described in this Section 7.04(e). To the extent that a Government Authority does not
permit prosecution or maintenance of any item of the Seller Intellectual Property other than by the owner of record, and if any item
of the Seller Intellectual Property is not yet recorded with the relevant Government Authority in the name of Seller or its applicable
Affiliate as of the Closing, Buyer shall, and shall cause its Affiliates to, hold such item in trust and shall take direction from Seller
as to all necessary prosecution or maintenance thereof. Seller shall bear all reasonable and out-of-pocket costs and expenses incurred
by Buyer for such prosecution or maintenance.
(f) From
and after the Closing, Seller shall not, and shall cause its Subsidiaries to not, adopt, use, attempt to register or register any Trademarks
(including as part of any company name, fictitious name, domain name or social media tag, handle or identifier) anywhere in the world
that are identical to or contain, or that are confusingly similar to or a colorable imitation of, any of the Trademarks included in the
Business Intellectual Property, including translations, transliterations or foreign equivalent thereof, on or in connection with any
products or services.
Section 7.05 Further
Assurances. From time to time following the Closing and subject to Section 7.04,
Buyer and Seller shall, and shall cause their respective Affiliates to, execute, acknowledge and deliver all reasonable further conveyances,
notices, assumptions, releases and acquittances and such instruments, and shall take such reasonable actions as may be reasonably necessary
or appropriate to make effective the Transactions as may be reasonably requested by the other Party (including (a) transferring
back to Seller or its designated Subsidiary (or having Seller or its designated Subsidiary assume), without consideration therefor, (i) each
Excluded Asset and each Excluded Liability transferred by a Seller Party to Buyer (directly or as an asset or Liability of any Transferred
Entity) directly at the Closing and (ii) any Excluded Asset that is transferred or paid to Buyer or its Affiliates by a third party
after the Closing and (b) transferring to Buyer or its designated Subsidiary (or having Buyer or its designated Subsidiary assume),
without consideration therefor, (i) each Transferred Asset and each Assumed Liability that was not transferred by a Seller Party
to Buyer (directly or as an asset or Liability of any Transferred Entity) directly at the Closing and (ii) any Transferred Asset
that is transferred or paid to Seller or its Affiliates by a third party after the Closing); provided however, that, except for
Buyer’s obligations to discharge an Assumed Liability and Seller’s obligations to discharge an Excluded Liability, nothing
in this Section 7.05 shall require either Party or its Affiliates to pay money to, commence or participate in any Action
with respect to, or offer or grant any accommodation (financial or otherwise) to, any third party following the Closing. In furtherance
of the foregoing obligations, if, following the Closing, either Party, or any of its Affiliates receives (x) any invoices, bills
or accounts payable from any third party with respect to any account payable that are (i) if received by Buyer or its Affiliates,
account payables prior to the Closing Date, or (ii) if received by Seller or any of its Affiliates, account payables from and after
the Closing Date, then such Party shall, within thirty (30) days after receipt of such demand, provide such demand to the other Party
who shall be responsible for the settlement of such demand in full, or (y) any payments from any obligor with respect to an account
receivable that are (i) if received by Buyer or its Affiliates, accounts receivable arising from the Business prior to the Closing
Date (the “Retained Accounts Receivable”), or (ii) if received by Seller or any of its Affiliates, arising from
the Business on or after the Closing Date (the “Assumed Accounts Receivable”), then such Party shall, within thirty
(30) days after receipt of such payment, remit such payment in full to the other Party. The obligations of Buyer and Seller under Section 7.04
and this Section 7.05 shall survive for a period of five (5) years after the Closing Date.
Section 7.06 Local
Transfer Agreements.
(a) The
Parties do not intend this Agreement to transfer title to any Transferred Assets, or to constitute the assumption of any Assumed Liabilities,
in any jurisdiction in which such transfer or assumption is required by applicable Law to be made pursuant to a Local Transfer Agreement,
and any such Transferred Assets or Assumed Liabilities, as applicable, shall only be transferred or assumed by the applicable Local Transfer
Agreement (which Local Transfer Agreement shall be subject to the terms of this Agreement and otherwise without representation or warranty
of any kind or nature or any covenant or recourse following the closing of such transfer). Each Local Transfer Agreement shall be in
a form reasonably acceptable to each of Buyer and Seller, including with respect to (i) the deletion of provisions which are inapplicable
to such Seller Party or Buyer (or its designated Affiliate) party to the applicable Local Transfer Agreement or to the Transferred Assets
and the Assumed Liabilities covered by such agreement, (ii) such changes as may be necessary to satisfy the requirements of applicable
local Law, and (iii) such other changes as may be reasonably agreed by Seller and Buyer. The Local Transfer Agreements shall serve
solely to effect the legal transfer of the applicable Transferred Equity Interests or Transferred Assets, or the assumption of any Assumed
Liabilities in the applicable jurisdictions, and, for the avoidance of doubt, the Local Transfer Agreements shall not have any effect
on the value being given or received by the Seller Parties or Buyer or the remedies or claims of any Party, including the allocation
of assets and Liabilities as between them, all of which shall be determined solely in accordance with this Agreement.
(b) Without
limiting the generality of Section 7.06(a), to the extent that the provisions of a Local Transfer Agreement are inconsistent
with, or (except to the extent they implement a transfer in accordance with this Agreement) additional to, the provisions of this Agreement
(or do not fully give effect to the provisions of this Agreement with respect to the transfer of the Transferred Assets or the assumption
of Assumed Liabilities): (i) the provisions of this Agreement shall prevail; and (ii) so far as permissible under applicable
Law of the relevant jurisdiction, the Seller Parties and Buyer shall cause the provisions of the relevant Local Transfer Agreement to
be amended to the extent necessary to give effect to the provisions of this Section 7.06.
(c) Each
Party hereto shall not, and shall cause its respective Affiliates not to, bring any Claim (including for breach of any warranty, representation,
undertaking, covenant or indemnity relating to the Transactions) against the other Party or any of its Affiliates in respect of or based
upon any of the Local Transfer Agreements, except to the extent necessary to enforce the transfer of title of the Transferred Equity
Interests, Transferred Assets or the assumption of Assumed Liabilities sold or assigned to Buyer hereunder in a manner consistent with
the terms of this Agreement. All such Claims (except as referred to above) shall be brought in accordance with, and be subject to the
provisions, rights and limitations set out in, this Agreement, and no Party shall be entitled to recover damages or obtain payment, reimbursement,
restitution or indemnity under or pursuant to any of the Local Transfer Agreements (but without prejudice to the establishment of the
existence of the Claim hereunder) to the extent inconsistent with this Agreement. To the extent that a Party does bring such a Claim
(except as referred to above), that Party shall indemnify the other Party (or that other Party’s relevant Affiliates) against all
Losses which it or they may suffer through or arising from the bringing of such Claim against it or them.
Section 7.07 Non-Solicitation
of Employee; Non-Competition.
(a) For
a period beginning on the Closing Date and ending on the date that is eighteen (18) months after the Closing Date (the “Non-Solicitation
Period”), Seller shall not, and shall cause its Affiliates not to, directly or indirectly, solicit for employment, hire, employ
or otherwise solicit or contract for the provision of services to Seller or any of its Affiliates, or induce to leave employment with
Buyer or any of its Affiliates, any Person who is a Transferred Employee; provided that the foregoing shall not prohibit (i) making
general solicitations through a public medium or general or mass mailing by Seller or its Affiliates that is not directly or indirectly
targeted at such Transferred Employees or the hiring or employment of such Transferred Employees solely as a result of the general solicitation
in accordance with this clause (i), (ii) the solicitation, hiring or otherwise employing, of any such Transferred Employees from
and after six (6) months after his or her resignation from Buyer or the Business, or (iii) the solicitation, hiring or employment
of such Transferred Employee if such Transferred Employee is terminated by Buyer or the Business.
(b) Until
the third (3rd) anniversary of the Closing Date in the European Economic Area and United Kingdom, and until the fifth (5th) anniversary
of the Closing Date elsewhere globally (or, if not enforceable for such period in any jurisdiction under the applicable Laws of such
jurisdiction, for such shorter period as will be enforceable in such country under any applicable Law) (such applicable period, the “Non-Compete
Period”), Seller shall, and shall cause its Affiliates to, refrain from, either alone or in conjunction with any other Person,
directly or indirectly, including through its present or future Affiliates, (i) owning, operating, managing, controlling, or investing
or engaging in a Competitive Business or (ii) otherwise knowingly lend assistance (financial or otherwise) to enable any Person
to participate or engage in a Competitive Business. As used herein, “Competitive Business” means the business of,
or the conduct of any activities or services with respect to researching, developing, manufacturing, producing, packaging, labeling,
storing, using, transporting, shipping, importing, exporting, registering, modifying, improving, formulating, testing, marketing, selling,
offering for sale, commercializing, distributing or exploiting any molecule, compound, composition, process, material, product or product
candidate, or the providing of services (including technological services) with respect to the Aqua Health Field anywhere in the world.
Notwithstanding the foregoing, none of Seller and its Affiliates shall be restricted from (i) the purchase, sales or distribution
of inventories or products that are Excluded Assets in the ordinary course of business consistent with past practice outside of the Aqua
Health Field or the performance of any of Seller’s or its Affiliates’ obligations under and in accordance with the Transaction
Agreements, and (ii) conducting any broad cross-species screens and early research related thereto other than as such activities
are specific to the Aqua Health Field; provided further that, notwithstanding the foregoing, conducting any in vivo testing
or studies with respect to the Aqua Health Field shall be activities included in the definition of “Competitive Business”.
(c) Nothing
in Section 7.07(b) shall restrict (i) Seller or any of its Affiliates from acquiring or owning any securities of
any Person to the extent such acquisitions or ownership are for passive investment purposes only and do not result in Seller or any of
its Affiliates owning in the aggregate three percent (3%) or more of all issued and outstanding capital stock or other equity interests
of such Person on a fully-diluted basis at the time of the acquisition, (ii) Seller or any of its Affiliates from owning any interest
in any Person that it owns as of immediately prior to the Closing provided that Seller and its Affiliates otherwise comply with Section 7.07(b),
(iii) Seller or any of its Affiliates from acquiring (through merger, stock purchase, purchase of assets or otherwise) any Person
or business engaged in any Competitive Business so long as (A) the principal purpose of such acquisition is not to engage in a Competitive
Business, (B) the acquired Person or business is not primarily engaged in a Competitive Business, and (C) Seller or its applicable
Affiliate either causes such Person or business to halt the conduct of any Competitive Business, or enters into a definitive agreement
to divest such Competitive Business, within nine (9) months after the acquisition thereof; or (iv) the activities of any Person
(or any of its Affiliates) who engages in a business combination transaction resulting in the acquisition (by merger, tender offer, purchase
or otherwise) of any capital stock or assets of Seller or any of its Affiliates, and who, prior to entering into or commencing such business
combination transaction, is not an Affiliate of Seller.
(d) The
Parties recognize that the Laws and public policies of the various states of the U.S. and the other jurisdictions throughout the rest
of the world may differ as to the validity and enforceability of covenants similar to those set forth in this Section 7.07.
It is the intention of the Parties that the provisions of this Section 7.07 be enforced to the fullest extent permissible
under the Laws and policies of each jurisdiction in which enforcement may be sought, and that the unenforceability (or the modification
to conform to such Laws or policies) of any provisions of this Section 7.07 shall not render unenforceable, or impair, the
remainder of the provisions of this Section 7.07 or any other provision in this Agreement. Accordingly, if any provision
of this Section 7.07 shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall be deemed
to apply only with respect to the operation of such provision in the particular jurisdiction in which such determination is made and
not with respect to any other provision or jurisdiction. Notwithstanding anything to the contrary, Section 7.07(a) shall
be of no force and effect after the expiration of the Non-Solicitation Period, and Sections 7.07(b) and 7.07(c) shall
be of no force and effect after the expiration of the Non-Compete Period; provided that Seller shall not be relieved of any liabilities
with respect to a breach any of the applicable provisions in Section 7.07 prior to the expiration of the Non-Solicitation
Period or Non-Compete Period, as applicable.
Section 7.08 Litigation
Support. For a period of five (5) years following the Closing Date, if and for so long
as either Party is actively contesting or defending against any Action in connection with any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Business, the Products or the Product Candidates, Buyer and its Affiliates, on the one hand, and Seller and its Affiliates,
on the other hand, will reasonably cooperate with each other in the defense, appeal or settlement of any such Action for which the other
Party has responsibility under this Agreement by providing, subject to applicable Law, the other Party and such other Party’s legal
counsel and other designated Persons access to employees, records, documents, data, facilities and other information regarding the Business,
the Products and the Product Candidates to the extent maintained or under the possession or control of the requested Party and not in
possession or control of the requesting Party. The requesting Party shall reimburse the other Party for its reasonable out-of-pocket
expenses paid to third parties in performing its obligations under this Section 7.08. Notwithstanding the foregoing, (a) this
Section 7.08 shall not apply to any Action in which Buyer or any of its Affiliates, on the one hand, and Seller or any of
its Affiliates, on the other hand, are opposing parties and (b) nothing contained in this Section 7.08 shall obligate
Buyer, Seller or any of their respective Affiliates to (i) waive any established legal privileges (including the attorney-client
privilege) held by such Person, (ii) breach confidentiality obligation to which it is bound (whether such duty arises contractually,
statutorily or otherwise) or any contract or agreement with any other Person or (iii) violate any applicable Law or Order (provided
that, in any case in this clause (b), Buyer, Seller or their respective Affiliates, as the case may be, shall use its or their respective
reasonable best efforts to obtain any required consents and take such other reasonable action (such as the entry into a joint defense
agreement or other arrangement to avoid loss of attorney-client privilege) to enable such Persons to satisfy their obligations under
this Section 7.08). All information received pursuant to this Section 7.08 will be subject to Section 6.03.
Section 7.09 Delivery
of Data.
(a) Within
two (2) Business Days of the Agreement Date, Seller shall permit Buyer to download the complete contents, as of the Agreement Date,
of the Data Room. On the Closing Date, Seller shall permit Buyer to download the complete contents, as of the Closing Date, of
the Data Room. The Parties agree that any materials downloaded by Buyer pursuant to this Section 7.09 shall be subject
to the terms and provisions of the Confidentiality Agreement and Section 6.03.
(b) As
soon as practicable and in any event within forty-five (45) days following the Closing Date, and subject to the Transition Services Agreement,
the applicable Seller Parties shall transfer to Buyer the Product Authorization Data described in Section 2.01(a)(iv) in
formats reasonably acceptable to Buyer. Notwithstanding anything to the contrary, but subject to Section 6.03, Seller may
retain copies of all such Product Authorization Data solely to the extent necessary to perform its obligations under the Transition Services
Agreement and for regulatory, tax, accounting, audit, insurance or litigation purposes or as otherwise required by Law.
Section 7.10 Termination
of Intercompany Obligations. Seller shall, and shall cause its Affiliates to, use commercially
reasonable efforts to take such action and make such payments as may be necessary so that, as of the Closing, there shall be no obligations
(other than (a) pursuant to the Transaction Agreements and (b) any Intercompany Obligations exclusively between or among the
Transferred Entities) between the Business or any Transferred Entity, on the one hand, and the Seller Parties (other than the Transferred
Entities), on the other hand, without any continuing Liability of or further recourse to Buyer or any of its Affiliates, the Business,
or any Transferred Entity, on the one hand, or Seller or any of its Affiliates, on the other hand. Nothing in this Section 7.10
shall require Seller or any of its Affiliates to terminate or cancel any obligation exclusively between or among Transferred Entities.
Section 7.11 No
Third Party Discussions. During the Pre-Closing Period, Seller shall not, and shall cause
its Affiliates and instruct its Representatives not to, directly or indirectly, (a) engage in any discussions or negotiations with,
provide information to, or enter into any confidentiality agreement or other agreement or transaction with, any Person relating to a
Third Party Transaction Proposal or (b) solicit, encourage or take any other action that could reasonably be expected to facilitate
any proposal relating to a Third Party Transaction Proposal. Following the Agreement Date, Seller shall, and shall cause its Affiliates
and instruct its Representatives to, immediately terminate any such current negotiations and contacts with any Person regarding any Third
Party Transaction Proposal, and promptly after the Agreement Date request the prompt return or destruction of all confidential information
previously furnished to such Person(s) within the last twelve (12) months for the purpose of evaluating a Third Party Transaction
Proposal. If Seller or any of its Affiliates or Representatives receive any Third Party Transaction Proposal, Seller shall promptly notify
Buyer of the existence of such proposal. Without limitation of the foregoing, the Parties agree that any violation of the restrictions
set forth in this Section 7.11 by any of Seller’s Affiliates shall be deemed a breach of this Section 7.11
by Seller. Notwithstanding the foregoing, this Section 7.11 shall not impair Seller’s ability to discuss with its
shareholders or any proxy advisory firms or enter into any settlement discussions or settlement agreements with any shareholder (including
any “activist investor”); provided such discussions or agreements do not involve or relate to any Third Party Transaction
Proposal.
Section 7.12 Wrong
Pockets. Without limitation of Buyer’s indemnification rights under this Agreement,
if, following the Closing, and until the date that is eighteen (18) months after the Closing Date, Buyer, the Seller Parties or any of
their respective Affiliates becomes aware that any of the representations or warranties of Seller contained in Section 4.17,
Section 4.25 or the second and third sentences of Section 4.08(b) as of the Closing Date were breached or
inaccurate in any material respect as of the Closing Date due to a failure of the Transferred Assets including any asset, property, right
or contract directly or indirectly owned, licensed, used or held for use by or on behalf of Seller or any of its Affiliates or designees
(any such asset, property, right or contract, an “Omitted Asset”), such Party shall promptly notify the other Party
in writing and Seller shall, and shall cause its applicable Affiliates to, as soon as reasonably practicable and at no additional cost
to Buyer or any of its Affiliates, convey, assign, transfer and deliver to Buyer, and the Buyer shall, and shall cause its applicable
Affiliates to, accept the transfer of such Omitted Asset, subject to any necessary prior Consent of or notice to any third party. Following
the transfer of any Omitted Assets, such Omitted Assets shall be deemed “Transferred Assets” for all purposes of this Agreement.
Section 7.13 License
under Commingled Marketing Materials. Seller hereby grants to Buyer and its Affiliates,
the right to use, and a non-exclusive, perpetual, sublicensable (through multiple tiers), fully paid up and royalty free right and license
in and to any copyrights (that are not Business Intellectual Property) in, the Commingled Marketing Materials (including all content
and information contained therein) for any purpose whatsoever, including in connection with the distribution, advertising, promotion,
marketing, offer for sale, sale, or other exploitation of Products or Product Candidates (including any improvements, modifications or
line extensions of, or any products or product candidates containing, any Products or Product Candidates) in the Aqua Health Field, which
right and license shall include the right to modify, reproduce, distribute, translate, publish, display, perform, create (and own) derivative
works based on, and otherwise use such Commingled Marketing Materials and all copyrights in such Commingled Marketing Materials in connection
therewith; provided that use of any and all Seller Names and Seller Marks included in the Commingled Marketing Materials shall
be subject to the Transitional Trademark License Agreement; provided, further, that such right and license shall expire
on the date that is three (3) years following the Closing Date.
Section 7.14 Commingled
Records. Following the Closing and until the third anniversary of the Closing Date, and
subject to the terms and conditions of this Agreement, including Section 7.07, (a) each of Seller, Buyer and their respective
Affiliates shall have the right to use the Shared Commingled Information for any reasonable business purpose, (b) each of Seller
and Buyer (in such capacity, the “Disclosing Party”) shall, upon the reasonable request of the other Party (in such
capacity, the “Requesting Party”), and to the extent reasonably required by the Requesting Party for any reasonable
business purpose, grant the Requesting Party reasonable access to the portions of the Commingled Records held by the Disclosing Party
that contain Shared Commingled Information (in the case of either Party), Buyer Commingled Information (in the case of Buyer) or Seller
Commingled Information (in the case of Seller) and each Requesting Party and its Affiliates shall have the right to use such portions
of the Commingled Records that contain Shared Commingled Information (in the case of either Party), Buyer Commingled Information (in
the case of Buyer) or Seller Commingled Information (in the case of Seller) for any reasonable business purpose, and in furtherance thereof
and to the extent necessary, grants each such Requesting Party and its Affiliates a non-exclusive, perpetual, sublicensable (through
multiple tiers), fully paid up and royalty free right and license in and to any copyrights therein; provided that the Disclosing
Party shall not be required to provide such access to the Commingled Records to the extent such access would violate any applicable Law;
provided further that notwithstanding the preceding proviso, such Disclosing Party shall act in good faith to develop a substitute
arrangement for providing such access to the Commingled Records in a manner that does not violate applicable Law; and (c) except
as necessary to ensure compliance with any applicable Law and subject to any applicable privilege (including the attorney-client privilege)
and contractual confidentiality obligations, the Disclosing Party shall, upon reasonable request of the Requesting Party, and to the
extent reasonably required by the Requesting Party in connection with (i) any pending Action (including any Action before the United
States Patent and Trademark Office and any successor agency thereto, or the equivalent entity in other jurisdictions) or (ii) complying
with requirements of any Government Authority, grant the Requesting Party reasonable access to the Commingled Records held by the Disclosing
Party that contain Shared Commingled Information (in the case of either Party), Buyer Commingled Information (in the case of Seller)
or Seller Commingled Information (in the case of Buyer). Any such access shall be provided electronically or in person at a location
determined by the Disclosing Party and at times agreed upon by Seller and Buyer, and shall be subject to Section 6.03. In
the event that a Requesting Party exercises its right hereunder to access Commingled Records held by the Disclosing Party, the Requesting
Party shall assume all Liability for any disclosure or use of any Shared Commingled Information (in the case of either Party), Seller
Commingled Information (in the case of Buyer) or Buyer Commingled Information (in the case of Seller), contained therein and any and
all Loss, destruction or alteration of such Commingled Records arising from the use or possession of such Commingled Records by the Requesting
Party or its Affiliates or Representatives. This Section 7.14 shall not provide any Party or any of their respective Affiliates
or Representatives with any rights to use or disclose any information contained within any Commingled Records not otherwise retained
or obtained pursuant to this Agreement.
Section 7.15 Returned
Products; Rebates.
(a) Subject
to the terms and conditions of the Transition Services Agreement, Buyer shall be financially responsible for return reimbursement for
all Products arising from customer invoices that are Assumed Accounts Receivable and Seller shall be financially responsible for return
reimbursement for all Products arising from customer invoices that are Retained Accounts Receivable. Each Party shall process returns
in accordance with the Party’s then current returned goods policy. In furtherance of the foregoing, the Parties shall cooperate
in good faith to process all returns and effect all return reimbursements.
(b) Seller
shall be financially responsible for all commercial rebates with respect to Products sold by Seller or its Affiliates prior to the Closing
Date. Buyer shall be financially responsible for all commercial rebates with respect to Products sold by Buyer or its Affiliates on or
after the Closing Date. The Parties shall cooperate in good faith to effect all commercial rebates.
Section 7.16 License
to Sentinel Product Data Seller
hereby grants to Buyer and its Affiliates, an exclusive, fully paid, royalty-free and transferable and assignable license and right of
reference (with the right to grant sublicenses and further rights of reference) to any Data (including veterinary clinical trial or study
Data and raw Data), information, reports or studies, summaries, files, dossiers and all technical and other information contained therein,
together with all amendments, supplements, and renewals thereto, relating to Seller’s Sentinel product (whether or not authorized
by a Product Authorization), its excipients, active ingredients, and packaging materials, and facilities that manufacture or distribute
such Sentinel product, excipients, active ingredients, and packaging materials, and the dossiers underlying the facility license for
such facilities (including its metabolites, impurities and degradates) for use exclusively with respect to lufenuron in support of the
Product Authorizations for any Product.
Article VIII
Employee
Matters
Section 8.01 Works
Council Processes. During the Pre-Closing Period, each Party shall, and shall cause its
Affiliates to, use their respective reasonable best efforts to cooperate in connection with any notification to, or any consultation
with, employees of the Seller Parties who might be affected by the Transaction and such employees’ Employee Representative Bodies
and labor boards concerning the Transactions, whether required by applicable Law or otherwise undertaken in good faith by the Seller
Parties. Buyer shall timely provide the relevant Seller Parties any information required by Law or reasonably requested by Seller relating
to Buyer and its plans for the Transferred Employees in connection with any such notification or consultation.
Section 8.02 Continuation
of Employment.
(a) No
later than ten (10) days after the Agreement Date and subject to Section 6.02(b), Seller shall provide to Buyer any
information as Buyer may reasonably request to enable Buyer to extend offers of employment or engagement, as applicable, in accordance
with Section 8.02(b), including any salary, compensation or position changes that have occurred or will occur as part of
ordinary course annual employee processes in 2024; provided that Seller shall provide to Buyer applicable merit information no later
than February 29, 2024.
(b) The
Parties intend that there shall be continuity of employment or service with respect to all Business Employees and Business Contractors
as follows (and intend that this Section 8.02 be interpreted and administered in accordance with applicable Law, in a manner
to effect such intent): (i) where the employment of the Business Employees transfers pursuant to the Transfer Regulations, the employment
of the Business Employees shall not be terminated upon the Closing and the rights, powers, duties, Liabilities and obligations of the
Seller Parties to or in respect of such Business Employees in respect of any contract of employment with such Business Employees in force
immediately before the Closing shall be transferred to Buyer and/or one of its Affiliates in accordance with applicable Law; and (ii) for
any Business Employee whose employment does not automatically transfer to Buyer pursuant to clause (i) hereof or any Business Contractor,
Buyer shall (subject to satisfactory completion of Buyer’s customary screening processes and Buyer’s timely receipt of the
information requested pursuant to Section 8.02(a)) within sixty (60) days following the Agreement Date offer (in each
case, as applicable) employment or engagement to each such Business Employee or Business Contractor commencing on the Closing Date on
the Current Employment Terms or Current Service Terms. For the avoidance of doubt, the obligation to make an offer to any Business Contractor
who is engaged or employed via an entity may be satisfied by the assumption by Buyer of the Assumed Contract to which such entity is
a party, subject to Section 2.02). The Parties may agree, on a country-by-country basis, to replace the offers of employment provided
for in clause (ii) above by tri-partite transfer agreements to be signed by the applicable Seller Party currently employing
the relevant Business Employee, Buyer (or any Affiliate of Buyer) and the Business Employee to effectuate the transfer of the relevant
Business Employee to Buyer pursuant to the terms and conditions set forth in this Section 8.02(b), and Buyer and Seller shall
cooperate in good faith in this regard. In relation to Business Employees or Delayed Transfer Employees whose employments transfer pursuant
to the Transfer Regulations or applicable Law, Seller and its Affiliates shall indemnify the Buyer Indemnified Parties for any Liabilities
relating to those Business Employees or Delayed Transfer Employees which were incurred or accrued in or relate to the period prior to
the time of transfer of employment pursuant to the Transfer Regulations or applicable Law.
(c) Each
Business Employee (i) who accepts an offer of employment with Buyer under Section 8.02(b), (ii) whose employment
automatically transfers to Buyer or any of its Affiliates under applicable Law or (iii) who enters into a tri-partite transfer agreement,
in each case in accordance with this Section 8.02, shall be a “Transferred Employee” for purposes of this
Agreement upon the Closing Date, subject to applicable Law or Labor Obligation; provided that no Business Employee shall be a
Transferred Employee where such Business Employee’s objections to the transfer to Buyer or its applicable Affiliate in accordance
with applicable Law or Labor Obligation validly prevents the transfer of such Business Employee to Buyer or its applicable Affiliate.
Each Business Contractor who accepts an offer of engagement shall be a “Transferred Contractor”. The employment of
each Transferred Employee or service of each Transferred Contractor shall be deemed to transfer from the Seller Parties to Buyer as of
the Closing Date in the jurisdiction in which such employee is employed (such date, the “Transfer Date”). Buyer agrees
to use commercially reasonable efforts to keep the Transferred Employees employed for at least one (1) year following the Closing
Date (but, for the avoidance of doubt, nothing shall prevent Buyer from terminating the employment of a Transferred Employee for “cause”
during such period).
(d) Notwithstanding
anything set forth in Section 8.02(b) to the contrary, each Delayed Transfer Employee (as defined in this Section 8.02(d))
who has a legal or contractual right to return to employment with the Seller Parties shall become a “Transferred Employee”
effective as of the date on which such Delayed Transfer Employee is eligible to return to active service; provided that such Delayed
Transfer Employee returns to active service within nine (9) months (or such longer period as permitted by the applicable Law) following
the Transfer Date that otherwise would have been applicable to such Delayed Transfer Employee and such Delayed Transfer Employee accepts
an offer of employment with or otherwise transfers by applicable Law to Buyer or an Affiliate of Buyer; and provided further,
that all references in this Agreement to events that take place with respect to Business Employees as of the respective Transfer Date
applicable to such Business Employee shall take place with respect to any Delayed Transfer Employee as of such Delayed Transfer Employee’s
commencement of employment with Buyer or one of its Affiliates. For purposes of this Agreement, “Delayed Transfer Employee”
means a Business Employee on military, medical or other leave of absence (other than vacation and sick leave, and whether paid or unpaid)
approved by the applicable Seller Party as of the respective Transfer Date that otherwise would have been applicable to such Delayed
Transfer Employee.
Section 8.03 Terms
and Conditions of Employment/Service
(a) Starting
at the time an employee becomes a Transferred Employee or Transferred Contractor and ending on the date that is one (1) year following
the Closing Date, or any longer period as required under applicable Law or Labor Obligation, Buyer shall, or shall cause one of its Affiliates
to, (x) provide each Transferred Employee with (i) a base salary or hourly wage rate that is at least equal to the base salary
or hourly wage rate provided to the Transferred Employee immediately prior to the Closing, (ii) cash bonus opportunities that are,
in each case, at least equal to such cash bonus opportunities (excluding any retention bonus) provided to the Transferred Employee immediately
prior to the Closing, (iii) a termination or severance pay plan, program or practice that is substantially comparable to the plan,
program or practice in effect immediately prior to the Closing Date, (iv) other employee benefits that are substantially comparable
in the aggregate (including pension, retirement, health, welfare, fringe and other employee benefits) (the “Buyer Plans”)
to employee benefits (other than defined benefit pension benefits, equity-based benefits or compensation arrangements, and retiree medical
or other retiree welfare benefits) provided to the Transferred Employee immediately prior to the Closing, (v) the same work location
(or such other work location no more than a thirty-five (35) kilometer driving distance from the current work location) applicable to
such Transferred Employee with Seller and its Affiliates immediately prior to the Closing Date, and (vi) the same or substantially
similar position (determined without regard to reporting relationships) and will use commercially reasonable efforts to effect the continued
sponsorship of existing visas applicable to any Transferred Employee immediately prior to the Closing Date; provided however,
and, for the avoidance of doubt, (A) that, subject to compliance with clauses (i) through (vi) of this Section, nothing
in this Agreement shall require Buyer to maintain the same job title or level of any Transferred Employee and (B) all Business Employees
who transfer pursuant to the Transfer Regulations will, subject to the provisions in this Agreement, and any exceptions or requirements
under applicable Law, remain entitled, only to the extent required by Law, to their employment terms applicable immediately prior to
Closing, with continuity of service preserved for all purposes (the terms in this Section 8.03(b)(x) being the “Current
Employment Terms”) and (y) provide each Transferred Contractor with the Current Service Terms. For the avoidance of doubt,
any retention bonuses awarded to Business Employees by any Seller Party prior to Closing shall be paid by Seller and Seller Parties.
(b) Buyer
shall assume, indemnify, defend and hold harmless the Seller Parties against, and reimburse the Seller Parties for all Liabilities to
provide any termination or severance payments required to be paid, including cash severance, benefits, which become payable due to the
termination of the employment relationship or other termination or severance amounts, under any applicable Law, Labor Obligation or Business
Employee Plan (including any employment agreement or offer letter) to any Business Employee or Business Contractor who is not offered
employment or engagement by Buyer or one of its Affiliates in compliance with Section 8.02 and Section 8.03(a). In the event
that Buyer or one of its Affiliates enters into a settlement or release agreement with any Transferred Employee within one (1) year
following the Closing in relation to such Transferred Employee’s termination of employment, such agreement shall provide (to the
extent permissible under applicable Law) that the Seller Indemnified Parties are released from any applicable claims to the same extent
as Buyer.
Section 8.04 Failure
to Transfer/Unintended Employee Transfers.
(a) Except
as set forth on Schedule 8.04, if any contract of employment of any Business Employee who was intended to be a Transferred Employee and
whose employment is found to have continued with Seller or its Affiliates after such Business Employee’s intended transfer date,
the Parties agree that: (i) Buyer or its Affiliates, within fourteen (14) days of discovering or being notified of such a finding,
shall notify the Seller of such finding and make to that Business Employee an offer in writing to employ him or her under a new contract
of employment with Buyer or its Affiliates on terms which comply with the Buyer’s obligations to Transferred Employees under Section 8.03(a) and
8.06, to take effect as soon as reasonably permissible under applicable Law and Labor Obligations; and (ii) upon the offer
of employment being accepted by the relevant Business Employee, or on the expiry of the fourteen (14)-day period from the date of discovery
or notification of such finding, Seller or its Affiliates shall give any notice of termination required by contract, applicable Law or
Labor Obligation to the applicable Business Employee, subject to any waiver of such notice agreed with such Business Employee.
(b) If
any contract of employment of any employee (other than a Business Employee) who at any time is, was or may become employed or otherwise
engaged by Seller or any of its Affiliates and whose employment is found to have wrongfully transferred to Buyer or any of its Affiliates
in connection with the Transactions, the Parties agree that: (i) Seller or its Affiliates, within fourteen (14) days of discovering
or being notified such a finding, shall notify the Buyer of such finding and make to that person an offer in writing to employ him or
her under a new contract of employment with Seller or its Affiliates on the same terms of employment that existed immediately before
the Closing Date to take effect as soon as permissible under applicable Law and Labor Obligations; and (ii) upon the offer of employment
being accepted by the relevant employee, or on the expiry of the fourteen (14)-day period from the date of discovery or notification
of such a or finding, Buyer or its Affiliates shall give any notice of termination required by contract, applicable Law or Labor Obligation
to the applicable employee, subject to any waiver of such notice agreed with such employee.
Section 8.05 Assumed
Employee Liabilities. Buyer shall, as of the Closing Date, assume all Liabilities of or
in relation to each Transferred Employee or Transferred Contractor (other than any Employee Liabilities) relating to periods after the
time of transfer of employment of any Transferred Employee or service of any Transferred Contractor to Buyer or its Affiliates. Seller
shall retain responsibility for all Liabilities of or in relation to each Transferred Employee or Transferred Contractor relating to
or accrued in periods prior to the time of transfer of employment of any Transferred Employee or service of any Transferred Contractor
to Buyer or its Affiliates, including:
(a) under
medical, life insurance and long-term disability plan expenses and benefits for each Transferred Employee with respect to claims incurred
by such Transferred Employee or his or her covered dependents prior to the Transfer Date (such claims to be read in junction with Section 13.01(k));
(b) for
reimbursements of business expenses incurred by the Transferred Employees or Transferred Contractors prior to the Transfer Date; and
(c) for
any unpaid salary or other fully accrued and earned compensation or benefits for services performed for the Seller Parties prior to the
Closing.
Section 8.06 Service
Credit. For purposes of eligibility and vesting (but not benefit accrual or eligibility
for defined benefit pension plans and retiree medical and welfare plans) under Buyer Plans, (a) Buyer shall recognize each Transferred
Employee’s seniority date with Seller or the applicable Seller Party (or their predecessors) under its employee benefit programs
(where such seniority date is relevant) consistent with Buyer’s treatment of employees generally, and (b) each Transferred
Employee shall be credited with his or her years of service with Seller or the applicable Seller Party (or their predecessors) to the
same extent that such Transferred Employee was entitled to credit for such service under any similar Business Employee Plan of Seller
or the applicable Seller Party in which such Transferred Employee participated or was eligible to participate immediately prior to the
Closing Date (such plans, collectively, the “Old Plans”); provided that the foregoing shall not apply to the
extent that its application would result in a duplication of benefits with respect to the same period of service. In addition, and without
limiting the generality of the foregoing, Buyer shall use reasonable best efforts to cause for purposes of each Buyer Plan providing
medical, dental, disability, pharmaceutical and/or vision benefits to any such Transferred Employee, any evidence of insurability requirements,
all pre-existing condition exclusions and actively-at-work requirements of such Buyer Plan to be waived for such Transferred Employee
and his or her covered dependents, to the extent such conditions were inapplicable or waived under the comparable Old Plan. Buyer shall
use reasonable best efforts to cause any eligible expenses incurred and paid by any Transferred Employee and his or her covered dependents
during the portion of the plan year of the Old Plan ending on the date such Transferred Employee’s participation in the corresponding
Buyer Plan begins to be taken into account under such Buyer Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such Transferred Employee and his or her covered dependents for the applicable plan year.
Section 8.07 Transfer
to Buyer Plans As of the Effective Time, the Transferred Employees shall cease to accrue
further benefits under any Business Employee Plans and shall commence participation in Buyer Plans as soon as reasonably practicable.
Where any Transferred Employee participates in any Business Employee Plan that is a defined contribution pension plan, the Parties agree
that Buyer shall enroll each such Transferred Employee as of, or as soon as reasonably practicable after, the Effective Time, in an existing
or newly established Buyer Plan that is a defined contribution pension plan or reasonably equivalent retirement or other plan to provide
pension or retirement benefits to such Transferred Employee.
Section 8.08 No
Third Party Beneficiaries. Nothing in this Article VIII or any other provision
of this Agreement, whether express or implied, is intended to, or shall: (i) constitute the establishment or adoption of or an amendment
to any employee benefit plan for purposes of applicable Law or otherwise be treated as an amendment or modification of any Business Employee
Plan or other benefit plan, agreement or arrangement; (ii) limit the right of Seller, Buyer or any of their respective Affiliates
to amend, terminate or otherwise modify any Business Employee Plan, Buyer Plan or other benefit plan, agreement or arrangement; or (iii) create
any third-party beneficiary or other right (x) in any Person, including any current or former employee of the Seller Parties, any
participant in any Business Employee Plan or other benefit plan, agreement or arrangement (or any dependent or beneficiary thereof) or
(y) to employment or continued employment for any period of time or particular term or condition of employment.
Article IX
Tax
Matters
Section 9.01 Straddle
Periods. For all purposes under this Agreement, including, for the avoidance of doubt, Section 2.01,
in the case of any Tax period that begins on or before and ends after the Closing Date (a “Straddle Period”), all
Taxes and Tax liabilities with respect to the income or operations of the Business or the ownership of the Transferred Assets (or any
Tax refund or amount credited against any Tax) that are allocable to the portion of the Straddle Period ending at the end of the Closing
Date will be: (a) in the case of property Taxes and other Taxes imposed on a periodic basis without regard to income, gross receipts,
payroll, sales or any specific transaction or event, the amount of such Taxes (or Tax refund or amount credited against Tax) for the
entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days in the portion of such Straddle
Period ending at the end of the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period
and (b) in the case of income, sales and use and withholding Taxes, determined as though the taxable year of the Business terminated
at the end of the Closing Date.
Section 9.02 Post-Closing
Actions. Except as otherwise required by applicable law, Buyer shall not, and shall not
permit any of its Affiliates to, with respect to the Transferred Assets or any Transferred Entity, take any action on the Closing Date,
after the Closing outside the ordinary course of business (other than as expressly contemplated by any of the Transaction Agreements).
Section 9.03 Transfer
Taxes and VAT.
(a) Notwithstanding
anything to the contrary in this Agreement, Transfer Taxes imposed or arising with respect to the sale and purchase hereunder of Transferred
Assets shall be economically borne fifty percent (50%) by the Buyer on the one hand, and fifty percent (50%) by the Seller Parties
on the other hand. The Party required by Law to file a Tax Return with respect to such Transfer Taxes shall timely prepare, with the
other Party’s cooperation, and file such Tax Return and pay all Taxes reflected on every such Tax Return, and the other Party shall
promptly reimburse the Party required by Law to file such Tax Return for its share of any Transfer Taxes, as determined under this Section 9.03,
paid by it in connection with the filing of such Tax Return; provided however, that for the first one hundred eighty (180) days
following the Closing Date, three (3) Business Days following the end of every calendar month following the Closing Date, (i) the
reimbursement payments owed by the Seller Parties to the Buyer with respect to Transfer Taxes paid by the Buyer in accordance with this
Section 9.03 during such calendar month shall be aggregated, (ii) the reimbursement payments owed by the Buyer to the
Seller Parties with respect to Transfer Taxes paid by the Seller Parties in accordance with this Section 9.03 shall be aggregated,
and (iii) (A) if the amount determined pursuant to clause (i) is greater than the amount determined pursuant to clause (ii),
the Seller Parties shall promptly reimburse the Buyer for the amount of such excess, and only for the amount of such excess, and the
Buyer shall make no reimbursement payment to the Seller Parties in respect of such calendar month, (B) if the amount determined
pursuant to clause (ii) is greater than the amount determined pursuant to clause (i), Buyer shall promptly reimburse the
Seller Parties for the amount of such excess, and only for the amount of such excess, and the Seller Parties shall make no reimbursement
payment to Buyer in respect of such calendar month or (C) if the amount determined pursuant to clause (i) is equal to
the amount determined pursuant to clause (ii) neither Party shall make a reimbursement payment to the other Party; provided
further, that on the Closing Date reimbursement payments with respect to any Transfer Taxes paid prior to the Closing Date shall
be made in accordance with the previous proviso on the Closing Date.
(b) The
Purchase Price, the Assumed Liabilities and all other consideration under this Agreement in respect of the sale of the Transferred Assets,
other than the Termination Fee, are exclusive of any applicable VAT. To the extent in each case that (i) VAT is or becomes chargeable
in respect of the sale of the Transferred Assets, the Assumed Liabilities or any other consideration or any part thereof under this Agreement,
(ii) such VAT is owed by the respective Seller Party to the Taxing Authority and (iii) such VAT is recoverable (whether by
credit or repayment) in full by Buyer or the representative member of any VAT group of which Buyer or the relevant Affiliate of Buyer
is a member, Buyer (or such Affiliate, if applicable) shall, against delivery of a valid VAT invoice (or equivalent, if any, as required
by applicable Law), in addition to any other amount expressed in this Agreement to be payable by Buyer, pay or cause to be paid to the
applicable Seller Party the full amount of any VAT so charged. If and to the extent (A) VAT due in respect of the sale of the Transferred
Assets (or part thereof) under this Agreement is owed by Buyer (or an Affiliate of Buyer, as applicable) to the Taxing Authority (reverse
charge) and (B) such VAT is recoverable (whether by credit or repayment) in full by Buyer or the representative member of any VAT
Group of which Buyer or the relevant Affiliate of Buyer is a member, Buyer, such Affiliate or such representative member shall report
such VAT to the relevant Taxing Authority, and the applicable Seller Party shall issue an appropriate invoice, in each case as required
by applicable Law. To the extent any invoice is not initially issued in an appropriate form or otherwise not in line with applicable
Law as determined by Buyer, acting reasonably and in good faith, the Parties shall cooperate to provide such information or assistance
as may be necessary to enable the issuance of such invoice consistent with VAT requirements. For the avoidance of doubt, to the extent
that any VAT cannot be recovered in its entirety or in part (whether by credit or repayment) by Buyer or the representative member of
any VAT group of which Buyer or the relevant Affiliate of Buyer is a member (whether such irrecoverable VAT is charged by the applicable
Seller Party to Buyer or is reported and paid by Buyer under any reverse charge procedure) then such irrecoverable VAT shall be treated
as a Transfer Tax and shall be economically borne fifty percent (50%) by Buyer or its relevant Affiliate on the one hand, and fifty percent
(50%) by the Seller Parties on the other hand, provided that the applicable Seller Party has issued an appropriate invoice in a timely
manner as required by applicable Law and otherwise shall be borne one hundred percent (100%) by the Seller Parties. For the avoidance
of doubt, the provisions of this Section 9.03(b) shall not apply to the payment, if any, of the Termination Fee.
(c) Notwithstanding
anything to the contrary in Section 9.03(a) and Section 9.03(b), Seller and its relevant Affiliate, Elanco Vietnam Company
Limited, shall economically bear one hundred percent (100%) of any VAT relevant or rechargeable in Vietnam. Seller shall cause Elanco
Vietnam Company Limited to either (i) issue an invoice excluding VAT, or (ii) if required by applicable Law, issue in invoice
including VAT; provided, however, that Seller shall cause (A) such VAT to be paid by Elanco Vietnam Company Limited and not
by Buyer (or its relevant Affiliate), or (B) Elanco Vietnam Company Limited promptly to reimburse Buyer (or its relevant Affiliate)
in full if applicable Law requires that, such VAT be paid by Buyer (or its relevant Affiliate). For the avoidance of doubt, with respect
to payments to be made in Vietnam, Buyer or its relevant Affiliate will only be economically responsible for the amount stated in Schedule
3.07 relating to Vietnam, and shall not be economically responsible for any VAT in relation thereto.
(d) The
Local Transfer Agreements shall provide for the procedures for paying, reporting and recovering (whether by credit or repayment) any
applicable VAT, in a manner consistent with the provisions of this Section 9.03.
(e) Buyer
and Seller each agree to timely sign and deliver (or to cause to be timely signed and delivered) such certificates, forms or invoices
as may be necessary or appropriate and otherwise to cooperate to establish any available exemption from (or otherwise reduce) any Transfer
Taxes or VAT (which shall include cooperating to treat the sale and purchase of Transferred Assets as the transfer of a going concern
for VAT purposes where such treatment is possible and agreeing to take all reasonably necessary steps for such treatment to apply). Buyer
and Seller will use reasonable best efforts to ensure that the “Transfer of a Going Concern” (“TOGC”)
rules apply to the transfer of the relevant Transferred Assets where applicable so that the transfer of the relevant Transferred
Assets is not to be considered a supply of goods or services for VAT purposes.
(f) To
the extent that the Transactions are deemed to be within the scope of Swiss VAT legislation, the Parties agree that they will request
the Swiss VAT notification procedure pursuant to Article 38 of the Swiss Value Added Tax Act (Mehrwertsteuergesetz) if applicable.
The Parties shall reasonably cooperate in applying for such notification procedure, and in due course after the Closing, the Parties
shall both sign the duly completed Form Nr. 764 zur Meldung nach Artikel 38 MWStG, which shall be filed with the Swiss Federal
Tax Administration by the applicable Seller Party.
(g) Buyer
and Seller will cooperate with each other in connection with any procedures required for VAT purposes in any applicable jurisdiction,
including the execution of any certifications. Buyer and Seller will notify each other and keep each other reasonably informed of any
communications made to or received from any applicable Taxing Authority in connection with the procedures required for VAT purposes in
any applicable jurisdiction, including under any TOGC or similar VAT exemption provisions and any provisions applicable to VAT-taxed
transactions, as applicable.
Section 9.04 Bulk
Transfer. Buyer and Seller hereby waive compliance by Seller with any applicable bulk sales
Laws in any jurisdiction in connection with the transactions under this Agreement.
Article X
Conditions
to Closing
Section 10.01 Conditions
to Obligations of Each Party. The respective obligations of each Party to consummate the
Closing shall be subject to the satisfaction or waiver (to the extent permitted by applicable Law), at or before the Closing, of each
of the following conditions:
(a) Governmental
Approvals. (i) All Required Approvals shall have been obtained, (ii) all waiting periods under Antitrust Laws necessary
for the consummation of the Transactions imposed by any Government Authority in any jurisdiction where a Required Approval is required
shall have expired or shall have been terminated and (iii) if there is any voluntary agreement with respect to any Required Approval
between Buyer, Seller or their respective Affiliates, on the one hand, and any applicable Government Authority, on the other hand, entered
into in accordance with this Agreement pursuant to which the Closing shall not be consummated for any period of time, such period of
time shall have expired.
(b) No
Legal Restraint. There shall be no Law or Order in effect in any Material Jurisdiction that prohibits, or makes illegal, the consummation
of the Closing.
Section 10.02 Conditions
to Obligations of Seller. The obligation of Seller to consummate the Closing shall be subject
to the satisfaction or Seller’s waiver (to the extent permitted by applicable Law) in its sole discretion, at or before the Closing,
of each of the following conditions:
(a) Representations
and Warranties. (i) The representations and warranties of Buyer contained in this Agreement (other than as set forth in clause
(ii) of this Section 10.02(a)) shall be true and correct as of the Closing as if made on the Closing Date (other than
representations and warranties that are made as of a specific date, which representations and warranties shall have been true and correct
as of such date), except for breaches or inaccuracies, as the case may be, as to matters that, individually or in the aggregate, would
not, individually or in the aggregate, reasonably be expected to have a Buyer Material Adverse Effect; provided however, that
for purposes of determining the satisfaction of the condition in this Section 10.02(a), (A) no effect shall be given
to the exceptions of “material” or “Buyer Material Adverse Effect” in such representations and warranties, and
(B) each of the Buyer Fundamental Representations shall be true and correct in all material respects as of the Closing as if made
on the Closing Date (other than any Buyer Fundamental Representations that are made as of a specific date, which such representations
and warranties shall have been true and correct in all material respects as of such date).
(b) Covenants.
The covenants contained in this Agreement required to be performed or complied with by Buyer on or before the Closing shall have been
performed or complied with in all material respects.
(c) Certificate.
Seller shall have received a certificate signed by an authorized officer of Buyer, dated as of the Closing Date, certifying that the
conditions set forth in Section10.02(a) and Section 10.02(b) have been satisfied.
(d) Closing
Deliverables. Buyer shall have delivered, or caused to be delivered, to Seller each of the items required to be delivered at Closing
pursuant to Section 3.02(b).
Section 10.03 Conditions
to Obligations of Buyer. The obligation of Buyer to consummate the Closing shall be subject
to the fulfillment or Buyer’s waiver (to the extent permitted by applicable Law) in its sole discretion, at or before the Closing,
of each of the following conditions:
(a) Representations
and Warranties. (i) The Seller Fundamental Representations shall be true and correct in all material respects as of the Closing
as if made on the Closing Date (other than Seller Fundamental Representations that are made as of a specific date, which representations
and warranties shall have been true and correct in all material respects as of such date), (ii) the representations and warranties
made in Section 4.05(b) shall be true and correct in all respects as of the Closing Date as if made on the Closing Date
and (iii) all other representations and warranties of Seller contained in this Agreement shall be true and correct as of the Closing
as if made on the Closing Date (other than representations and warranties that are made as of a specific date, which representations
and warranties shall have been true and correct as of such date), except for breaches or inaccuracies, as the case may be, as to matters
that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; provided however,
that for purposes of determining the satisfaction of the condition in this Section 10.03(a)(iii), no effect shall be given
to the exceptions of “material” or “Material Adverse Effect” in such representations and warranties; provided,
further, that the word “material” in the definitions of “Material Adverse Effect”, “Material Contract,”
“Material Supplier” and “Material Customer” shall be given effect and not subject to the preceding proviso.
(b) Covenants.
The covenants contained in this Agreement required to be performed or complied with by Seller on or before the Closing shall have been
performed or complied with in all material respects.
(c) Certificate.
Buyer shall have received a certificate signed by an authorized officer of Seller, dated as of the Closing Date, certifying that the
conditions set forth in Section10.03(a), Section 10.03(b) and Section 10.03(d) have been satisfied.
(d) Material
Adverse Effect. Since the Agreement Date, no Material Adverse Effect shall have occurred.
(e) Closing
Deliverables. Seller shall have delivered to Buyer each of the items required to be delivered at Closing pursuant to Section 3.02(a).
Section 10.04 Frustration
of Closing Conditions. No Party may rely on the failure of any condition set forth in this
Article X to be satisfied if such failure was primarily or proximately caused by such Party’s or its Affiliate’s
failure to perform any of its obligations under this Agreement, to act in good faith or to use in accordance with the terms of this Agreement
its required efforts to cause the Closing Conditions of such Party to be satisfied.
Article XI
Termination
Section 11.01 Termination.
Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated before the Closing:
(a) by
the mutual written consent of Seller and Buyer;
(b) by
Seller, if Buyer shall have breached any representation or warranty or failed to, or failed to cause its Affiliates to, comply with any
covenant or agreement applicable to Buyer or its Affiliates that would cause any Closing Condition set forth in Section 10.02(a) or
Section 10.02(b) not to be satisfied, and such Closing Condition is (i) incapable of being satisfied by the Outside
Date or (ii) if capable of being satisfied by the Outside Date, such breach or failure to comply has not been cured by Buyer by
the earlier of (A) thirty (30) days after delivery by Seller to Buyer of a written notice of such breach or failure to comply
and (B) the Outside Date; provided however, that, at the time of termination, Seller has not breached its representations,
warranties, covenants or other obligations under this Agreement in any material respect;
(c) by
Buyer, if Seller shall have breached any representation or warranty or failed to, or failed to cause its Affiliates to, comply with any
covenant or agreement applicable to Seller or its Affiliates that would cause any Closing Condition set forth in Section 10.03(a) or
Section 10.03(b) not to be satisfied, and such Closing Condition is (i) incapable of being satisfied by the Outside
Date or (ii) if capable of being satisfied by the Outside Date, such breach or failure to comply has not been cured by Seller by
the earlier of (A) thirty (30) days after delivery by Buyer to Seller of a written notice of such breach or failure to perform
and (B) the Outside Date; provided however, that, at the time of termination, Buyer has not breached its representations,
warranties, covenants or other obligations under this Agreement in any material respect;
(d) by
either Seller or Buyer if the Closing shall not have occurred by November 5, 2024 (as such date may be extended pursuant to the
immediately succeeding proviso or by the mutual written consent of the parties hereto, the “Outside Date”) for any
reason; provided that (i) if on such date, the conditions to the Closing set forth in Section 10.01(a) or
Section 10.01(b) (where the failure of such condition set forth in Section 10.01(b) to be satisfied
is a result of any Law or Order arising under any Antitrust Law) shall not have been satisfied, but all other conditions to the Closing
set forth in Article X shall have been satisfied or validly waived (except for those conditions that by their terms can only
be satisfied on the Closing Date; provided that such conditions are capable of being satisfied), then the Outside Date shall be
automatically extended for a period of ninety (90) days; provided, further, however, the right to terminate this
Agreement under this Section 11.01(d) shall not be available to a Party whose breach or failure to fulfill any obligations
under this Agreement has been the primary or proximate cause of the failure of the Closing to occur before the Outside Date; and provided
further, that neither Party shall have the right to terminate this Agreement pursuant to this Section 11.01(d) in
the event that the other Party has initiated proceedings prior to the Outside Date to specifically enforce this Agreement while such
proceedings are pending; or
(e) by
either Seller or Buyer in the event that any Government Authority of competent jurisdiction shall have issued or enacted a Law or Order
in effect in any Material Jurisdiction that permanently enjoins or prohibits the consummation of the Closing and such Law or Order shall
have become final and non-appealable; provided however, that the right to terminate this Agreement under this Section 11.01(e) shall
not be available to any Party whose breach or failure to fulfill any obligations under this Agreement has been the primary or proximate
cause to the issuance or enactment of any such Law or Order.
Section 11.02 Notice
of Termination. Either Party desiring to terminate this Agreement pursuant to Section 11.01
shall give written notice of such termination to the other Party specifying the provision hereof pursuant to which such termination
is made.
Section 11.03 Effect
of Termination.
(a) In
the event this Agreement is terminated pursuant to Section 11.01, this Agreement shall thereupon become null and void and
of no further force and effect, except for the provisions of Section 6.03(a), the last sentence of Section 6.04(a),
Section 11.01, this Section 11.03 and Article XIII (such surviving provisions, the “Surviving
Provisions”) and, subject to such foregoing sections and the following sentences, there shall be no Liability on the part of
either Party. Notwithstanding anything to the contrary, nothing in this Agreement shall be deemed to release any Party from any Liability
for Fraud or any Willful Breach. In addition to the foregoing, no termination of this Agreement will affect the rights or obligations
of any Person pursuant to the Confidentiality Agreement, which rights, obligations and agreements will survive the termination of this
Agreement in accordance with its terms. For purposes of this Section 11.03, “Willful Breach” means an
intentional and material breach that is a consequence of an intentional act or omission undertaken or omitted by the breaching Party
with the knowledge that such act or omission would cause a breach of any representation, warranty, covenant or agreement in this Agreement
in a material respect, regardless of whether breaching was the conscious object of the act or failure to act.
(b) In
the event that (i) this Agreement is terminated by Buyer or Seller pursuant to Section 11.01(d) or Section 11.01(e) (provided
that in the case of Section 11.01(e), any Law or Order giving rise to such termination right is issued solely under or pursuant
to any Antitrust Law), and (ii) at the time of such termination, (A) all of the Closing Conditions set forth in Section 10.03
shall have been satisfied (except for those conditions that by their terms can only be satisfied on the Closing Date; provided that
such conditions are capable of being satisfied) or, to the extent permitted by applicable Law, waived, (B) the Closing Condition
set forth in Section 10.01(a) or Section 10.01(b) is not satisfied (provided that in the case of Section 10.01(b),
any Law or Order, as applicable, causing the Closing Condition set forth in Section 10.01(b) not to be satisfied is
issued under or pursuant to any Antitrust Law), and (C) no breach of Seller of its obligations under Section 6.04 shall
have been the primary cause of the failure to be satisfied of all or any of the Closing Conditions listed in the foregoing clause (B),
then Buyer shall promptly, and in any event no later than two (2) Business Days following the date of such termination, pay or cause
to be paid to Seller or its designee the Termination Fee in cash, which amount shall be deemed inclusive of any applicable VAT,
by wire transfer of immediately available funds to the bank account or accounts designated in writing by
Seller or its designee.
(c) The
Parties hereby acknowledge and agree that in the event that the Termination Fee is duly paid pursuant to Section 11.03(b),
except as otherwise provided in Section 11.03(a) in respect of breaches of the Surviving Provisions occurring after
the termination of this Agreement and except in connection with Fraud, (1) no Party shall have any liability hereunder, (2) the
Termination Fee plus the amount of any Enforcement Costs shall be the sole and exclusive remedy of Seller and its Affiliates, and deemed
to be liquated damages (and not a penalty), for all Losses suffered or incurred by Seller and its Affiliates in connection with this
Agreement (and the termination thereof) or the Transactions (and the abandonment thereof) or any matter forming the basis for such termination,
and (3) no Party or any other Person shall be entitled to bring or maintain any Claim against any other Party or its Affiliates
or their respective former and current Representatives arising out of or in connection with this Agreement (and the termination thereof)
or the Transactions (and the abandonment thereof) or any matter forming the basis for such termination. For the avoidance of doubt, (A) except
as otherwise provided in Section 11.03(a) in respect of breaches of the Surviving Provisions occurring after the termination
of this Agreement, in the event the Termination Fee is payable, and duly paid, in accordance with Section 11.03(b), under
no circumstances will Seller or its Affiliates be entitled to monetary damages in excess of the amount of the Termination Fee plus the
amount of any Enforcement Costs and (B) while this Section 11.03(c) shall not limit the right of Seller to seek
specific performance of this Agreement, under no circumstances shall Seller be permitted or entitled to receive both a grant of specific
performance with respect to the Closing and any money damages, including all or any portion of the Termination Fee and any and all Enforcement
Costs.
(d) Buyer
hereby acknowledges and agrees that (x) the agreements contained in Section 11.03(b) are an integral part of this
Agreement, (y) without these agreements, Seller would not enter into this Agreement and (z) if and only if the Termination
Fee is actually paid under the circumstances specified in the first sentence of this Section 11.03(b), the Termination Fee
shall constitute a reasonable estimate of the damages or losses suffered and constitutes liquidated damages and a reimbursement (and
not a penalty) and Buyer hereby waive its right to, and will not contest, the reasonableness of such amount. In no event shall Buyer
be required to pay to Seller or its designees the Termination Fee more than once pursuant to Section 11.03(b).
(e) If
Buyer fails to timely pay, or cause to be paid, the Termination Fee in accordance with Section 11.03(b), Buyer shall pay,
together with the Termination Fee, (i) interest on the Termination Fee from the date of termination of this Agreement at the Interest
Rate and (ii) any reasonable out-of-pocket fees, costs and expenses (including legal fees) incurred by Seller in connection with
any such Action (such interest, fees, costs and expenses, collectively, “Enforcement Costs”).
Article XII
Indemnification
Section 12.01 Survival.
The representations and warranties of Seller and Buyer contained in or made pursuant to this Agreement or contained in either certificate
required to be delivered pursuant to Section 10.03(c) or Section 10.02(c) shall (a) survive the
Closing and continue in full force and effect for six (6) years, with respect to the Seller Fundamental Representations, and the
Buyer Fundamental Representations and (b) not survive, and be of no further force and effect after, the Closing in the case of all
other representations and warranties; provided that each representation and warranty that would otherwise be terminated pursuant to this
Section 12.01 shall continue to survive until the expiration of the applicable statute of limitations for the purpose of any claim
involving Fraud. The covenants in this Agreement that by their terms apply or are to be performed or complied with entirely at or prior
to the Closing shall terminate and not survive and be of no further force and effect from and after the Closing, and no Party to this
Agreement shall have any Liability with respect thereto from and after the Closing. The Tax matters described in Section 2.01(d)(vii) shall
survive until the date that is sixty (60) days following the expiration of the applicable statute of limitations. The covenants in this
Agreement that by their terms contemplate performance or compliance following the Closing shall survive in accordance with their terms,
after which such covenants shall terminate and no claims shall be made for indemnification with respect thereto under Section 12.02
or Section 12.03 thereafter. After the expiration of the applicable survival periods specified in this Section 12.01,
any claim for indemnification under this Agreement with respect to any breach of such representations, warranties, covenants or agreements,
as applicable, shall be deemed time barred. Notwithstanding anything contrary in this Section 12.01, any representation,
warranty or covenant that would otherwise terminate in accordance with this Section 12.01 will continue to survive if a notice
of a Claim or notice of a Third Party Claim (as applicable) shall have been timely given in accordance with this Article XII on
or prior to such termination date, until the related claim for indemnification has been satisfied or otherwise resolved as provided in
this Article XII.
Section 12.02 Indemnification
by Seller.
(a) From
and after the Closing, and subject to the terms of this Agreement, Seller shall indemnify and hold harmless Buyer and its Affiliates
and each of their respective officers, directors, employees, agents and Representatives (collectively, the “Buyer Indemnified
Parties”) from and against, and compensate and reimburse any Buyer Indemnified Party for, any and all Losses that such Buyer
Indemnified Party may suffer or incur, or become subject to, without duplication, as a result of, relating to or arising out of:
(i) any
breach of or inaccuracy in any representation or warranty of Seller contained in this Agreement or contained in the certificate required
to be delivered pursuant to Section 10.03(c) (without giving effect to any “Material Adverse Effect” or
other similar materiality qualifier contained therein; provided that the word “material” in the definitions of “Material
Adverse Effect”, “Material Contract,” “Material Supplier” and “Material Customer” shall be
given effect);
(ii) any
breach or failure by Seller to perform or comply with any of its covenants or agreements in this Agreement that by their terms contemplate
performance following the Closing;
(iii) any
Excluded Asset or Excluded Liability (including any Excluded Liability of any Transferred Entity);
(iv) any
Seller Portion of Shared Contract; or
(v) the
matter set forth in Section 12.02 of the Seller Disclosure Schedules.
(b) Notwithstanding
anything in this Agreement to the contrary:
(i) no
Buyer Indemnified Party shall have any claim for indemnification from Seller under Section 12.02(a)(i) based upon, arising
out of, with respect to, or by reason of any breach of or inaccuracy in any representation or warranty other than any Seller Fundamental
Representation; provided that this Section 12.02(b)(i) shall not apply to any Losses based upon, arising out
of, with respect to or by reason of Fraud;
(ii) subject
to Section 12.07(c), with respect to any claim for indemnification under Section 12.02(a)(i) based upon,
arising out of, with respect to or by reason of any breach of or inaccuracy in any Seller Fundamental Representation, the Buyer Indemnified
Parties shall (A) first, recover for all or any portion of Losses with respect to such claim directly from Seller, up to an amount
equal to the Retention, (B) second, seek recovery for such Losses from the R&W Policy, to the extent available, and (C) third,
recover for all or any portion of such Losses in excess of the then-remaining amount of coverage under the R&W Policy available for
such Losses directly from Seller;
(iii) the
cumulative indemnification obligation of Seller under this Article XII (other than Section 12.02(a)(iii)) shall
in no event exceed 100% of the Purchase Price; provided that this Section 12.02(b)(iii) shall not apply to any
Losses based upon, arising out of, with respect to or by reason of Fraud;
(iv) no
Buyer Indemnified Party shall be entitled to indemnification for Losses resulting from such claim or series of related claims where the
Losses resulting therefrom are less than $50,000 (the “Claim Threshold”); provided that this Section 12.02(b)(iv) shall
not apply to any Losses based upon, arising out of, with respect to or by reason of (x) any breach of or inaccuracy in any Seller
Fundamental Representation, (y) breach or failure by Seller to perform or comply with any of its covenants or agreements in Section 7.04,
Section 7.05 or Section 7.12, or (z) Fraud; and
(v) Seller
shall not be required to indemnify or hold harmless any Buyer Indemnified Party for any Losses reflected in the Final Closing Statement.
Section 12.03 Indemnification
by Buyer.
(a) From
and after the Closing, and subject to the terms of this Agreement, Buyer shall indemnify and hold harmless Seller and its Affiliates
and each of their respective officers, directors, employees, agents and Representatives (collectively, the “Seller Indemnified
Parties”) from and against, and compensate and reimburse any Seller Indemnified Party for, all Losses that such Seller Indemnified
Party may suffer or incur, or become subject to, without duplication, as a result of, relating to or arising out of:
(i) any
breach of inaccuracy in any representation or warranty of Buyer contained in this Agreement or the certificate required to be delivered
pursuant to Section 10.02(c) (without giving effect to any “Buyer Material Adverse Effect” or other similar
materiality qualifier contained therein; provided that the word “material” in the definition of “Buyer Material
Adverse Effect”);
(ii) any
breach or failure by Buyer to perform or comply with any of its covenants in this Agreement that by their terms contemplate performance
following the Closing;
(iii) any
Transferred Asset or Assumed Liability (including any Delayed Assumed Liability);
(iv) any
Buyer Portion of Shared Contract; or
(v) (A) any
Taxes that such Seller Indemnified Party may be liable for or incur, or become subject to, as a result of any Taxes with respect to the
Business, with respect to any Tax period (or portion thereof) beginning after the Closing Date and (B) any Taxes for which Buyer
is liable pursuant to Section 9.03.
(b) Notwithstanding
anything in this Agreement to the contrary:
(i) (A) Buyer
shall not be liable for indemnification under Section 12.03(a)(i) until the aggregate amount of all Losses in respect
of indemnification under Section 12.03(a)(i) on an aggregate basis is an amount equal to one-half of the Retention,
and then only to the extent of such excess, and (B) the aggregate amount of all Losses for which Buyer shall be liable pursuant
to Section 12.03(a)(i) shall in no event exceed $130,000,000; provided that this Section 12.03(b)(i) shall
not apply to any Losses based upon, arising out of, with respect to or by reason of (x) any inaccuracy in or breach of any Buyer
Fundamental Representation or (y) Fraud;
(ii) The
cumulative indemnification obligation of Buyer under this Article XII (other than Section 12.03(a)(iii)) shall
in no event exceed 100% of the Purchase Price; provided that this Section 12.03(b)(ii) shall not apply to any Losses
based upon, arising out of, with respect to or by reason of Fraud; and
(iii) no
Seller Indemnified Party shall be entitled to indemnification for Losses resulting from such claim or series of related claims where
the Losses resulting therefrom are less than the Claim Threshold; provided that this Section 12.03(b)(iii) shall
not apply to any Losses based upon, arising out of, with respect to or by reason of (x) any breach of or inaccuracy in any Seller
Fundamental Representation or (y) Fraud.
Section 12.04 Notification
of Claims.
(a) Except
as otherwise provided in this Agreement, a Person that may be entitled to be indemnified under this Agreement (the “Indemnified
Party”), shall promptly notify the Party liable for such indemnification (the “Indemnifying Party”) in writing
of any pending or threatened Claim, demand or circumstance that the Indemnified Party has determined has given or would reasonably be
expected to give rise to a right of indemnification under this Agreement (including a pending or threatened Claim or demand asserted
by a third party against the Indemnified Party, such Claim being a “Third Party Claim”), describing in reasonable
detail the facts and circumstances with respect to the subject matter of such Claim, demand or circumstance; provided however,
that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Article XII
except to the extent the Indemnifying Party is actually and materially prejudiced by such failure.
(b) Upon
receipt of a notice of a Claim for indemnity from an Indemnified Party pursuant to Section 12.04(a) with respect to
any Third Party Claim, the Indemnifying Party shall have the right (but not the obligation) to assume the defense and control of any
Third Party Claim and, in the event that the Indemnifying Party shall assume the defense of such Claim, it shall allow the Indemnified
Party a reasonable opportunity, but the Indemnified Party shall not have the obligation, to participate in the defense of such Third
Party Claim with its own counsel and at its own expense; provided that, notwithstanding anything to the contrary in this Section 12.04,
the Indemnifying Party shall not be entitled to assume the defense of any Third Party Claim (and, to the extent the Indemnifying Party
has assumed the defense, shall transfer control of such defense to the Indemnified Party) if (i) such Third Party Claim seeks any
injunction or other equitable relief, (ii) such Third Party Claim involves a criminal Action, or (iii) the Indemnifying Party
shall not have assumed the defense of such Third Party Claim by providing notice thereof to the Indemnified Party within thirty (30) days
of receipt of a notice of such Claim for indemnity. If the Indemnifying Party shall assume the defense of any such Third Party Claim,
(x) the Indemnifying Party shall select, at the Indemnifying Party’s sole cost and expense, counsel, contractors and consultants
of recognized standing and competence after consultation with the Indemnified Party (and in each case subject to approval by the Indemnified
Party, which shall not be unreasonably withheld) and shall take all steps reasonably necessary in the defense or, to the extent permitted
by Section 12.04(c), settlement of such Third Party Claim and (y) the Indemnified Party may retain separate co-counsel
at its sole cost and expense and participate in the defense of such Third Party Claim (provided however, that such Indemnified
Party shall be entitled to retain separate co-counsel at the expense of the Indemnifying Party if so requested by the Indemnifying Party
to participate or a conflict or potential conflict exists between the Indemnified Party and the Indemnifying Party that would make such
separate representation advisable; provided further that the Indemnifying Party shall not be required to pay for more than one
such counsel for all Indemnified Parties in connection with any Third Party Claim).
(c) If
the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnified Party shall, and shall cause each of its Affiliates
and Representatives to, reasonably cooperate with the Indemnifying Party, at the Indemnifying Party’s sole cost and expense, in
the defense of any Third Party Claim. The Indemnifying Party shall not consent to a settlement of, or the entry of any judgment arising
from, any Third Party Claim, without the consent of any Indemnified Party (which consent shall not be unreasonably withheld, delayed
or conditioned), provided that the Indemnifying Party may agree to the settlement of, or the entry of any judgment arising from,
any Third Party Claim without the Indemnified Party’s consent if it (i) does not include an injunction or other equitable
remedy upon the Indemnified Parties, their respective Affiliates or the Business, (ii) does not involve criminal liability or any
admission of wrongdoing by any Indemnified Party or its Affiliates, (iii) involves only the payment of monetary damages and the
Indemnifying Party pays all amounts arising out of such settlement or judgment (subject to Section 12.02(b), if applicable)
and (iv) includes, as a condition of such settlement or judgment, a complete and unqualified release of any Indemnified Party potentially
affected by such Third Party Claim.
Section 12.05 Exclusive
Remedies. Except as otherwise expressly set forth in this Agreement (including Section 3.04,
Section 13.15, Section 7.05 and Section 7.12 and for Claims alleging Fraud), and without limiting any right
or obligation under any other Transaction Agreements, following the Effective Time, the indemnification provisions of this Article XII
(and, in the case of any Buyer Indemnified Party, the indemnification provisions of this Article XII and the R&W
Policy) shall be the sole and exclusive remedies of any Seller Indemnified Party and any Buyer Indemnified Party, respectively,
for any Losses (including any Losses from Claims for breach of contract, warranty, tortious conduct (including negligence) or otherwise
and whether predicated on common law, statute, strict Liability or otherwise) that it may at any time suffer or incur, or become subject
to, as a result of, or in connection with, this Agreement or the Transactions. Without limiting the generality of the foregoing, to the
maximum extent permitted by Law, the Parties hereby irrevocably waive any right of rescission they may otherwise have or to which they
may become entitled. The provisions of this Section 12.05 and this Article XII were specifically bargained for
by the Parties and were taken into account by them in arriving at the Purchase Price and the terms and conditions of this Agreement,
and Buyer and Seller in approving this Agreement have specifically relied upon the provisions of this Section 12.05 and this
Article XII in agreeing to the Purchase Price and the terms and conditions of this Agreement.
Section 12.06 Additional
Indemnification Provisions.
(a) With
respect to each indemnification obligation contained in this Agreement: (i) each such obligation shall be reduced by any net Tax
benefit actually realized in cash by the Indemnified Party during the taxable period in which such Loss arises or the immediately succeeding
taxable period (excluding, for the avoidance of doubt, any Tax benefit that represents only an acceleration of the timing with respect
to which a loss, deduction, or other tax attribute is taken into account, rather than a Tax benefit that results in permanent reduction
in Tax Liability) and (ii) all Losses shall be net of any amounts (less Recovery Expenses) that have been actually recovered by
the Indemnified Party pursuant to any indemnification by, or indemnification agreement with, any third party or any insurance policy
or other cash receipts or sources of reimbursement in respect of such Loss; provided that in the event any amounts recovered under
insurance policies or other sources are not received before any claim for indemnification is paid, the Indemnifying Party shall pay the
full amount of the Loss, and the Indemnified Party shall pursue recovery for all amounts paid in indemnification under such insurance
policies; provided further, that nothing herein shall (A) apply to any self-insurance or (B) be deemed to obligate any
Indemnified Party or any of its Affiliates to maintain any insurance policies (other than the R&W Policy) after the Closing Date
or take any Action against any insurance carriers or other third parties with respect to any such claim.
(b) If
an Indemnifying Party makes any payment for any Losses suffered or incurred by an Indemnified Party pursuant to the provisions of this
Article XII, such Indemnifying Party shall be subrogated, to the extent of such payment, to all rights and remedies of the
Indemnified Party to any insurance benefits or other Claims of the Indemnified Party with respect to such Losses and with respect to
the Claim giving rise to such Losses, in each case, to the extent permitted by the applicable insurance policies.
(c) In
the event an Indemnified Party recovers Losses in respect of a claim of indemnification under this Article XII, no other
Indemnified Party will be entitled to recover the same Losses in respect of such claim for indemnification. If Losses fall into multiple
categories of Section 12.02 or Section 12.03, an Indemnified Party may seek recovery under such multiple categories
but may only recover such Losses one time, and any Losses accounted for in the Final Purchase Price Adjustment shall not be recoverable
pursuant to Section 12.02 or Section 12.03.
Section 12.07 Mitigation.
Each Party shall, and shall cause its applicable Affiliates and Representatives to, take reasonable steps to mitigate their respective
Losses to the extent required by applicable Law upon and after becoming aware of any fact, event, circumstance or condition that has
given rise to or would reasonably be expected to give rise to, any Losses for which it would have the right to seek indemnification hereunder;
provided that (a) such mitigation is commercially reasonable and does not interfere in any significant manner with the operation
of the Business, (b) the costs of such mitigation efforts shall themselves be deemed to be indemnifiable Losses and (c) notwithstanding
anything to the contrary in this Agreement, Buyer shall not be required to seek recovery under the R&W Policy in respect of any Losses
indemnifiable by Seller pursuant to Section 12.02(a) prior to seeking indemnification under this Article XII.
Section 12.08 Limitation
on Liability. Notwithstanding anything in this Agreement or in any other Transaction Agreement
to the contrary, in no event shall either Party have any Liability under any Transaction Agreement (including under this Article XII)
for any punitive damages (except to the extent paid to any third party pursuant to a Third Party Claim).
Section 12.09 Tax
Treatment of Payments. Seller and Buyer shall treat any adjustments or indemnity payments
made pursuant to this Agreement as adjustments to the Purchase Price for income Tax purposes unless applicable Tax Law causes such payment
not to be so treated.
Section 12.10 Manner
of Payment. Any indemnification of an Indemnified Party pursuant to this Article XII
shall be effected by wire transfer of immediately available funds from the Indemnifying Party to an account designated by such Indemnified
Party within ten (10) Business Days after the final determination thereof. If any payment required to be made by this Section 12.10
is not made by such tenth (10th) Business Day, then such payment shall bear interest at the Interest Rate, from the date such payment
was required to be paid to (but excluding) the date such payment was made.
Section 12.11 Representation
and Warranty Insurance. Buyer or its Affiliates shall procure a representation and warranty
insurance policy (or other similar policy) (a “R&W Policy”). Such R&W Policy shall be at Buyer’s
sole expense and Buyer shall cause such R&W Policy to expressly include a waiver by the insurer of any and all subrogation rights
against Seller and its Affiliates and their respective officers, directors and employees (other than arising from Fraud). Buyer shall
cause each insured party under any such R&W Policy not to waive, amend, modify or otherwise revise such subrogation provision, or
allow such provision to be waived, amended, modified or otherwise revised, in a manner that is adverse to Seller without the prior written
consent of Seller. Seller shall reasonably cooperate with Buyer with respect to Buyer’s procurement of any such R&W Policy.
Article XIII
Miscellaneous
Section 13.01 Rules of
Construction. The following rules of construction shall govern the interpretation of
this Agreement:
(a) (i) references
to “applicable” Law or Laws with respect to a particular Person, thing or matter means only such Law or Laws as to which
the Government Authority that enacted or promulgated such Law or Laws has jurisdiction over such Person, thing or matter; (ii) references
to any Law (including in the definition thereof) shall be deemed to include references to such Law as amended, modified, supplemented
or replaced from time to time (and, in the case of any statute, shall include any rules and regulations promulgated under such statute);
and (iii) all references to any section of any statute, rule, regulation or form shall include any successor to such section;
(b) an
item arising with respect to a specific representation or warranty shall be deemed to be “reflected on” or “set forth
in” a balance sheet or financial statements (other than any Closing Statements) to the extent (i) there is a specific reserve,
accrual or other similar item underlying a number on such balance sheet or financial statement that is related to the subject matter
of such representation, (ii) such item is otherwise specifically set forth on the balance sheet or financial statement or (iii) such
item is reflected on the balance sheet or financial statement and is specifically referred to in the notes thereto;
(c) when
calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement,
the date that is referenced in beginning the calculation of such period will be excluded (for example, if an action is to be taken within
two (2) days after a triggering event and such event occurs on a Tuesday, then the action must be taken by Thursday); provided
that, if the last day of such period is a non-Business Day, the period in question will end on the next succeeding Business Day;
(d) whenever
the context requires, words in the singular shall be held to include the plural and vice versa, and words of one gender shall
be held to include the other gender as the context requires;
(e) (i) the
provision of a table of contents, the division into Articles, Sections and other subdivisions and the insertion of headings are for convenience
of reference only and shall not affect or be utilized in construing or interpreting this Agreement and (ii) references to the terms
“Article,” “Section,” “subsection,” “subclause,” “clause,” “Schedule,”
“Annex,” and “Exhibit” are references to the Articles, Sections, subsections, subclauses, clauses, Schedules,
Annexes, and Exhibits to this Agreement unless otherwise specified;
(f) (i) the
terms “hereof,” “herein,” “hereby,” “hereto”, “hereunder” and derivative
or similar words refer to this entire Agreement and not to any particular provision of this Agreement, including the Schedules, Annexes
and Exhibits hereto, (ii) the terms “include,” “includes,” “including” and words of similar
import when used in this Agreement mean “including, without limitation,” unless otherwise specified, (iii) the term
“any” means “any and all,” (iv) the term “or” shall not be exclusive and shall mean “and/or,”
and (v) “extent” in the term “to the extent” means the degree to which a subject or other thing extends,
and such term does not mean simply “if”;
(g) (i) references
to “days” means calendar days unless Business Days are expressly specified, (ii) references to “written”
or “in writing” include in electronic form to the extent in compliance with Section 13.03, (iii) references
to “$” mean U.S. dollars and (iv) references to a date or time shall be deemed to be references to such date or
time in the City of New York, New York, U.S.A., unless otherwise specified;
(h) references
to any Person includes such Person’s permitted successors and permitted assigns;
(i) where
any information, document or material is described as “delivered” or “made available” to Buyer prior to the Agreement
Date, it shall mean that such information, document or material has been posted to the Data Room established by Seller by 5:00 p.m. New
York time at least two (2) calendar days prior to the Agreement Date;
(j) whenever
this Agreement requires any Seller Party to take any action, such requirement shall be deemed to involve an undertaking on the part of
Seller to take such action or to cause such Seller Party to take such action;
(k) for
purposes of and in conjunction with Section 8.05(a), a claim shall be deemed to have been incurred with respect to:
(i) a
death or dismemberment claim, on the actual date of death or dismemberment;
(ii) a
short-term or long-term disability claim, on the date of diagnosis of the illness;
(iii) an
extended health care claim, including vision, dental and medical treatments, on the date of diagnosis of the illness or condition; and
(iv) a
prescription drug claim, the date the prescription is filled; and
(l) each
Party has participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise,
this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or
burdening either Party by virtue of the authorship of any provision in this Agreement; the language used herein will be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule of strict construction will be applied against either
Party. Further, prior drafts of this Agreement or any ancillary agreements hereto or the fact that any clauses have been added, deleted
or otherwise modified from any prior drafts of this Agreement or any ancillary agreements hereto or emails exchanged between the Parties
or their Representatives shall not be used as an aide of construction or otherwise constitute evidence of the intent of the Parties;
and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of such prior drafts or communications.
Section 13.02 Expenses.
Except as otherwise specified herein and in the other Transaction Agreements, each Party will pay its own costs and expenses, including
legal, consulting, financial advisor and accounting fees, disbursements, and expenses, incurred in connection with the Transaction Agreements
and the Transactions, irrespective of when incurred or whether or not the Closing occurs or this Agreement is terminated.
Section 13.03 Notices.
All notices, requests, instructions and other communications or document under or by reason of the Transaction Agreements shall be in
writing and shall be deemed to have been duly given or made (a) when personally delivered, (b) the Business Day sent if delivered
by e-mail transmission if sent prior to 6 p.m. (Eastern time) on a Business Day and, if not, the next Business Day or (c) upon
delivery by internationally recognized overnight courier service, in each case to the addresses and attention parties indicated below
(or such other address, e-mail address or attention party as the recipient party has specified by prior notice given to the sending party
in accordance with this Section 13.03):
If to Seller, to: |
Elanco Animal Health Inc. |
|
2500 Innovation Way |
|
Greenfield, Indiana 46140 |
|
Attention: |
General Counsel |
|
E-mail: |
[***] |
|
with a copy (which will not constitute notice) to: |
White & Case LLP |
|
1221 Avenue of the Americas |
|
New York, NY 10020 |
|
Attention: |
James Hu |
|
E-mail: |
[***] |
|
If to Buyer, to: |
Merck Sharp & Dohme LLC |
|
126 East Lincoln Avenue |
|
P.O. Box 2000 |
|
Rahway, NJ 07065 USA |
|
Attention: |
Office of Secretary |
|
E-mail: |
[***] |
|
with a copy (which will not constitute notice) to: |
Merck Sharp & Dohme LLC |
|
126 East Lincoln Avenue |
|
P.O. Box 2000 |
|
Rahway, NJ 07065 USA |
|
Attention: |
Senior Vice President, Business Development |
|
with a copy (which will not constitute notice) to: |
Covington & Burling LLP |
|
One CityCenter |
|
850 Tenth Street, NW |
|
Washington, DC 20001 |
|
Attention: |
Catherine J. Dargan |
|
|
Drew Fischer |
|
Email: |
[***] |
|
|
[***] |
Section 13.04 Public
Announcements. Each Party may issue its initial press release with respect to the execution
of this Agreement on or following the Agreement Date, subject to the other Party’s prior written approval on the form and substance
of such press release. Thereafter, prior to the Closing, each Party shall obtain the other Party’s prior written consent (such
consent not to be unreasonably withheld, conditioned, or delayed), and provide meaningful opportunity for review and give due consideration
to reasonable comment by the other Party, prior to it or any of its Affiliates issuing any additional press releases or otherwise making
public statements with respect to this Agreement or the Transactions and prior to making any filings with any third party or, subject
to Section 6.04, any Government Authority (including any national securities exchange) with respect thereto, except (a) as
a Party believes in good faith and based on reasonable advice of counsel is required by applicable Law or by applicable rules of
any national securities exchange or quotation system on which such Party or its Affiliates lists or trades securities (in which case
the disclosing Party will use its commercially reasonable efforts to (i) advise the other Party before making such disclosure and
(ii) provide such other Party a reasonable opportunity to review and comment on such release or announcement and consider in good
faith any comments with respect thereto) or (b) a Party may make such public disclosures that are consistent with prior disclosures
made in compliance with this Section 13.04 or any communication plan previously agreed to by the Parties.
Section 13.05 Severability.
If any term or provision of this Agreement is held invalid, illegal or unenforceable in any respect under any applicable Law, as a matter
of public policy or on any other grounds, the validity, legality and enforceability of all other terms and provisions of this Agreement
will not in any way be affected or impaired and shall continue in full force and effect. If the final judgment of a court of competent
jurisdiction or other Government Authority declares that any term or provision hereof is invalid, illegal or unenforceable, the Parties
agree that the court making such determination will have the power to reduce the scope, duration, area or applicability of the term or
provision, to delete specific words or phrases, or to replace any invalid, illegal or unenforceable term or provision with a term or
provision that is valid, legal and enforceable and that comes closest to expressing the intention of the invalid, illegal or unenforceable
term or provision.
Section 13.06 Assignment.
This Agreement will be binding upon and inure to the benefit of and be enforceable by the respective permitted successors and permitted
assigns of the Parties. Neither Party may assign (whether by operation of Law or otherwise) this Agreement or any rights, interests or
obligations provided by this Agreement without the prior written consent of the other Party; provided however, that Buyer may
assign this Agreement and any or all rights and obligations under this Agreement to any of its Affiliates upon prior written notice to
the other Party; provided further, that no such assignment shall release Buyer from any Liability under this Agreement. Any attempted
assignment in violation of this Section 13.06 shall be void ab initio.
Section 13.07 No
Third-Party Beneficiaries. This Agreement and the other Transaction Agreements are for the
sole benefit of the Parties and their respective permitted successors and permitted assigns, and, except with respect to Buyer Indemnified
Parties and Seller Indemnified Parties pursuant to Article XII, or as expressly set forth in the applicable Transaction Agreement,
nothing in the Transaction Agreements shall create or be deemed to create any third-party beneficiary rights in any Person not a party
to the Transaction Agreements, including any Affiliates of any Party.
Section 13.08 Entire
Agreement. This Agreement (including the Seller Disclosure Schedules), the other Transaction
Agreements (and all exhibits and schedules hereto and thereto) and the Confidentiality Agreement collectively constitute and contain
the entire agreement and understanding of the Parties with respect to the subject matter hereof and thereof and supersede all prior negotiations,
correspondence, understandings, contracts and agreements, whether written or oral, among the Parties respecting the subject matter hereof
and thereof.
Section 13.09 Amendments.
The Transaction Agreements (including all exhibits and schedules thereto) may be amended, restated, supplemented or otherwise modified,
only by a written agreement making specific reference to the applicable Transaction Agreement to be amended, restated, supplemented or
otherwise modified, in each case duly executed by each party to such Transaction Agreement. No Consent from any Indemnified Party under
this Article XIII (in each case other than the Parties) shall be required to amend this Agreement.
Section 13.10 Waiver.
At any time before the Closing, either Seller or Buyer may (a) extend the time for the performance of any obligation or other acts
of the other Party, (b) waive any breaches or inaccuracies in the representations and warranties of the other Party contained in
this Agreement or in any document delivered pursuant to this Agreement or (c) waive compliance with any covenant, agreement or condition
contained in this Agreement, but such waiver of compliance with any such covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure to comply. Any such waiver shall be in a written instrument duly executed
by the waiving Party. No failure on the part of either Party to exercise, and no delay in exercising, any right, power or remedy under
any Transaction Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy
by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
Section 13.11 Governing
Law. This Agreement and each other Transaction Agreement, and any and all Claims or Actions
(whether at law, in contract, tort, or otherwise, or in equity) that may be based upon, arise out of or relate or be incidental to this
Agreement, any Transaction, any Transaction Agreement, the negotiation, execution, performance or consummation of any of the foregoing
or the inducement of any Party to enter into any of the foregoing, whether for breach of contract, tortious conduct or otherwise, and
whether now existing or hereafter arising (each, a “Transaction Dispute”), will be exclusively governed by and construed
and enforced in accordance with the internal Laws of the State of Delaware, without giving effect to any conflict of law provisions or
any other Law or rule that would cause the Laws of any jurisdiction other than the State of Delaware to be applied. The Parties
expressly acknowledge and agree that (a) the requirements of 6 Del. C § 2708 are satisfied by the provisions of this Agreement
and that such statute mandates the application of Laws of the State of Delaware to this Agreement, the relationship of the Parties, the
Transactions, the Transaction Agreements, and the interpretation and enforcement of the rights and duties of the Parties hereunder and
(b) the Parties have a reasonable basis for the application of the Laws of the State of Delaware to this Agreement, the relationship
of the Parties, the Transactions, the Transaction Agreements, and the interpretation and enforcement of the rights and duties of the
Parties hereunder. Seller shall cause the Seller Indemnified Parties, and Buyer shall cause the Buyer Indemnified Parties, to comply
with the foregoing as though such Indemnified Parties were a Party to this Agreement.
Section 13.12 Dispute
Resolution; Consent to Jurisdiction.
(a) Except
as otherwise provided in Section 3.04, any Transaction Dispute will exclusively be brought and resolved in the Court of Chancery
of the State of Delaware (or, only if such court declines to accept jurisdiction over a particular matter, then in the United States
District Court for the District of Delaware or, if jurisdiction is not then available in the United States District Court for the District
of Delaware (but only in such event), then in any Delaware state court sitting in New Castle County) and any appellate court from any
of such courts. In that context, and without limiting the generality of the foregoing, each Party irrevocably and unconditionally:
(i) submits
for itself and its property to the exclusive jurisdiction of such courts with respect to any Transaction Dispute and for recognition
and enforcement of any judgment in respect thereof, and agrees that all Claims in respect of any Transaction Dispute shall be heard and
determined in such courts;
(ii) agrees
that venue for any such Transaction Dispute would be proper in such courts, and waives any objection that it may now or hereafter have
that any such court is an improper or inconvenient forum for the resolution of any such Transaction Dispute; and
(iii) agrees
that the mailing by certified or registered mail, return receipt requested, to the Persons listed in Section 13.03 of any
process required by any such court, will be effective service of process; provided however, that nothing herein will be deemed
to prevent a Party from making service of process by any means authorized by the Laws of the State of Delaware.
(b) The
foregoing consent to jurisdiction will not constitute submission to jurisdiction or general consent to service of process in the State
of Delaware for any purpose except with respect to any Transaction Dispute.
Section 13.13 Waiver
of Jury Trial. To the maximum extent permitted by Law, each Party
irrevocably and unconditionally waives any right IT MAY HAVE to trial by jury in any forum in respect of any Transaction Dispute
and covenants that neither it nor any of its Affiliates or Representatives will assert (whether as plaintiff, defendant or otherwise)
any right to such trial by jury. Each Party certifies and acknowledges that (a) such Party has considered the implications of this
waiver, (b) such Party makes this waiver voluntarily and (c) such waiver constitutes a material inducement upon which such
Party is relying and will rely in entering into the Transaction Agreements. Each Party may file an original counterpart or a copy of
this Section 13.13 with any court as written evidence of the consent of each Party to the waiver of its right to trial by
jury.
Section 13.14 Admissibility
into Evidence. All offers of compromise or settlement among the Parties or their Representatives
in connection with the attempted resolution of any Transaction Dispute (a) shall be deemed to have been delivered in furtherance
of a Transaction Dispute settlement, (b) shall be exempt from discovery and production and (c) shall not be admissible into
evidence (whether as an admission or otherwise) in any proceeding for the resolution of the Transaction Dispute.
Section 13.15 Remedies;
Specific Performance.
(a) Except
to the extent set forth otherwise in this Agreement (including in Section 12.05), all remedies under this Agreement expressly
conferred upon a Party will be deemed cumulative with and not exclusive of and shall be in addition to any other remedy conferred hereby,
or by Law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy.
(b) Each
Party acknowledges and agrees that irreparable damage (for which monetary relief, even if available, would not be an adequate remedy)
would occur and the Parties would not have an adequate remedy at law or in equity if any provision of this Agreement is not performed
in accordance with its specific terms or is otherwise breached (or any Party threatens such a breach), including if any Party fails to
take such actions as are required of it hereunder to consummate the Transactions or to enable the Transactions to be consummated. Accordingly,
each Party agrees that, unless this Agreement is validly terminated in accordance with its terms, the other Party will be entitled to
injunctive relief at any time from time to time to prevent breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions of this Agreement, in each case (i) without the requirement of posting any bond or other indemnity and (ii) in
addition to any other remedy to which it may be entitled, at law or in equity. Furthermore, each Party agrees (x) not to raise any
objections (whether on the basis that a remedy of monetary damages would provide an adequate remedy for any such breach or otherwise)
to the availability of the equitable remedy of specific performance to restrain breaches or threatened breaches of this Agreement, and
to specifically enforce the terms of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the
covenants and obligations of such Party under this Agreement and (y) that the right to specific performance is an integral part
of the Transactions and without such right neither Seller nor Buyer would have entered into this Agreement.
(c) The
Parties further agree that (i) by seeking the remedies provided for in this Section 13.15, a Party shall not in any
respect waive its right to seek any other form of relief that may be available to a Party under this Agreement in the event that this
Agreement has been terminated or in the event that the remedies provided for in this Section 13.15 are not available or otherwise
are not granted, and (ii) nothing set forth in this Section 13.15 shall require any Party to institute any Action for
(or limit any Party’s right to institute any Action for) specific performance under this Section 13.15 prior to or
as a condition to exercising any termination right under Article XI (and pursuing damages after such termination), nor shall
the commencement of any Action pursuant to this Section 13.15 or anything set forth in this Section 13.15 restrict
or limit any Party’s right to pursue any other remedies under this Agreement that may be available then or thereafter.
Section 13.16 Non-Recourse.
All Claims, obligations, Liabilities or causes of action (whether in contract or in tort, in law or in equity, or granted by statute)
that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to the Transaction
Agreements, or the negotiation, execution, or performance of the Transaction Agreements (including any representation or warranty made
in, in connection with, or as an inducement to, the Transaction Agreements), may be made only against (and are expressly limited to)
the entities that are expressly identified as parties in the preamble to this Agreement or the other Transaction Agreements, as applicable
(“Contracting Parties”). No Person who is not a Contracting Party, including any past, present or future director,
officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney, or representative of, and any financial
advisor or lender to, any Contracting Party, or any director, officer, employee, incorporator, member, partner, manager, stockholder,
Affiliate, agent, attorney, or representative of, and any financial advisor or lender to, any of the foregoing (“Nonparty Affiliates”),
shall have any Liability (whether in contract or in tort, in law or in equity, or granted by statute) for any claims, causes of action,
obligations or Liabilities arising under, out of, in connection with, or related in any manner to the Transaction Agreements or based
on, in respect of, or by reason of the Transaction Agreements or their negotiation, execution, performance or breach; and, to the maximum
extent permitted by law, each Contracting Party hereby waives and releases all such Liabilities, claims, causes of action and obligations
against any such Nonparty Affiliates.
Section 13.17 Payments
and Interest. Except as otherwise expressly set forth herein, all payments shall be paid
by wire transfer in immediately available funds to the account or accounts designated in advance by the Party receiving such payment.
If any payment expressly required to be made to a Party under this Agreement is made after the date on which such payment is due, interest
shall accrue on such amount from (but not including) the due date of the payment to (and including) the date such payment is actually
made at the Interest Rate. All computations of interest pursuant to this Agreement shall be made on the basis of a year of three
hundred sixty-five (365) days, in each case, for the actual number of days from (but not including) the first day to (and including)
the last day occurring in the period for which such interest is payable.
Section 13.18 Disclosure
Schedules and Exhibits. The Seller Disclosure Schedules, Schedules, Annexes, and Exhibits
attached to this Agreement shall be construed with and as an integral part of this Agreement to the same extent as if the same had been
set forth verbatim herein. Any capitalized terms used in any Exhibit, Annex, or Schedule or in the Seller Disclosure Schedules but not
otherwise defined therein shall be defined as set forth in this Agreement. The representations and warranties of Seller set forth in
this Agreement are made and given subject to the disclosures contained in the Seller Disclosure Schedules. Inclusion of information in
the Seller Disclosure Schedules will not be construed as an admission that such information is material to the business, operations or
condition (financial or otherwise) of the Business. The Seller Disclosure Schedules have been arranged for purposes of convenience in
separately titled Sections corresponding to the Sections of this Agreement, however, each Section (other than Section 4.05(b) of
the Seller Disclosure Schedules) shall be deemed to incorporate by reference all information disclosed in any other Section of the
Seller Disclosure Schedules to the extent it is reasonably apparent from its face that the disclosure of such matter is applicable to
such Section of the Seller Disclosure Schedules.
Section 13.19 Provision
Respecting Legal Representation. Each Party to this Agreement agrees, on its own behalf
and on behalf of its Affiliates and Representatives, that White & Case LLP, Carey y Cía. Ltda. and Blake, Cassels &
Graydon LLP may serve as counsel to the Seller Parties in connection with the negotiation, preparation, execution and delivery of the
Transaction Agreements and the consummation of the Transactions, and that, following consummation of the Transactions, White &
Case LLP, Carey y Cía. Ltda. and Blake, Cassels & Graydon LLP may serve as counsel to the Seller Parties or any Representative
of any such party, in connection with any litigation, claim or obligation arising out of or relating to the negotiation, preparation,
execution and delivery of the Transaction Agreements and the consummation of the Transactions and each Party consents thereto and waives
any conflict of interest arising therefrom, and each Party shall cause its Affiliates and Representatives to consent to waive any conflict
of interest arising from such representation.
Section 13.20 Privilege.
Each of Seller and Buyer, for itself and its Affiliates, and its and its Affiliates’ respective successors and assigns, hereby
irrevocably and unconditionally acknowledges and agrees that all attorney-client privileged communications between any Seller Party and
their respective current or former Affiliates or Representatives (in each case, including any of their respective directors, officers,
employees and contractors) and their counsel, including White & Case LLP, Carey y Cía. Ltda. and Blake, Cassels &
Graydon LLP, made before the consummation of the Closing in connection with the negotiation, preparation, execution, delivery and Closing
under any Transaction Agreement or any Transaction Dispute (the “Privileged Communications”) shall continue after
the Closing to be privileged communications with such counsel and shall be subject to a shared privilege between the Seller Parties,
on the one hand, and the Transferred Entities, on the other hand. The Seller Parties and the Transferred Entities shall have equal right
to assert all such shared privileges in connection with privileged information under any Law and no such shared privilege may be waived
after the Closing by any of the Seller Parties or any of their Affiliates without the prior written consent of Buyer; provided,
however, that neither Buyer nor any of its Affiliates may waive such shared privilege or access any Privileged Communication without
the prior written consent of Seller. In the event that Buyer or any of its Affiliates are legally required by any Law or Order to produce
any Privileged Communications in their possession, Buyer shall as promptly as practicable notify Seller in writing so that Seller can
seek a protective order or take other appropriate action (at Seller’s sole cost and expense) and Buyer agrees to use and to cause
its Affiliates to use all commercially reasonable efforts to assist therewith.
Section 13.21 Counterparts.
Each Transaction Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to any Transaction Agreement
electronically, (including by facsimiles, e-mail transmission of pdf signatures or other electronic copies of signatures) shall be deemed
to be originals and effective as delivery of a manually executed counterpart to any Transaction Agreement.
Section 13.22 Release.
Effective as of the Closing and except as otherwise expressly set forth in this Agreement or any Transaction Agreement, Seller,
on behalf of itself, its Affiliates, its Subsidiaries (excluding the Transferred Entities) and all of their respective successors and
assigns (each, a “Seller Releasing Party”), agrees not to sue and fully and irrevocably waives, releases and discharges
Buyer, its Affiliates, its Subsidiaries (including the Transferred Entities) and all of their respective directors, officers, employees,
members, managers, equityholders, Affiliates, agents, successors and assigns, past and present, from and against any and all Claims,
Actions, obligations, rights, Liens, contracts, covenants, debts, expenses (including reasonable attorneys’ fees), Losses, or Liabilities
of any nature whatsoever in law, equity, or otherwise, whether now known or unknown, concealed or hidden, suspected or unsuspected, primary
or secondary, direct or indirect, absolute or contingent (collectively, the “Seller Claims”), that any Seller Releasing
Party now has, or at any time had, or shall or may have in the future, in connection with any Seller Releasing Party’s direct or
indirect ownership or operation of the Business or any Transferred Assets, or as a counterparty to any contract or agreement with any
Transferred Entity or otherwise, in each case arising with respect to any matter occurring at or prior to the Closing; provided
that the foregoing waiver, release and discharge shall not apply to (a) any Seller Claim arising out of or relating to this Agreement
or any other Transaction Agreement or (b) any Seller Claim unrelated to the Business or the Transferred Assets. It is the intention
of Seller that such release be effective as a bar to each and every demand and Action hereinabove specified and in furtherance of such
intention, Seller, for itself and its Affiliates, its Subsidiaries (excluding the Transferred Entities) and all of their respective successors
and assigns, hereby expressly waives, effective as of the Closing, any and all rights and benefits conferred upon such Person by the
provisions of applicable Law and expressly agrees that this release will be given full force and effect according to each and all of
its express terms and provisions, including those related to unknown and unsuspected demands and Actions, if any, as those relating to
any other demands and Actions specified in this Section 13.22, but only to the extent such provision is applicable to releases
such as this.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, Seller
and Buyer have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.
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SELLER:
ELANCO ANIMAL HEALTH, INC. |
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By: |
/s/ Jeffrey N. Simmons |
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Name: Jeffrey N. Simmons
Title: President and Chief Executive Officer |
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BUYER:
INTERVET INTERNATIONAL B.V. |
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By: |
/s/ Michel Deinum |
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Name: Michel Deinum
Title: Director |
[Signature Page to Asset Purchase Agreement]
Exhibit A
Definitions
“Action”
means any Claim, action, suit, charge, complaint, audit, investigation, arbitration or proceeding by or before any Government Authority
or arbitrator.
“Affiliate”
means, with respect to any specified Person, any other Person that, at the time of determination, directly or indirectly through one
or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person; provided however, that
for the purposes of this Agreement (a) Seller shall not be deemed an Affiliate of Buyer, nor, after the Closing, of any Transferred
Entity and (b) after the Closing, Buyer shall be deemed an Affiliate of each of the Transferred Entities (and vice versa).
For the avoidance of doubt, prior to the Closing, the Transferred Entities shall be deemed Affiliates of Seller.
“Agreement”
means this Asset Purchase Agreement, dated as of February 5, 2024, by and between Seller and Buyer, including the Seller
Disclosure Schedules and the Exhibits, the Schedules and Annexes attached hereto, and all amendments to such agreement made in accordance
with Section 13.09.
“Anti-Corruption
Laws” means all applicable U.S. and non-U.S. Laws regarding corruption, including, without limitation, (i) the U.S.
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations issued thereunder, (ii) the UK Bribery
Act 2010 and (iii) any other applicable Law enacted to implement the OECD Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions.
“Antitrust Laws”
means the HSR Act, the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the Federal Trade Commission Act of 1914,
Council Regulation No. 139/2004 of the European Union, the UK Competition Act 1998, the Norwegian Competition Act, the Chilean Decree
Law 211, the Brazilian Competition Act, Vietnamese competition regulations and all other national, multinational, federal or state, domestic
or foreign, statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other applicable Laws that are designed
to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade, that relate to antitrust,
competition or market conditions through merger, acquisition or other transaction, that affect foreign investment, national security
or national interest of any jurisdiction or that otherwise are applicable to the Transactions.
“Applicable
Withholding Certificate” means the IRS Form W-9 and any IRS Form W-8, as applicable, to be delivered pursuant to
Section 3.02(a)(vii).
“Aqua
Health Field” means the diagnosis, prevention, palliation, mitigation, cure or treatment of any disease, disorder, syndrome
or condition (including pest infestation) in, or the enhancement or protection of the health or productivity of, or the enhancement or
facilitation of the production, breeding, holding, raising, cultivation or culture of, in each case, aquatic animals (excluding mammals,
terrestrial animals or humans).
“Bankruptcy and
Equity Exception” means the effect on enforceability of (a) any applicable Law relating to bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or preferential transfers, or similar Laws relating to or affecting creditors’ rights
generally and (b) subject, as to enforceability, to the general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).
“Business”
means Seller’s business of (a) manufacturing, packaging, distributing, producing, labeling, storing, using, transporting,
shipping, importing, exporting, registering, modifying, improving, formulating, testing, marketing, licensing, sale, offering for sale,
commercializing and exploiting of the Products and providing of customer services, in each case, in the Aqua Health Field but excluding
any general supply chain, corporate or back office services (the “Operating Business”), and (b) researching and
developing the Product Candidates in the Aqua Health Field the (“R&D Business”).
“Business Contractor”
means each independent contractor of the Seller Parties who is listed on Schedule A-1(a).
“Business Day”
means any day that is not a Saturday, a Sunday or other day on which commercial banks in the City of New York, New York are required
or authorized by Law to be closed.
“Business
Employee” means (a) each employee of any of the Seller Parties who is listed on Schedule A-1(b) (which
Schedule shall set out to the extent permitted by applicable Law, for each Business Employee: name or employee identification number,
salary, job function, job band, hire year, place of employment, and full-time or part-time status), (b) any employee hired after
the date of this Agreement by any of the Seller Parties to replace any person who qualifies under clause (a) to the extent not prohibited
by Section 6.01, and (c) any other employees mutually agreed by Buyer and Seller after the Agreement Date.
“Business Employee
Plan” means each Employee Plan that Seller or any of its Affiliates sponsors, or contributes to (or could be required to contribute
to) for the benefit of, any Business Employee, other than such plans or arrangements that are solely maintained by a Government Authority.
“Business Employee
Records” shall mean all books and personnel records relating to each Transferred Employee that are owned or controlled by or
in the possession of Seller or any of its Affiliates, to the extent permitted by applicable Law to be transferred to Buyer, with respect
to salary, job function, job band, variable compensation targets, social security number (or similar identification number), hire year,
full-time or part-time status, business mailing addresses and telephone numbers, employee training records and certifications, documents
pertaining to visa applications and sponsorship, and any performance, merit, or discipline records.
“Business Intellectual
Property” means all of the following owned or purported to be owned (in each case, solely or jointly with others) by any of
the Seller Parties: (a) all Registrable IP exclusively Used in the Business, including the Registrable IP set forth on Schedule 2.01(a)(iii)(A),
(b) all Software exclusively Used in the Business, and (c) all unregistered Intellectual Property (including any unregistered
Trademarks, logos and trade dress) exclusively Used in the Business. For the avoidance of doubt, Business Intellectual Property excludes
the Seller Names and Seller Marks.
“Business Labor
Agreement” means any contract, agreement, arrangement or practice (whether written or not) with or agreed with an Employee
Representative Body.
“Business Systems”
means all Software, Technology, computer hardware (whether general or special purpose), electronic data processing, information, record
keeping, communications, telecommunications, networks, interfaces, platforms, servers, peripherals, and computer systems, including any
outsourced systems and processes, that are owned or used by Seller or any of its Subsidiaries exclusively in the conduct of the Business.
“Business Technology”
means all of the following owned by any of the Seller Parties: (a) all Technology that is Related to the Business and (b) all
Data that is Related to the Business.
“Buyer Commingled
Information” means information contained in Commingled Records to the extent used exclusively in, relating exclusively to,
or arising, directly or indirectly, exclusively out of the operation or conduct of, the Business.
“Buyer Confidential
Information” means (a) all information disclosed by Buyer (or its Representatives or Affiliates) to Seller (or its Representatives
or Affiliates) in connection with this Agreement, any Transaction Agreement and the transactions contemplated hereby and thereby, (b) all
information to the extent relating to the Business, the Transferred Assets and the Assumed Liabilities, and (c) all memoranda, notes,
analyses, compilations, studies and other materials prepared by or for Seller (or any of its Representatives or Affiliates) to the extent
containing or reflecting the information in the preceding clauses (a) or (b). Notwithstanding the foregoing, Buyer Confidential
Information shall not include information that, at the time of disclosure by Buyer (or its Representatives or Affiliates) (i) is
generally available to the public or is otherwise in the public domain, (ii) is, or becomes, available from a source other than
Buyer (or its Representatives or Affiliates) that is not bound by any confidentiality obligation to Buyer, or (iii) is independently
developed by any Seller Party (or any of their respective Representatives or Affiliates).
“Buyer
Fundamental Representations” means the representations and warranties made in Section 5.01 (Formation and Authority
of Buyer) and Section 5.07 (Brokers).
“Buyer Material
Adverse Effect” means a material adverse effect on the ability of Buyer to timely consummate the Buyer Transactions or otherwise
perform its obligations under the Buyer Transaction Agreements.
“Buyer Transaction
Agreements” means this Agreement and each other Transaction Agreement to which Buyer or an Affiliate thereof is named as a
party on the signature pages thereto.
“Buyer Transactions”
means the transactions contemplated by the Buyer Transaction Agreements.
“Claim”
means, collectively, all rights, claims, cross claims, counterclaims and causes of action, whether class, individual or otherwise in
nature, under contract or in law or in equity, known or unknown, contingent or matured, liquidated or unliquidated and all rights and
remedies with respect thereto.
“Closing
Conditions” means conditions to the respective obligations of the Parties to consummate the transactions contemplated by this
Agreement, as set forth in Article X.
“Closing Statements”
means, collectively, the Estimated Closing Statement, the Proposed Final Closing Statement and the Final Closing Statement.
“Code”
means the U.S. Internal Revenue Code of 1986, as amended.
“Commingled Marketing
Materials” means the Specified Marketing Materials that are included in documents which also include portions that are not
Related to the Business.
“Commingled Records”
means books and records existing as of the Closing used non-exclusively in, or relating non-exclusively to, any Transferred Asset or
Assumed Liability, or arising, directly or indirectly, non-exclusively out of the operation or conduct of, the Business, excluding (a) communications
specifically relating to the Transaction Agreements and the transactions contemplated thereby, (b) Trade Secrets unrelated to the
Business, any Transferred Asset or any Assumed Liability, and (c) materials prepared for Seller’s board of directors that
are inextricably commingled with information unrelated to the Business, any Transferred Asset or any Assumed Liability.
“Confidentiality
Agreement” means the Confidentiality Agreement dated September 6, 2023, by and between Intervet Inc. (an Affiliate of
Buyer) and Seller, as the same may be amended from time to time in accordance with its terms.
“Consent”
means any consent, approval, clearance or authorization of any Person that is not an Affiliate of Seller or Buyer.
“contracts or agreements”
means any contract, agreement, obligation, lease, sublease, license, sublicense, sales or purchase order, promise, understanding, arrangement,
commitment or undertaking of any nature.
“Control”
means, as to any Person, the power (directly or indirectly through one or more intermediaries) to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities, by contracts or agreements or otherwise.
The terms “Controlled by,” “Controlled,” “under common Control with” and “Controlling”
shall have correlative meanings.
“COVID-19”
means COVID-19 or SARS-COV-2, including any future resurgence, evolutions, mutations or variants thereof.
“COVID-19 Measures”
means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down,
closure, safety or similar Law, binding directive or guidelines promulgated by any Government Authority, including the Centers for Disease
Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19, including any
Law passed by any Government Authority in response to COVID-19.
“Credit Agreement”
means that certain Credit Agreement dated as of August 1, 2020, by and among Seller, as borrower, Elanco US Inc., as co-borrower,
and the lenders party thereto from time to time, Goldman Sachs Bank USA, as term loan administrative agent, collateral agent and security
trustee, and JPMorgan Chase Bank, N.A., as revolver administrative facility agent.
“Current Liabilities”
means all Liabilities maturing within one (1) year that would, in accordance with GAAP, be classified on a consolidated balance
sheet as current liabilities.
“Current Service
Terms” means, for each Business Contractor, service fees that are at least equal to the service fees provided to the Business
Contractors immediately prior to the Closing and upon other terms and conditions that are substantially comparable in the aggregate with
those in effect as of the Closing Date.
“Data”
means databases and compilations, including all data and collections of data, including Personally Identifiable Information, whether
machine readable or otherwise.
“Data Room”
means the virtual data room established by Seller and maintained by Donnelley Financial Solutions with respect to the Business.
“Data Security Requirements”
means, collectively, all of the following to the extent relating to privacy, security, or security breach notification requirements:
(a) the Business’s own rules, policies, and procedures, and (b) all applicable Laws.
“Debt”
means, with respect to any Person the aggregate amount owed (including the outstanding principal amount, accrued or unpaid interest,
any other payment obligations, including prepayment penalties, premiums, breakage costs, fees, and other costs and expenses associated
with repayment), without duplication, in respect of, (a) indebtedness for borrowed money from third-party lending sources, whether
or not evidenced by bonds, debentures, notes or other similar instruments or debt securities; (b) amounts drawn under outstanding
letters of credit, banker’s acceptances, surety or performance bonds and the like; (c) currency or interest rate swaps, collars
or caps, forward currency or interest rate contracts, or other hedging arrangements; (d) obligations, contingent or otherwise, for
the deferred purchase price of goods or services, including “earn-outs”, “seller notes” and other similar obligations;
(e) obligations under conditional sale or other title retention agreements relating to property or assets purchased by such Person
(other than customary trade credit incurred in the ordinary course of business); (f) securitization, factoring or other similar
arrangements; and (g) obligations referred to in the foregoing of other Persons for the payment of which such Person is responsible
as obligor, guarantor, surety or otherwise, including any guarantee of such obligations.
“Employee Liabilities”
means (a) any and all Liabilities relating to Employee Plans and any trusts or other assets of funding vehicles attributable thereto,
in each case, arising at any time; (b) any and all Liabilities relating to Seller’s or any of its Affiliates’ employment
or engagement of employees, including, without limitation, the termination of such employment or engagement, whether under applicable
Law, contract or agreement, Employee Plan or otherwise (including any Liabilities associated with the employment of Transferred Employees
prior to the Closing); and (c) any employment or payroll Taxes with respect to any of the foregoing.
“Employee Plans”
means (a) all “employee benefit plans” (within the meaning of Section 3(3) of ERISA, whether or not subject
to ERISA), (b) all retirement, welfare benefit, bonus, commission, equity or equity-based, stock option, stock purchase, restricted
stock, incentive, supplemental retirement, deferred compensation, retiree health, life insurance, severance, Code Section 125 flexible
benefit, or vacation or other benefit or compensation plans, programs, policies, contracts, arrangements or agreements and (c) all
individual employment, retention, termination, severance or other similar agreements.
“Employee Representative
Body” means any union, works council, employee forum or other body recognized by any Seller Party for any information, consultation
or collective bargaining purposes in respect of the Business Employees.
“Environmental Law”
means any Law relating to human health or safety (with respect to exposure to Hazardous Materials), pollution, or protection of the environment,
including the use, handling, transportation, treatment, storage, Environmental Release or threat of Environmental Release of, or exposure
of any Person to, Hazardous Materials.
“Environmental Permit”
means any Permit that is required or issued by a Government Authority under any Environmental Law for the operation of the Business.
“Environmental Release”
means any release, spill, emission, leaking, pumping, pouring, injection, escaping, disposal, discharge, or dumping of any Hazardous
Material into or through the environment.
“ERISA”
means the Employee Retirement Income Security Act of 1974, and the rules and regulations promulgated thereunder.
“Estimated
Closing Statement” means a written statement setting forth (i) the Estimated Inventory Increase or Estimated Inventory
Decrease and (ii) the amount to be paid by Buyer to Seller (for the benefit of the Seller Parties) at Closing, prepared in accordance
with Section 3.03.
“Estimated Inventory”
means Seller’s good faith estimate of Inventory Amount as of the Effective Time.
“Estimated Inventory
Decrease” means Seller’s good faith estimate of the amount, if any, by which Target Inventory exceeds Estimated Inventory
set forth on the Estimated Closing Statement.
“Estimated Inventory
Increase” means Seller’s good faith estimate of the amount, if any, by which Estimated Inventory set forth on the Estimated
Closing Statement exceeds Target Inventory.
“Estimated Purchase
Price Adjustment” means the amount equal to the Estimated Inventory Increase (which shall be expressed as a positive amount)
or the Estimated Inventory Decrease (which shall be expressed as a negative amount), as applicable; provided that if the Estimated
Inventory Increase is zero (0), the Estimated Purchase Price Adjustment shall be zero (0).
“Ex-Im Laws”
means all applicable U.S. and non-U.S. Laws relating to export, reexport, transfer, and import controls, including, without
limitation: (a) the Export Administration Regulations, the International Traffic in Arms Regulations, the European Union and United
Kingdom Dual Use Regulations and Swiss and Norwegian dual-use export controls measures; (b) the customs and import Laws administered
by U.S. Customs and Border Protection and the customs laws and regulations of any other jurisdiction into which the Seller Parties
import merchandise; (c) and the anti-boycott Laws administered by the U.S. Department of Commerce, U.S. Department of the Treasury,
the European Union and the United Kingdom.
“Explorer
Intellectual Property Agreement” means the Explorer Intellectual Property Agreement, dated August 1, 2020, between
Bayer AG, Bayer Intellectual Property GmbH, Bayer CropScience AG, Bayer Pharma AG, Bayer HealthCare LLC, Bayer Australia Ltd., Bayer
New Zealand Ltd., Bayer S.p.A., Bayer Korea Ltd., Bayer Yakuhin Ltd., Bayer de Mexico S.A. de C.V., SC Bayer SRL, Romania, and Bayer
Vietnam Ltd., on the one hand, and Elanco US, Inc., Elanco Australasia Pty. Ltd., Elanco New Zealand, Elanco Italia S.p.A., Elanco
Korea Animal Health Co., Ltd., Elanco Japan K.K., Elanco Salud Animal, S.A. de C.V., Elanco Hungary Korlátolt Felelősségű
Társaság, Elanco Vietnam Company Limited, Bayer Animal Health GmbH and Elanco Animal Health, Inc., on the other hand.
“Facility Permits”
means the manufacturing and distribution licenses and any other Permits, in each case necessary to operate each of the facilities located
at the Transferred Real Property.
“Final
Closing Statement” means a written statement setting forth (i) the Final Inventory Increase or Final Inventory Decrease,
as applicable and (ii) the Final Purchase Price Adjustment and the Post-Closing Adjustment, each as finally determined pursuant
to Section 3.04.
“Final
Inventory” means the amount of Inventory Amount as of the Effective Time as finally determined pursuant to Section 3.04.
“Final Inventory
Decrease” means the amount (if any) by which Target Inventory exceeds Final Inventory.
“Final Inventory
Increase” means the amount (if any) by which Final Inventory exceeds Target Inventory.
“Final Purchase
Price Adjustment” means the amount equal to the Final Inventory Increase (which shall be expressed as a positive amount) or
the Final Inventory Decrease (which shall be expressed as a negative amount); provided that if the Final Inventory Increase is
zero (0), the Final Purchase Price Adjustment shall be zero (0).
“Fraud”
means with respect to any Party, an actual and intentional fraud with respect to the making of any of the representations or warranties
contained in this Agreement or any other Transaction Agreement, with the actual intent to deceive the other Party or induce such Party
to act or refrain from acting in reliance upon such representation or warranty, which other Party relies on and suffers damages as a
result thereof; provided, that such actual and intentional fraud of such Party specifically excludes any statement, representation
or omission made negligently or recklessly, or any constructive fraud or equitable fraud.
“GAAP”
means U.S. generally accepted accounting principles, as in effect from time to time.
“Governing Documents”
means, with respect to any particular Person: the articles or certificate of incorporation and the bylaws, the limited partnership agreement
and the certificate of limited partnership, the articles or certificate of organization or formation and the operating agreement, or
any other charter or similar document adopted or filed in connection with the creation, formation or organization of a Person, including
any amendment, modification or supplement thereto.
“Government Authority”
means any federal, national, state, provincial or local or any supra-national, international or multinational government, political
subdivision, governmental, regulatory or administrative authority, instrumentality, agency, body or commission, self-regulatory organization
or any court, tribunal, or judicial or arbitral body (public or private), including any stock exchange.
“Government Official”
means any official or employee of, or Person acting in an official capacity on behalf of, a Government Authority.
“Hazardous Materials”
means any substance, material or waste that is defined or regulated as “hazardous,” “toxic,” “dangerous,”
a “pollutant,” a “contaminant” or words of similar effect, or for which Liability or standards of conduct may
be imposed, under any applicable Environmental Law, including asbestos, polychlorinated biphenyls, per- and polyfluoroalkyl substances,
radioactive materials, lead, petroleum and petroleum by-products and distillates.
“HSR Act”
means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“Intellectual
Property” means all intellectual property and proprietary rights of any kind or nature, including all: (a) Patents, patent
applications, and patent rights, (b) copyrights, moral rights, mask work rights, database rights, rights in Data, rights in works
of authorship, and design rights, (c) Trademarks, (d) Trade Secrets, and (e) registrations, issuances, grants and
applications of or for any of the foregoing, and all renewals, restorations and extensions thereof, and (f) rights to bring an Action,
whether at law or in equity, for infringement, dilution, misappropriation or other impairment or violation of rights and to receive damages,
proceeds or other legal or equitable protections and remedies with respect to any of the foregoing.
“Interest Rate”
means the prevailing prime lending rate as published in The Wall Street Journal at the time that a payment expressly required by this
Agreement is due.
“Inventory”
means the materials or components (including raw materials, intermediates, excipients, active ingredients, bulk drug product and product
labeling and packaging materials and components), work-in-process, goods in transit and finished goods inventory with respect to any
products or product candidates owned or held by or on behalf of Seller or its Affiliates.
“Inventory Amount”
means the sum of the value of all Transferred Inventories determined in accordance with the Transaction Accounting Principles.
“IRS”
means the U.S. Internal Revenue Service.
“Key Product”
has the meaning set forth on Schedule A-2.
“Knowledge of Seller”
means the actual knowledge of the Persons set forth on Schedule A-3 after reasonable inquiry, which for purposes of Section 4.08
shall include the making of due inquiry of the Seller Parties’ outside Intellectual Property counsel (but, for clarity, shall
not require searches of records of or filing with any Government Authority, the obtaining of any legal opinion or other report or opinion
of outside experts or to conduct any “freedom to operate” analyses, in each case, not already searched, obtained or conducted).
“Labor Obligations”
means (i) any information, consultation, negotiation or consent processes with any Employee Representative Body which any of the
Seller Parties are required to comply with in connection with the Transaction, (ii) any obligations under the Business Labor Agreements
and (iii) any other legal or administrative requirements in relation to the transfer of the Business Employees’ employment
in connection with the Transaction.
“Law”
means any federal, national, state, provincial, local statute, law, act, ordinance, regulation, directive, rule, code, Order or other
requirement or rule of law (including common law) promulgated by a Government Authority, including the Veterinary Care Laws.
“Liabilities”
means any liability, debt, guarantee, claim, demand, expense, commitment or obligation (whether direct or indirect, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, or due or to become due) of every kind and description, including all costs and expenses
related thereto.
“Lien”
means any mortgage, deed of trust, pledge, hypothecation, security interest, license, sublicense, covenant not to sue, right of first
refusal, encumbrance, claim, lien, charge or any other encumbrance of any kind (other than transfer restrictions under applicable securities
Laws).
“Local
Transfer Agreement” means any local agreement or instrument of conveyance or assumption entered into or delivered pursuant
to Section 7.06 in connection with the transfer of any Transferred Assets to Buyer or for Buyer to assume the Assumed Liabilities,
in any jurisdiction where the Business is organized or operates (including, with respect to each Transferred Owned Real Property, a general
warranty deed (or local equivalent) in customary form and substance reasonably satisfactory to Seller and Buyer).
“Losses”
means all losses, damages, fines, fees, obligations, penalties, costs, expenses, and Liabilities actually suffered or incurred and paid
(including interest, court costs, reasonable attorneys’, accountants’ or other experts’ fees and out-of-pocket costs).
“Material
Adverse Effect” means any change, event, circumstance, development, occurrence, fact, condition, or effect having, or that
(a) have, individually or in the aggregate with all other changes, events, circumstances, developments, occurrences, facts, conditions,
or effects, a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Business
or (b) would reasonably be expected to prevent or materially impair or delay the ability of Seller to consummate the Seller Transactions
or otherwise perform its obligations under the Seller Transaction Agreements; provided however, that, solely for purposes of clause
(a) any adverse effect to the extent arising out of, resulting from or attributable to (i) an event or circumstances or series
of events or circumstances affecting (A) the U.S. (or any other country or jurisdiction where the Business or any Transferred
Entity operates) or the global economy generally or capital, financial, banking, credit or securities markets generally, including changes
in interest or exchange rates, (B) political conditions generally of the U.S. or any other country or jurisdiction in which
the Business or any Transferred Entity operates or (C) any industry generally in which the Business or any Transferred Entity operates
or in which Products are distributed, (ii) the negotiation, announcement or pendency of the Transactions (provided that the
exceptions in this clause (ii) shall not apply with respect to references to Material Adverse Effect in the representations and
warranties contained in Article IV the purpose of which are to address the consequences resulting from the execution, delivery,
and performance of this Agreement and the consummation of the transactions contemplated hereby), (iii) any changes in applicable
Law or GAAP, or accounting principles, practices or policies that any of the Seller Parties are required by Law to adopt, or the enforcement
or interpretation thereof, in each case with respect to the Business, (iv) actions specifically required to be taken or omitted
pursuant to this Agreement or actions taken or omitted to be taken at the express written request of Buyer, (v) the effect of any
action taken by Buyer or its Affiliates with respect to any transaction contemplated hereby, (vi) any acts of God, other similar
force majeure events or national or international calamities (whether or not caused by any Person), including any earthquakes,
hurricanes, tornadoes, floods, tsunami, or other natural disasters, health emergencies, sabotage, any armed hostilities or acts of war
(whether or not declared), act of terrorism, military actions, blockage or conflicts, or any escalation or worsening of any of the foregoing
conditions or responses of any Government Authority thereto, (vii) any failure to meet internal or published projections, estimates
or forecasts of revenues, earnings, or other measures of financial or operating performance for any period (provided that the
underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded), and (viii) the bankruptcy,
insolvency or other financial distress of any manufacturer, distributor, supplier or collaboration partner shall not, in any such case,
constitute or be deemed to contribute to a Material Adverse Effect, and otherwise shall not be taken into account in determining whether
a Material Adverse Effect has occurred or would be reasonably likely to occur; provided that any adverse effect arising out of,
resulting from or attributable to the foregoing clauses (i), (iii), and (vi) may be taken into account in determining whether a
Material Adverse Effect has occurred or would be reasonably likely to occur solely to the extent such adverse effect has a disproportionate
impact on the Business, relative to other similarly situated businesses in the same industry.
“Material Jurisdictions”
means the jurisdictions set forth on Schedule A-4.
“OFAC”
means the U.S. Department of Treasury, Office of Foreign Assets Control.
“Order”
means any order, writ, judgment, injunction, ruling, temporary restraining order, decree, stipulation, determination or award entered
by or with any Government Authority.
“Patents”
means (a) all patents, patent applications, invention disclosures and certificates of invention, (b) all reissues, reexaminations,
supplemental examinations, continuations, continuations-in-part, divisions, revisions, and extensions, including any supplemental protection
certificates and restorations, of or relating to any of the foregoing, and (c) all rights and priorities afforded under any Law
with respect to any of the foregoing.
“Permits”
means all permits, authorizations, licenses, Consents, registrations, concessions, qualifications, grants, franchises, certificates,
identification and approval numbers, notifications exemptions, variances, waivers, and filings issued or required by any Government Authority
under applicable Law.
“Permitted
Liens” means the following Liens: (a) Liens for Taxes, assessments or other governmental charges, assessments or levies
that are not yet due or payable or that are being contested in good faith and for which adequate reserves have been made in accordance
with GAAP, in each case such Liens will not be permitted as of the Closing unless an Assumed Liability, (b) statutory Liens of landlords
and Liens of carriers imposed by Law in the ordinary course of business which are not yet due and payable or that are being contested
in good faith, which, in each case, will not be a “Permitted Lien” as of the Closing unless such Lien is an Assumed Liability,
(c) warehousemen’s, mechanics’, materialmen’s, workmen’s, repairmen’s and other Liens imposed by Law
in the ordinary course of business which are not yet due and payable or that are being contested in good faith, which, in each case,
will not be a “Permitted Lien” as of the Closing unless such Lien is an Assumed Liability, (d) Liens incurred or deposits
made in the ordinary course of business consistent with past practice in connection with workers’ compensation, unemployment insurance
or other types of social security, (e) Liens affecting the Transferred Real Property as set forth on Schedule A-5, (f) encroachments
and other matters that would be shown in an accurate survey or physical inspection of such Transferred Real Property which are not materially
violated by the current use or occupancy of the Transferred Real Properties or the operation of the Business thereon, (g) zoning,
entitlement, building and other generally applicable land use and environmental restrictions by a Government Authority, which are not
materially violated by the current use or occupancy of the Transferred Real Properties or the operation of the Business thereon, (h) Liens
not created by Seller or any of its Subsidiaries that affect the underlying fee interest or any other superior interest in any Transferred
Leased Real Property or real property over which Seller or any if its Subsidiaries (with respect to the Business) have easement or other
property rights, which are not materially violated by the current use or occupancy of the Transferred Real Properties or the operation
of the Business thereon, (i) rights, terms or conditions of any Transferred Real Property Leases made available to Buyer (other
than if arising from a material breach of the Transferred Real Property Leases), and (j) in the case of Intellectual Property, Software,
Data and Technology, non-exclusive licenses granted by any of the Seller Parties to customers, suppliers or service providers in the
ordinary course of business consistent with past practices.
“Person”
means any natural person, general or limited partnership, corporation, company, trust, limited liability company, limited liability partnership,
firm, association or organization or other legal entity.
“Personally Identifiable
Information” means any information that specifically identifies, or could be reasonably be used to identify, any individual
whose information has been provided, directly or indirectly, to any Seller Party or Transferred Entity in connection with the conduct
of the Business, such as addresses, telephone numbers, health information, drivers’ license numbers, and government issued identification
numbers.
“Post-Closing Adjustment”
means the amount equal to the Final Purchase Price Adjustment minus the Estimated Purchase Price Adjustment.
“Pre-Closing Period”
means the period beginning on the Agreement Date and ending on the earlier of the Closing Date and the date that this Agreement is terminated
in accordance with its terms.
“Product Authorization”
means a Permit that is applicable to any Product or Product Candidate for the manufacturing, import, export, distribution, use, promotion
or sale of veterinary medicinal products (small molecules, biological entities and vaccines), pesticides, biocides, nutritionals, crop
pesticides, vaccines, biologics and other veterinary products, including medical devices, in the Aqua Health Field for one or more indications
(if applicable) or that is otherwise applicable to any Product or Product Candidate in a country or other regulatory jurisdiction, including
approval of New Animal Drug Applications (as such term is defined in the United States Food, Drug and Cosmetic Act) or any corresponding
foreign application, including, with respect to the European Union, the approval of a marketing authorization application filed with
the European Medicines Agency pursuant to the centralized approval procedure or with the applicable Government Authority of a country
in the European Economic Area with respect to the decentralized procedure or mutual recognition or any other national approvals.
“Product Authorization
Data” means any Data (including veterinary clinical trial or study Data and raw Data), information, reports or studies, summaries,
files, dossiers and all technical and other information contained therein, together with all amendments, supplements, and renewals thereto,
relating to a Product or Product Candidate (whether or not authorized by a Product Authorization), its excipients, active ingredients,
and packaging materials, and facilities that manufacture or distribute such product, excipients, active ingredients, and packaging materials,
and the dossiers underlying the facility license for such facilities (including its metabolites, impurities and degradates), including
(a) documentation (including agency submissions, responses and compilations of regulatory comments) relating to the qualification,
formulation, target animal safety, human food safety, efficacy, chemistry, manufacturing and controls, environmental assessment, and
other data and information generated in preparation and licensure to obtain or maintain any Permit necessary for the manufacturing, import,
export, distribution, use, promotion or sale of any Product or Product Candidate, (b) regulatory documentation maintained with respect
to any such Product or Product Candidate, including adverse event reports, complaint data, and other Data, (c) any written correspondence
from a Government Authority in respect of any such Permit, Product or Product Candidate, (d) literature safety reports and documents
relating to current good manufacturing practice issues, animal clinical trials, animal research, including laboratory and target animal
research and all veterinary master files related to the Product or Product Candidate (including those contained or referenced in any
such Product Authorization), (e) other dossiers or compilations necessary to obtain or maintain any such Product Authorization,
and (f) to the extent not already included above, lab notebook entries, reagents, antibodies, polymerase chain reaction primers,
cell lines, bacterial and viral strains, nucleic acid constructs, expression systems, adjuvants, assay methods, bioinformatics data and
analysis, amino acid and nucleic acid sequence files, viral isolates, tissue samples and challenge models relating to a Product. Notwithstanding
the foregoing, “Product Authorization Data” shall not include Data with respect to lufenuron to the extent related to Seller’s
Sentinel product.
“Product Candidates”
means the product candidates listed on Schedule A-6.
“Products”
means (a) the products listed on Schedule A-7, (b) with respect to the cold water products, all other products
used, or held for use, exclusively in the Aqua Health Field and (c) with respect to the warm water products, all other products
used, or held for use, primarily in the Aqua Health Field; provided that clauses (b) and (c) shall not include the products
listed in item 1 of Schedule 2.01(b)(xxi).
“Proposed Final
Closing Statement” means (a) a written statement setting forth the Proposed Final Purchase Price Adjustment or (b) a
written statement that Buyer proposed no changes to the Estimated Closing Statement, as applicable.
“Proposed Final
Inventory Decrease” means Buyer’s good faith estimate of the amount (if any) by which Target Inventory exceeds Final
Inventory set forth on the Proposed Final Closing Statement.
“Proposed Final
Inventory Increase” means Buyer’s good faith estimate of the amount (if any) by which Final Inventory exceeds Target
Inventory set forth on the Proposed Final Closing Statement.
“Proposed Final
Purchase Price Adjustment” means the amount equal to the Proposed Final Inventory Increase or the Proposed Final Inventory
Decrease, as applicable.
“Recovery Expenses”
means (a) any deductibles paid by the Indemnified Party or its Affiliates to obtain insurance coverage, (b) any reasonable
and documented out-of-pocket costs and expenses incurred by the Indemnified Party or its Affiliates in investigating, prosecuting, defending
and collecting amounts recovered under any such insurance coverage and (c) any increase to insurance premiums resulting directly
therefrom.
“Reference Exchange
Rate” means the exchange rate (a) published by Bloomberg (BFIX) referring to the exchange rate at 5:00 PM New York Time,
which is two (2) Business Days prior to the Closing Date or (b) if no rates are published on such day, on the latest day before
that day for which such rates are published.
“Registrable IP”
means Patents, registered Trademarks, Trademark applications, domain name registrations, social media handles, tags and identifiers,
copyright registrations and copyright applications.
“Related to the
Business” means (a) with respect to all tangible personal property of any kind (other than, for clarity, the books and
records and labeling, advertising, marketing, sales and promotional materials), including machinery, equipment, furniture, office equipment
and supplies, communications equipment, vehicles, leasehold improvements, goods, hardware, electronic devices (including computers) and
related equipment, repair, replacement and spare parts and tools, (x) physically located at the premises of any Transferred Real
Property at the Effective Time, including those that are necessary to perform Buyer’s obligations under the Transaction Agreements
(including the consummation of the Transactions), or (y) used exclusively in, arising exclusively out of, or exclusively relating
to, the operation or conduct of the Business, wherever located, except for those necessary to perform Seller’s obligations under
the Transaction Agreements (including the consummation of the Transactions), (b) with respect to all Intellectual Property, Software,
Technology and Data, (x) Used in or necessary for the operation of the tangible assets described in the immediately preceding clause
(a) (other than to the extent unrelated to the Aqua Health Field) or (y) exclusively Used in, arising exclusively out of or
exclusively relating to, or arising from the Business, and (c) for all other categories of assets other than those set forth in
clauses (a) and (b) above, including contracts and agreements, Permits, Product Authorizations and pending applications for
Product Authorizations, books and records and labeling, advertising, marketing, sales and promotional materials, (x) used primarily
in, or (y) arising, directly or indirectly, primarily out of, or primarily relating to, the operation or conduct of, the Business.
“Representative”
of a Person means the directors, officers, employees, advisors, agents, consultants, attorneys, accountants, investment bankers or other
representatives of such Person.
“Required
Approvals” means each of the Government Approvals set forth on Schedule 10.01(a).
“Restricted Country”
means Belarus, Cuba, Iran, North Korea, Russia, Sudan, Syria, Venezuela, and the Crimea region of Ukraine and so-called Donetsk
People’s Republic and Luhansk People’s Republic, Kherson, and Zaporizhia regions in Ukraine of Ukraine, or any jurisdiction
that is the target of a comprehensive embargo under Sanctions Laws.
“Retained Real Property”
means all real property owned, leased, subleased or licensed by a Seller Party, other than the Transferred Leased Real Property and the
Transferred Owned Real Property.
“Retention”
has the same meaning ascribed to such term in the R&W Policy.
“Sanctioned Person”
means any individual or entity that is the subject or target of sanctions or restrictions under Sanctions Laws or Ex-Im Laws, including:
(a) any individual or entity listed on any applicable U.S. or non-U.S. sanctions- or export-related restricted party list,
including, without limitation, OFAC’s Specially Designated Nationals and Blocked Persons List and the United Kingdom and European
Union lists of persons subject to financial sanctions; (b) any individual or entity located in, a blocked national of, resident
in, or organized under the Laws of a Restricted Country; (c) any individual or entity that is otherwise a target of or subject to
heightened restrictions under applicable Sanctions Laws or Ex-Im Laws; (d) or any entity that is, in the individually or in the
aggregate, fifty percent (50%) or greater owned, directly or indirectly, or otherwise controlled by a person or persons described
in clauses (a) through (d).
“Sanctions Laws”
means all applicable U.S. and non-U.S. Laws relating to economic or trade sanctions, including, without limitation, the Laws
administered or enforced by the United States (including by OFAC or the U.S. Department of State), the United Nations Security Council,
the European Union and the European Union Member States, the United Kingdom, Switzerland and Norway.
“Securities Act”
means the Securities Act of 1933.
“Seller Commingled
Information” means information contained in Commingled Records to the extent not used in, relating to, or arising, directly
or indirectly, out of the operation or conduct of, the Business.
“Seller Confidential
Information” means (a) all information disclosed by Seller (or its Representatives or Affiliates) to Buyer (or its Representatives
or Affiliates) in connection with this Agreement, any Transaction Agreement and the transactions contemplated hereby and thereby, excluding
all information to the extent relating to the Business, the Transferred Assets and the Assumed Liabilities, and (b) all memoranda,
notes, analyses, compilations, studies and other materials prepared by or for Buyer (or any of its Representatives or Affiliates) to
the extent containing or reflecting the information in the preceding clause (a). Notwithstanding the foregoing, Seller Confidential Information
shall not include information that, at the time of disclosure by Seller (or its Representatives or Affiliates) (i) is generally
available to the public or is otherwise in the public domain, (ii) is, or becomes, available from a source other than Seller (or
its Representatives or Affiliates) that is not bound by any confidentiality obligation to Seller, or (iii) is independently developed
by Buyer or its Affiliates (or any of their respective Representatives or Affiliates).
“Seller Disclosure
Schedules” means disclosure schedules dated as of the Agreement Date delivered by Seller to Buyer, and which form a part of
this Agreement.
“Seller Divesting
Entities” means any Affiliate of Seller that, as of immediately prior to the Effective Time, has any right, title or interest
in, to or under any Transferred Asset.
“Seller
Fundamental Representations” means the representations and warranties made in Section 4.01 (Formation and Authority
of the Seller Parties; Enforceability), Section 4.02(a) (No Conflict), the first sentence of Section 4.08(b) (Intellectual
Property title), Section 4.14 (Personal Property title), Section 4.15(a) (Real Property title)
and Section 4.16 (Brokers).
“Seller Intellectual
Property” means all Intellectual Property and/or Software that is owned or purported to be owned by any Seller Party other
than (a) the Business Intellectual Property, (b) any Intellectual Property, Technology, Software or Data included within the
Transferred R&D Assets, and (c) any Intellectual Property, Technology, Software or Data described in Section 2.01(a)(xvi).
“Seller Names and
Seller Marks” means the names or trademarks of Seller, or any Affiliate of Seller, that in each case use or contain “Elanco”
(in block letters or otherwise) or any transliteration or derivation thereof (collectively, the “Elanco Marks”), and
all logos or tag lines used therewith, and any domain name registrations and other source identifiers embodying any of the foregoing
Elanco Marks, either alone or in combination with other words, in each case, owned by Seller or any Affiliate of Seller and all other
Trademarks (other than Trademarks included in the Business Intellectual Property) that are owned or Controlled by Seller or any Affiliate
of Seller and that are Used in connection with the operation of the Business or with the Products or the Product Candidates immediately
prior to the Closing Date or that are included in the Specified Marketing Materials, the Transferred Books and Records or other Transferred
Assets, including those set forth in Schedule 7.01.
“Seller Technology”
means all Technology and Data that is owned or purported to be owned by any Seller Party other than the Business Technology.
“Seller Transaction
Agreements” means this Agreement and each other Transaction Agreement to which any Seller Party is named as a party on the
signature pages thereto.
“Seller Transactions”
means the transactions contemplated by the Seller Transaction Agreements.
“Shared Commingled
Information” means information contained in Commingled Records other than Buyer Commingled Information and Seller Commingled
Information.
“Shared Contracts”
means all contracts or agreements of any kind to which any of the Seller Parties, on the one hand, and one or more third parties, on
the other hand, are party, that relate in part, but not primarily, to the Business, including as set forth on Schedule A-8; provided
that “Shared Contracts” shall exclude any contracts or agreements underlying or relating to any Business Employee Plans,
leases of real or personal property, insurance policies or programs and staffing or employment agreement.
“Software”
means all (a) computer programs, including all software implementation of algorithms, models and methodologies, whether in source
code, object code, human readable form or other form, (b) descriptions, flow charts and other work products used to design, plan,
organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons
and icons and (c) all documentation including user manuals and other training documentation relating to any of the foregoing, in
each case (a)-(c), excluding Data.
“Subsidiary”
of any specified Person means any other Person of which such first Person owns (either directly or through one or more other Subsidiaries)
a majority of the outstanding equity securities or securities carrying a majority of the voting power in the election of the board of
directors or other governing body of such Person, and with respect to which entity such first Person is not otherwise prohibited contractually
or by other legally binding authority from exercising Control.
“Target Inventory”
means $49,000,000.
“Tax”
or “Taxes” means all U.S. federal, state, provincial, municipal, county, local or non-U.S. income, alternative,
excise, gross receipts, ad valorem, value-added, sales, use, employment, payroll, franchise, license, profits, gains, real or personal
property, estimated transfer, fees, levies, duties, tariffs, imposts, assessments, franchise, unclaimed property, escheat, payroll,
intangibles, stamp, registration, environmental, withholding or other taxes of any kind whatsoever (whether payable directly or by withholding),
in each case whether disputed or not, together with any interest and any penalties, additions to tax or additional amounts imposed by
any Taxing Authority with respect thereto.
“Tax Returns”
means all returns and reports (including elections, declarations, disclosures, schedules, estimates, claims for refunds and information
returns) required to be supplied to a Taxing Authority relating to the determination, assessment or collection of any Taxes.
“Taxing Authority”
means any U.S. federal, state or local or non-U.S. jurisdiction (including any subdivision and any revenue agency of a jurisdiction)
imposing Taxes and the agencies, if any, charged with the collection of such Taxes for such jurisdiction.
“Technology”
means, collectively, all technology, designs, procedures, models, discoveries, processes, techniques, know-how, research and development,
tools, materials, specifications, processes, inventions, improvements, and technology, other than Software and Data.
“Termination Fee”
means $55,000,000.
“third party”
means any Person who is not a Party to this Agreement or an Affiliate of a Party to this Agreement.
“Third Party Transaction
Proposal” means, other than the Transactions, any inquiry, proposal or offer from any Person relating to, or that could reasonably
be expected to lead to, any direct or indirect sale, license, disposition, transfer or acquisition of, or the grant of rights to any
third party with respect to, a material portion of the Transferred Assets or the Business. Notwithstanding the foregoing, “Third
Party Transaction Proposal” shall not include (i) any merger, consolidation or other business combination pursuant to
which all or more than 50% of the business, assets or divisions of Seller is combined with that of a potential acquiror, (ii) the
sale, transfer, exchange or other disposition of all or more than 50% of the business, assets, divisions or voting securities of Seller,
whether by way of merger or consolidation, reorganization, recapitalization or restructuring, tender or exchange offer, share exchange,
option or negotiated purchase, leveraged buyout, lease or license, partnership, joint or collaborative venture or otherwise, including
in each case any of the foregoing transactions with respect to Seller’s overall farm animal portfolio as long as the Business and
Transferred Assets are carved out of the scope of such transaction or (iii) any transactions involving the securities issued by
Seller.
“Trade
Secrets” means confidential and proprietary information, including rights relating to know-how or trade secrets, including
technical information, data, ideas, concepts, discoveries, methods, formulas, compositions, formulations, schematics, protocols, designs,
techniques, inventions (whether patentable or unpatentable), and other works, whether or not developed or reduced to practice, rights
in industrial property, customer, vendor, and prospect lists, and all associated information or databases, and other confidential or
proprietary information (including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical,
safety, quality control, preclinical and clinical data, improvements, processes, specifications), in each case that derives economic
value from not being generally known to other Persons who can obtain economic value from its disclosure.
“Trademarks”
means trademarks, service marks, trade names, service names, domain names, social media tags, handles and identifiers, trade dress, logos
and other identifiers of origin, source or quality, including all goodwill associated therewith, and all common law and statutory rights
in any of the foregoing, and all registrations and applications for registration thereof, all rights therein provided by international
treaties or conventions, and all reissues, extensions and renewals of any of the foregoing.
“Transaction Accounting
Principles” means those Transaction Accounting Principles set forth on Exhibit E.
“Transaction Agreements”
means this Agreement, the Transitional Manufacturing and Supply Agreement, the Intellectual Property License Agreement, the EVAH License
Agreement, the Explorer License Agreement, the Transitional Trademark License Agreement, the Transition Services Agreement, the Bill
of Sale, Assignment and Assumption Agreement, the Local Transfer Agreements, IP Assignment Agreement, the Lease Assignments, the
Data Sharing Agreement and the Pharmacovigilance Agreement, in each case including all exhibits and schedules thereto and all amendments
thereto made in accordance with the respective terms thereof.
“Transactions”
means the transactions contemplated by this Agreement and the other Transaction Agreements.
“Transfer Agreement”
means, collectively, the Bill of Sale, Assignment and Assumption Agreement, the IP Assignment Agreement and the Local Transfer Agreements.
“Transfer Regulations”
means European Council Directive 2001/23/EC or similar Laws applicable in any jurisdiction, or any other laws or regulations of any national,
state, provincial or federal government or local government in any jurisdiction (whether within or outside of the European Union) that
require the transfer of, or operate to transfer, between legal persons, the employment or engagement of, or the contracts of employment
or engagement of employees or workers on either the transfer of any undertaking or part of an undertaking or a service provision change.
“Transfer Taxes”
means (i) any use, transfer, excise, license, privilege, conveyance, land, customs, recording, registration, direct or indirect
real property transfer, documentary transfer stamp, and similar Tax together with any related fees, and (ii) any VAT that is not
recoverable (whether by credit or repayment from a Taxing Authority); provided that Transfer Taxes shall not include any VAT except
for irrecoverable VAT described in clause (ii) of this definition.
“Transferred
Books and Records” means all books, records, files and papers (or, in each case, any relevant portions thereof), whether in
hard copy or computer format, including Intellectual Property prosecution files, sales and promotional literature, medical materials,
training materials, manuals and data, sales and purchase correspondence, customer lists, lists of suppliers, quality control records
and manufacturing procedures, in each case to the extent Related to the Business or primarily related to the Transferred Assets or Assumed
Liabilities, other than any Tax Returns (other than Tax Returns exclusively of a Transferred Entity) and any Excluded Assets of the type
described in Section 2.01(b)(xiii) and Section 2.01(b)(xvi) and any Business Employee Records.
“Transferred Equity
Interests” means the issued and outstanding equity interests in the Transferred Entities.
“Transferred
Inventory” shall mean (a) with respect to Inventories other than lufenuron active ingredient, (i) all Inventories
that are physically located at, or being shipped or en route to, the premises of the Transferred Real Property as of the Effective Time,
excluding (A) Inventories purchased by Seller pursuant to a Shared Contract and (B) Inventories that are finished goods (whether
or not any quality control or release procedure is complete with respect thereof) of products other than the Products, (ii) all
Inventories that are finished goods (whether or not any quality control or release procedure is complete with respect thereof) of Products,
irrespective of physical location as of the Effective Time, and (iii) all Inventories purchased by any Seller Party pursuant to
an Assumed Contract as of immediately prior to the Effective Time; and (b) with respect to Inventories that are lufenuron active
ingredient, those Inventories set forth on Schedule A-9.
“Transferred Permits”
means all Permits (other than Product Authorizations) held by any Seller Party which are Related to the Business, including Permits with
respect to Products or Product Candidates that are not subject to any Product Authorization that is in full force and effect, the Facility
Permits and the Permits set forth on Schedule A-10; provided that the Transferred Permits shall not include any Permits
which may not be transferred in accordance with applicable Law.
“Transferred Prepaid
Expenses” means the pre-paid expenses of the Business set forth on Schedule A-11.
“Transferred Product
Authorizations” means the Product Authorizations and pending applications for Product Authorizations with respect to the Products
and held by any Seller Party and any amendments or supplements or renewals thereto; provided that the Transferred Product Authorizations
shall not include any Product Authorizations or pending applications the transfer of which would be prohibited by applicable Law.
“Transferred Real
Properties” means, collectively, the Transferred Owned Real Property and the Transferred Leased Real Property.
“U.S.”
means the United States of America.
“Used”
means used, practiced, held, licensed, sublicensed, reproduced, distributed, performed, displayed and otherwise exploited, made, had
made, advertised, promoted, marketed, offered for sale, sold, had sold, imported, exported and otherwise provided, and prepared modifications,
derivative works, improvements or enhancements or commercialized or legally disposed of products and services thereunder.
“VAT” means within
the European Union any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added
tax (Council Directive 2006/112/EC) and, outside the European Union, any similar tax levied by reference to value added, and any goods
and services, harmonized sales and other added value or sales taxes.
“Veterinary Care
Laws” means the United States Federal Food, Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.), the Virus-Serum-Toxin
Act, as amended by the 1985 Food Security Act, and any other laws and regulations administered by the United States Food and Drug Administration
(“FDA”) and the United States Department of Agriculture (“USDA”), including products of the Seller
Parties and any state, provincial, or other local government and foreign equivalents thereof, including any anti-kickback or anti-inducement
law or regulation applicable to the practice of veterinary medicine or animal food or feed.
“Accounting
Firm” |
Section 3.04(c) |
“Agreement
Date” |
Preamble |
“Antitrust
Law Impediment” |
Section 6.04(a) |
“Assumed
Accounts Receivable” |
Section 7.05 |
“Assumed
Contracts” |
Section 2.01(a)(ii) |
“Assumed
Liabilities” |
Section 2.01(c) |
“Available
Insurance Policies” |
Section 7.03(b) |
“Base
Purchase Price” |
Section 3.01 |
“Bill
of Sale, Assignment and Assumption Agreement” |
Section 3.02(a)(v) |
“Business
Insurance Policies” |
Section 4.18 |
“Buyer” |
Preamble |
“Buyer
Indemnified Parties” |
Section 12.02(a) |
“Buyer
Plans” |
Section 8.03(a) |
“Buyer
Portion of Shared Contracts” |
Section 2.02(b) |
“Capex
Budget” |
Section 6.01(a)(xii) |
“CBA” |
Section 4.11(a)(viii) |
“Claim
Threshold” |
Section 12.02(b)(iv) |
“Closing” |
Section 2.03 |
“Closing
Date” |
Section 2.03 |
“Closing
Payment” |
Section 3.03 |
“Cold
Water Material Customer” |
Section 4.20(a) |
“Cold
Water Material Supplier” |
Section 4.20(a) |
“Competitive
Business” |
Section 7.07(b) |
“Contracting
Parties” |
Section 13.16 |
“Coverage
Claims” |
Section 7.03(b) |
“Current
Employment Terms” |
Section 8.03(a)(x) |
“Data
Breach” |
Section 4.09(a) |
“Data
Sharing Agreement” |
Section 3.02(a)(xiii) |
“Delayed
Assumed Liability” |
Section 2.02(a) |
“Delayed
Transfer Employee” |
Section 8.02(d) |
“Delayed
Transferred Asset” |
Section 2.02(a) |
“Disclosing
Party” |
Section 7.14 |
“Disputed
Items” |
Section 3.04(c) |
“Effective
Time” |
Section 2.03 |
“Elanco
Marks” |
Exhibit A |
“Enforcement
Costs” |
Section 11.03(e) |
“Equity
Transfer” |
Section 2.05(a) |
“EVAH
License Agreement” |
Section 3.02(a)(iii) |
“Exchange
Act” |
Section 4.03 |
“Excluded
Assets” |
Section 2.01(b) |
“Excluded
Liabilities” |
Section 2.01(d) |
“Government
Approvals” |
Section 6.04(a) |
“Indemnified
Party” |
Section 12.04(a) |
“Indemnifying
Party” |
Section 12.04(a) |
“Insurance
Policies” |
Section 2.01(b)(x) |
“Intellectual
Property License Agreement” |
Section 3.02(a)(ii) |
“Intercompany
Obligation” |
Section 4.19 |
“IP
Assignment Agreements” |
Section 3.02(a)(vi) |
“IT
Migration” |
Section 6.09 |
“Lease
Assignments” |
Section 3.02(a)(ix) |
“Legal
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Section 6.03(b) |
“Local
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Section 3.08(a) |
“Material
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Section 4.11(a) |
“Material
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Section 4.20(b) |
“Material
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Section 4.20(b) |
“Migration
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Section 6.09 |
“Non-Compete
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Section 7.07(b) |
“Nonparty
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Section 13.16 |
“Non-Solicitation
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Section 7.07(a) |
“Old
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Section 8.06 |
“Omitted
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Section 7.12 |
“Operating
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Exhibit A |
“Outside
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Section 11.01(d) |
“Ownership
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Section 2.03 |
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Preamble |
“Pharmacovigilance
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Section 7.15 |
“Privileged
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Section 13.20 |
“Purchase
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Preamble |
“Seller
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“Seller
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Section 13.22 |
“Seller
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Section 12.03(a) |
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Preamble |
“Seller
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Section 2.02(b) |
“Seller
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Section 13.22 |
“Shared
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Section 2.02(b) |
“Specified
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Section 2.01(a)(xi) |
“Straddle
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Section 9.01 |
“Surviving
Provisions” |
Section 11.03(a) |
“Third
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Section 12.04(a) |
“TOGC” |
Section 9.03(d) |
“Transaction
Dispute” |
Section 13.11 |
“Transfer” |
Section 2.05(a) |
“Transfer
Date” |
Section 8.02(c) |
“Transfer
Plan” |
Section 6.07(a) |
“Transferred
Assets” |
Section 2.01(a) |
“Transferred
Contractor” |
Section 8.02(c) |
“Transferred
Employee” |
Section 8.02(c) |
“Transferred
Entity” |
Section 2.05(a) |
“Transferred
Leased Real Property” |
Section 2.01(a)(i)(A) |
“Transferred
Owned Real Property” |
Section 2.01(a)(i)(A) |
“Transferred
R&D Assets” |
Section 2.01(a)(xii) |
“Transferred
Real Property Leases” |
Section 2.01(a)(ii) |
“Transition
Services Agreement” |
Section 3.02(a)(iii) |
“Transitional
Manufacturing and Supply Agreement” |
Section 3.02(a)(x) |
“Transitional
Trademark License Agreement” |
Section 3.02(a)(iv) |
“Unaudited
Statements of the Business” |
Section 4.04(a) |
“Warm
Water Material Customer” |
Section 4.20(b) |
“Warm
Water Material Supplier” |
Section 4.20(b) |
“Willful
Breach” |
Section 11.03(b) |
“Work
Papers” |
Section 3.04(b) |
Exhibit 99.1
| Elanco
Animal Health
2500 Innovation Way
Greenfield, IN 46140
| |
Media Contact: Colleen Parr Dekker, +1.317.989.7011, colleen.dekker@elancoah.com
Investor Contact: Kathryn Grissom, +1.317.273.9284, kathryn.grissom@elancoah.com
Elanco Announces Sale of Aqua Business for
$1.3 Billion
Transaction reinforces Elanco’s commitment
to most significant value creation opportunities in pet health and livestock sustainability
Enables company to accelerate debt paydown
by $1.05B to $1.1B
GREENFIELD, Ind. (February 5, 2024) – Elanco
Animal Health Incorporated (NYSE: ELAN) today announced it has entered into an agreement to sell its aqua business to Merck Animal Health
(NYSE: MRK) for approximately $1.3 billion in cash, which represents approximately 7.4x the estimated 2023 revenue of the Elanco aqua
business.
“A strategic decision resulting from a disciplined process over
the last year, the sale of the aqua business allows us to prioritize our investments in larger markets with greater earnings potential
over the medium and long term, while creating balance sheet flexibility,” said Jeff Simmons, President and CEO of Elanco Animal
Health. “We are focused on delivering consistent high impact innovation and continue to have confidence in our late-stage pipeline
with six potential blockbuster products expected in the U.S. market by 2025. Further, we are advancing our next wave of development projects,
which we believe will contribute meaningful growth for Elanco through the second half of the decade. Importantly, the proceeds from this
transaction combined with improved free cash flow from the business, will accelerate deleveraging with net debt to adjusted EBITDA expected
in the high-3x to low-4x range by the end of 2025.”
The transaction reinforces Elanco’s focus and investment on
its most significant value creation opportunities, notably in pet health and livestock sustainability. In addition to the expected U.S.
approvals in the first half of 2024 for Credelio Quattro™, Zenrelia™ and Bovaer®, Elanco is pursuing a portfolio of clinical
development projects that the company expects to have differentiated profiles and blockbuster potential in significant markets with meaningful
growth and earnings potential. Elanco’s targeted areas of focus include next generation products for pet parasiticides, dermatology
and pain, as well as livestock sustainability. Additionally, the company is opportunistically pursuing platform-aligned targets, such
as monoclonal antibodies, and other major emerging spaces of high unmet need.
“We are excited for the acquisition of Elanco’s aqua products,
solutions as well as the capabilities and expertise the team brings to our business,” said Rick DeLuca, president, Merck Animal
Health. “We believe this acquisition, coupled with our commercial and scientific prowess, will deliver enhanced benefits for our
aqua customers. The addition of this innovative portfolio of cold water and warm water aqua products across vaccines, anti-parasitic
treatments, water supplements and nutrition, will establish Merck Animal Health as a leader in aqua.”
Transaction Details
Elanco’s aqua business includes products across both warm-water
and cold-water species, generating an estimated $175 million in revenue and approximately $92 million in adjusted EBITDA, excluding the
allocation of corporate costs, based on 2023 preliminary results. The divestiture includes current marketed brands, aqua R&D projects,
the transfer of manufacturing sites in Prince Edward Island, Canada and Dong Nai, Vietnam and approximately 280 commercial and manufacturing
employees.
Upon closing of the transaction, Elanco plans to use the expected
$1.05 billion to $1.1 billion of after-tax cash proceeds to pay down a portion of the Term Loan B debt. Elanco’s preliminary full
year 2023 results, which do not include the effect of the sale of the aqua business, project net debt to adjusted EBITDA to be slightly
below the midpoint of the company’s previous guidance range (5.5x to 5.8x). Giving pro forma effect to the transaction for the
full year 2023, including the expected debt paydown and excluding the EBITDA associated with the aqua business, the company estimates
the net leverage ratio would have been 0.6x to 0.7x lower, at or slightly below 5.0x. In 2024, with the anticipated debt paydown resulting
from the transaction and from cash generated by the base business, the company expects to end the year with net debt to adjusted EBITDA
in the mid-4x range. Further, the company expects net debt to adjusted EBITDA in high-3x to low-4x range by the end of 2025, driven by
innovation fueled growth and continued debt paydown from improving free cash flow.
The expected retirement of a portion of the Term Loan B debt will
result in reduced interest expense of approximately $65 million, or $0.11 of EPS, annually. For 2023, based on the midpoint of the company’s
previous adjusted EPS guidance ($0.91), net EPS dilution would be approximately $0.03, or about 3%, while the company will be able to
reduce net debt by approximately 20%.
The transaction, which is subject to regulatory approvals and customary
closing conditions and adjustments, is expected to close around mid-year. The Company plans to discuss the transaction further when it
releases its fourth quarter and full year fiscal 2023 financial results on February 26th, 2024.
BofA Securities, Inc. is serving as the company’s exclusive
financial advisor and White & Case LLP is serving as the company’s legal advisor in connection with the transaction.
Preliminary Full Year 2023 Results
This press release discusses estimated financial results for the full
year of 2023, which are preliminary, unaudited and represent the most recent current information available to company management.
The company’s actual results may differ from these estimated financial results, including due to the completion of its financial
closing procedures and final adjustments. The company expects to issue full financial results for the fourth quarter and full year 2023
on February 26, 2024.
About Elanco
Elanco Animal Health Incorporated (NYSE: ELAN) is a global leader
in animal health dedicated to innovating and delivering products and services to prevent and treat disease in farm animals and pets,
creating value for farmers, pet owners, veterinarians, stakeholders, and society as a whole. With nearly 70 years of animal health heritage,
we are committed to helping our customers improve the health of animals in their care, while also making a meaningful impact on our local
and global communities. At Elanco, we are driven by our vision of Food and Companionship Enriching Life and our Elanco Healthy Purpose™
Sustainability Initiatives – all to advance the health of animals, people, and the planet. Learn more at elanco.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the federal securities laws. These forward-looking statements include, without limitation, statements regarding the proposed
divestiture, including the timing of the divestiture, the expected financial impacts of the divestiture, plans for using the cash we
expect to receive in the divestiture, the impact of the divestiture on our business and financial results, expected growth in our business
and expected product launches and sales. There are a number of important factors that could cause actual events to differ materially
from those suggested or indicated by such forward-looking statements, including uncertainties as to the timing of the divestiture; the
inability of the parties to satisfy the conditions to closing the divestiture, including obtaining required regulatory approvals; the
effect of the announcement or pendency of the transaction on Elanco’s ability to retain and hire key personnel and maintain relationships
with customers, suppliers and other business partners; risks related to diverting management’s attention from our ongoing business
operations; our ability to recognize the expected financial and cash generation benefits of the transaction; the impact of disruptive
innovations and advances in veterinary medical practices, animal health technologies and alternatives to animal-derived protein; changes
in regulatory restrictions on the use of antibiotics in farm animals; the success of our research and development and licensing efforts;
unanticipated safety, quality of efficacy concerns and the impact of identified concerns associated with our products; the lack of availability
or significant increases in the cost of raw materials; risks related to the evaluation of animals; manufacturing problems and capacity
imbalances; and actions by regulatory bodies, including as a result of their interpretation of studies on product safety. For information
about other factors that could cause actual results to differ materially from forward-looking statements, please see the company’s
latest Form 10-K and Form 10-Qs filed with the Securities and Exchange Commission. Although we have attempted to identify important
risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause
actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this
press release. We caution you against relying on any forward-looking statements, which should also be read in conjunction with the other
cautionary statements that are included elsewhere in this press release. Any forward-looking statement made by us in this press release
speaks only as of the date thereof. Factors or events that could cause our actual results to differ may emerge from time to time, and
it is not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking statement,
whether as a result of new information, future developments or otherwise, except as may be required by law.
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