Exhibit 10.6

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as of September 24, 2018 (this
“Agreement”), is by and between Elanco Animal Health Incorporated, an Indiana
corporation (“Elanco”), and Eli Lilly and Company, an Indiana corporation (“Eli
Lilly”).

 

WHEREAS, Eli Lilly currently owns all of the issued and outstanding shares of
common stock, no par value per share, of Elanco (“Elanco Common Stock”);

 

WHEREAS, Eli Lilly intends for an offer and sale to the public of shares of
Elanco Common Stock (the “IPO”) to take place pursuant to a registration
statement on Form S-1 (the “IPO Registration Statement”);

 

WHEREAS, after the IPO, Eli Lilly may transfer shares of Elanco Common Stock to
holders of shares of Eli Lilly’s common stock by means of one or more
distributions by Eli Lilly to holders of shares of Eli Lilly’s common stock, one
or more offers to holders of Eli Lilly’s common stock to exchange their shares
of Eli Lilly common stock for shares of Elanco Common Stock, or any combination
thereof (the “Distribution”);

 

WHEREAS, from time to time, Eli Lilly may sell or offer to sell some or all of
the outstanding shares of Elanco Common Stock then owned directly or indirectly
by Eli Lilly, in one or more transactions Registered under the Securities Act;
and

 

WHEREAS, Elanco desires to grant to Eli Lilly the Registration Rights for the
Registrable Securities, subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
covenants and agreements of the parties hereto, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1                               Defined Terms.  As used in this Agreement, the
following terms shall have the following meanings:

 

“Action” means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any federal, state, local, foreign or
international Governmental Authority or any arbitration or mediation tribunal.

 

“Affiliate” shall mean, when used with respect to a specified Person, another
Person that controls, is controlled by, or is under common control with the
Person specified; provided, however, that, for purposes of this Agreement,
Elanco and its Subsidiaries shall not be considered to be “Affiliates” of Eli
Lilly and its Subsidiaries (other than Elanco and its Subsidiaries), and Eli
Lilly and its Subsidiaries (other than Elanco and its Subsidiaries) shall not be
considered to be “Affiliates” of Elanco or its Subsidiaries.  As used herein,
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the

 

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management and policies of such person, whether through the ownership of voting
securities or other interests, by contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which banking institutions doing business in New York, New York are authorized
or obligated by law or required by executive order to be closed.

 

“Convertible or Exchange Registration” has the meaning set forth in Section 2.7.

 

“Demand Registration” has the meaning set forth in Section 2.1(a).

 

“Distribution” has the meaning set forth in the recitals to this Agreement.

 

“Elanco” has the meaning set forth in the preamble to this Agreement and shall
include its successors, by merger, acquisition, reorganization or otherwise.

 

“Elanco Common Stock” has the meaning set forth in the recitals to this
Agreement.

 

“Elanco Public Sale” has the meaning set forth in Section 2.2(a).

 

“Elanco Notice” has the meaning set forth in Section 2.1(a).

 

“Elanco Takedown Notice” has the meaning set forth in Section 2.1(g).

 

“Eli Lilly” has the meaning set forth in the preamble to this Agreement and
shall include its successors, by merger, acquisition, reorganization or
otherwise.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and
any successor thereto, and any rules and regulations promulgated thereunder, all
as the same shall be in effect from time to time.

 

“Governmental Authority” means any nation or government, any state, municipality
or other political subdivision thereof, and any entity, body, agency,
commission, department, board, bureau, court, tribunal or other instrumentality,
whether federal, state, local, domestic, foreign or multinational, exercising
executive, legislative, judicial, regulatory, administrative or other similar
functions of, or pertaining to, government and any executive official thereof.

 

“Holder” shall mean Eli Lilly or any of its Subsidiaries, so long as such Person
holds any Registrable Securities, and any Person owning Registrable Securities
who is a permitted transferee of rights under Section 3.3.

 

“Initiating Holder” has the meaning set forth in Section 2.1(a).

 

“IPO” has the meaning set forth in the recitals to this Agreement.

 

“IPO Registration Statement” has the meaning set forth in the recitals to this
Agreement.

 

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“Loss” or “Losses” has the meaning set forth in Section 2.9(a).

 

“Person” means any individual, firm, limited liability company or partnership,
joint venture, corporation, joint stock company, trust or unincorporated
organization, incorporated or unincorporated association, government (or any
department, agency or political subdivision thereof) or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity.

 

“Piggyback Registration” has the meaning set forth in Section 2.2(a).

 

“Prospectus” means the prospectus included in any Registration Statement, all
amendments and supplements to such prospectus, including post-effective
amendments, and all other material incorporated by reference in such prospectus.

 

“Registrable Securities” means any Shares and any securities issued or issuable
directly or indirectly with respect to, in exchange for, upon the conversion of
or in replacement of the Shares, whether by way of a dividend or distribution or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation, exchange or other reorganization.  The term “Registrable
Securities” excludes any security (i) the sale of which has been effectively
Registered under the Securities Act and which has been disposed of in accordance
with a Registration Statement, (ii) that have been sold or disposed of pursuant
to Rule 144 (or any successor provision) under the Securities Act, (iii) that
may be sold pursuant to Rule 144 (or any successor provision) under the
Securities Act without being subject to the volume limitations in subsection
(e) of such rule or (iv) that have been sold by a Holder in a transaction in
which such Holder’s rights under this Agreement are not, or cannot be, assigned.

 

“Registration” means a registration with the SEC of the offer and sale to the
public of Elanco Common Stock under a Registration Statement.  The terms
“Register,” “Registered” and “Registering” shall have a correlative meaning.

 

“Registration Expenses” shall mean all expenses incident to Elanco’s performance
of or compliance with this Agreement, including all (i) registration,
qualification and filing fees; (ii) expenses incurred in connection with the
preparation, printing and filing under the Securities Act of the Registration
Statement, any Prospectus and any issuer free writing prospectus and the
distribution thereof; (iii) the fees and expenses of Elanco’s counsel and
independent accountants; (iv) the reasonable fees and expenses of not more than
one firm of attorneys acting as legal counsel for all of the Holders in the
relevant Registration and sale; (v) the fees and expenses incurred in connection
with the registration or qualification and determination of eligibility for
investment of the Shares under the state or foreign securities or blue sky laws
and the preparation, printing and distribution of a Blue Sky Memorandum
(including the related fees and expenses of counsel); (vi) the costs and charges
of any transfer agent and any registrar; (vii) all expenses and application fees
incurred in connection with any filing with, and clearance of an offering by,
Financial Industry Regulatory Authority, Inc.; (viii) expenses incurred in
connection with any “road show” presentation to potential investors;
(ix) printing expenses, messenger, telephone and delivery expenses; (x) internal
expenses of Elanco (including all salaries and expenses of employees of Elanco
performing legal or accounting duties); and (xi) fees and expenses of listing
any Registrable Securities on any securities exchange on which shares of

 

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Elanco Common Stock are then listed; but excluding any internal expenses of the
Holder, any underwriting discounts or commissions attributable to the sale of
any Registrable Securities and any stock transfer taxes.

 

“Registration Period” has the meaning set forth in Section 2.1(c).

 

“Registration Rights” shall mean the rights of the Holders to cause Elanco to
Register Registrable Securities pursuant to this Agreement.

 

“Registration Statement” means any registration statement of Elanco filed with,
or to be filed with, the SEC under the rules and regulations promulgated under
the Securities Act, including the related Prospectus, amendments and supplements
to such registration statement, including post-effective amendments, and all
exhibits and all material incorporated by reference in such registration
statement.

 

“Registration Suspension” has the meaning set forth in Section 2.1(d).

 

“SEC” has the meaning set forth in the recitals to this Agreement.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended, and any
successor thereto, and any rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time.

 

“Shares” means all shares of Elanco Common Stock that are beneficially owned by
Eli Lilly or any permitted transferee from time to time, whether or not held
immediately following the IPO.

 

“Shelf Registration” means a Registration Statement of Elanco for an offering to
be made on a delayed or continuous basis of Elanco Common Stock pursuant to
Rule 415 under the Securities Act (or similar provisions then in effect).

 

“Subsidiary” shall mean, with respect to any Person, any corporation, limited
liability company, joint venture or partnership of which such Person
(i) beneficially owns, either directly or indirectly, more than fifty percent
(50%) of (A) the total combined voting power of all classes of voting securities
of such Person, (B) the total combined equity interests or (C) the capital or
profit interests, in the case of a partnership, or (ii) otherwise has the power
to vote, either directly or indirectly, sufficient securities to elect a
majority of the board of directors or similar governing body.

 

“Takedown Notice” has the meaning set forth in Section 2.1(g).

 

“Underwritten Offering” means a Registration in which securities of Elanco are
sold to an underwriter or underwriters on a firm commitment basis for reoffering
to the public.

 

1.2                               General Interpretive Principles.  Whenever
used in this Agreement, except as otherwise expressly provided or unless the
context otherwise requires, any noun or pronoun shall be deemed to include the
plural as well as the singular and to cover all genders.  Whenever the words
“include,” “includes” or “including” are used in this Agreement, they shall be
deemed to

 

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be followed by the words “without limitation.”  Unless otherwise specified, the
terms “hereof,” “herein,” “hereunder” and similar terms refer to this Agreement
as a whole (including the exhibits hereto), and references herein to Articles
and Sections refer to Articles and Sections of this Agreement.  Except as
otherwise indicated, all periods of time referred to herein shall include all
Saturdays, Sundays and holidays; provided, however, that if the date to perform
the act or give any notice with respect to this Agreement shall fall on a day
other than a Business Day, such act or notice may be performed or given timely
if performed or given on the next succeeding Business Day.  References to a
Person are also to its permitted successors and assigns.  The parties have
participated jointly in the negotiation and drafting of this Agreement and, in
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as jointly drafted by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision of this Agreement.

 

ARTICLE II
REGISTRATION RIGHTS

 

2.1                               Registration.

 

(a)                                 Request.  Any Holder(s) of Registrable
Securities (collectively, the “Initiating Holder”) shall have the right to
request that Elanco file a Registration Statement with the SEC on the
appropriate registration form for all or part of the Registrable Securities held
by such Holder once such Registrable Securities are no longer subject to the
underwriter lock-up applicable to the IPO (which may be due to the expiration or
waiver of such lock-up with respect to such Registrable Securities) by
delivering a written request to Elanco specifying the number of shares of
Registrable Securities such Holder wishes to Register (a “Demand
Registration”).  Elanco shall (i) within five (5) days of the receipt of such
request, give written notice of such Demand Registration to all Holders of
Registrable Securities (the “Elanco Notice”), (ii) use its reasonable best
efforts to file a Registration Statement in respect of such Demand Registration
within forty-five (45) days of receipt of the request, and (iii) use its
reasonable best efforts to cause such Registration Statement to become effective
as expeditiously as possible.  Elanco shall include in such Registration all
Registrable Securities that the Holders request to be included within the ten
(10) days following their receipt of the Elanco Notice.

 

(b)                                 Limitations of Demand Registrations.  There
shall be no limitation on the number of Demand Registrations pursuant to
Section 2.1(a); provided, however, that the Holders may not require Elanco to
effect more than two (2) Demand Registrations, in the aggregate, in a twelve
(12)-month period (it being understood that the IPO Registration Statement shall
not be treated as a Demand Registration).  In the event that any Person shall
have received rights to Demand Registrations pursuant to Section 2.7 or
Section 3.3, and such Person shall have made a Demand Registration request, such
request shall be treated as having been made by the Holder(s).  The Registrable
Securities requested to be Registered pursuant to Section 2.1(a) must represent
(i) an aggregate offering price of Registrable Securities that is reasonably
expected to equal at least $10,000,000 (or its equivalent if the Registrable
Securities are to be offered in an exchange offer) or (ii) all of the remaining
Registrable Securities owned by the requesting Holder and its Affiliates.

 

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(c)                                  Effective Registration.  Elanco shall be
deemed to have effected a Registration for purposes of Section 2.1(b) if the
Registration Statement is declared effective by the SEC or becomes effective
upon filing with the SEC, and remains effective until the earlier of (i) the
date when all Registrable Securities thereunder have been sold and (ii) ninety
(90) days from the effective date of the Registration Statement (the
“Registration Period”).  No Registration shall be deemed to have been effective
if the conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such Registration are not satisfied by reason of
Elanco.  If, during the Registration Period, such Registration is interfered
with by any Registration Suspension, stop order, injunction or other order or
requirement of the SEC or other Governmental Agency, the Registration Period
shall be extended on a day-for-day basis for any period the Holder is unable to
complete an offering as a result of such Registration Suspension, stop order,
injunction or other order or requirement of the SEC or other Governmental
Agency.

 

(d)                                 Delay in Filing; Suspension of
Registration.  If the filing, initial effectiveness or continued use of a
Registration Statement would, as reasonably determined in good faith by Elanco,
require the disclosure of material non-public information that Elanco has a bona
fide business purpose to keep confidential and the disclosure of which would
have a material adverse effect on any active proposal by Elanco or any of its
Subsidiaries to engage in any material acquisition, merger, consolidation,
tender offer, other business combination, reorganization or other material
transaction, Elanco may, upon giving prompt written notice of such action to the
Holders, postpone the filing or effectiveness of such Registration
(a “Registration Suspension”) for a period not to exceed thirty (30) days;
provided, however, that Elanco may exercise a Registration Suspension no more
than two (2) times in any twelve (12)-month period.  Notwithstanding the
foregoing, no such delay shall exceed such number of days that Elanco determines
in good faith to be reasonably necessary.  Elanco shall (i) immediately notify
the Holders upon the termination of any Registration Suspension, (ii) amend or
supplement the Prospectus, if necessary, so it does not contain any untrue
statement or omission therein and (iii) furnish to the Holders such numbers of
copies of the Prospectus as so amended or supplemented as the Holders may
reasonably request.

 

(e)                                  Underwritten Offering.  If the Initiating
Holder so indicates at the time of its request pursuant to Section 2.1(a), such
offering of Registrable Securities shall be in the form of an Underwritten
Offering and Elanco shall include such information in the Elanco Notice.  In the
event that the Initiating Holder intends to distribute the Registrable
Securities by means of an Underwritten Offering, the right of any Holder to
include Registrable Securities in such Registration shall be conditioned upon
such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting.

 

(f)                                   Priority of Securities in an Underwritten
Offering.  If the managing underwriter or underwriters of a proposed
Underwritten Offering, including an Underwritten Offering from a Shelf
Registration, pursuant to this Section 2.1 informs the Holders with Registrable
Securities in the proposed Underwritten Offering in writing that, in its or
their opinion, the number of securities requested to be included in such
Underwritten Offering exceeds the number that can be sold in such Underwritten
Offering without being likely to have an adverse effect on the price, timing or
distribution of the securities offered or the market for the securities offered,
then the securities to be included in such Underwritten Offering shall be

 

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reduced to such number that can be sold without such adverse effect and the
securities to be included in such Underwritten Offering shall be: (i) first,
Registrable Securities requested by Eli Lilly to be included in such
Underwritten Offering; (ii) second, Registrable Securities requested by all
other Holders to be included in such Underwritten Offering on a pro rata basis;
and (iii) third, all other securities requested and otherwise eligible to be
included in such Underwritten Offering (including securities to be sold for the
account of Elanco) on a pro rata basis.

 

(g)                                  Shelf Registration.  At any time after the
date hereof when Elanco is eligible to Register the applicable Registrable
Securities on Form S-3 (or a successor form) and the Holder may request Demand
Registrations, the requesting Holders may request Elanco to effect a Demand
Registration as a Shelf Registration.  There shall be no limitations on the
number of Underwritten Offerings pursuant to a Shelf Registration; provided,
however, that the Holders may not require Elanco to effect more than four
(4) Underwritten Offerings, in the aggregate, in a twelve (12)-month period. 
Any Holder of Registrable Securities included on a Shelf Registration shall have
the right to request that Elanco cooperate in a shelf takedown at any time,
including an Underwritten Offering, by delivering a written request thereof to
Elanco specifying the number of shares of Registrable Securities such Holder
wishes to include in the shelf takedown (“Takedown Notice”).  Elanco shall
(i) within five (5) days of the receipt of a Takedown Notice for an Underwritten
Offering, give written notice of such Takedown Notice to all Holders of
Registrable Securities included on such Shelf Registration (“Elanco Takedown
Notice”), and (ii) take all actions reasonably requested by such Holder,
including the filing of a Prospectus supplement and the other actions described
in Section 2.4, in accordance with the intended method of distribution set forth
in the Takedown Notice as expeditiously as possible.  If the takedown is an
Underwritten Offering, Elanco shall include in such Underwritten Offering all
Registrable Securities that that the Holders request to be included within the
two (2) days following their receipt of the Elanco Takedown Notice.  If the
takedown is an Underwritten Offering, the Registrable Securities requested to be
included in a shelf takedown must represent (i) an aggregate offering price of
Registrable Securities that is reasonably expected to equal at least $10,000,000
or (ii) all of the remaining Registrable Securities owned by the requesting
Holder and its Affiliates. Notwithstanding anything else to the contrary in this
Agreement, the requirement to deliver a Takedown Notice and the piggyback rights
described in this Section 2.1(g) shall not apply to an Underwritten Offering
that constitutes a block trade.

 

(h)                                 SEC Form.  Except as set forth in the next
sentence, Elanco shall use its reasonable best efforts to cause Demand
Registrations to be Registered on Form S-3 (or any successor form), and if
Elanco is not then eligible under the Securities Act to use Form S-3, Demand
Registrations shall be Registered on Form S-1 (or any successor form) or
Form S-4 (in the case of an exchange offer).  If a Demand Registration is a
Convertible or Exchange Registration, Elanco shall effect such Registration on
the appropriate Form under the Securities Act for such Registrations.  Elanco
shall use its reasonable best efforts to become eligible to use Form S-3 and,
after becoming eligible to use Form S-3, shall use its reasonable best efforts
to remain so eligible.  All Demand Registrations shall comply with applicable
requirements of the Securities Act and, together with each Prospectus included,
filed or otherwise furnished by Elanco in connection therewith, shall not
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.

 

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2.2                               Piggyback Registrations.

 

(a)                                 Participation.  If Elanco proposes to file a
Registration Statement under the Securities Act with respect to any offering of
Elanco Common Stock for its own account and/or for the account of any other
Persons (other than a Registration (i) under Section 2.1 hereof, (ii) pursuant
to a Registration Statement on Form S-8 or Form S-4 or similar form that relates
to a transaction subject to Rule 145 under the Securities Act, (iii) pursuant to
any form that does not include substantially the same information as would be
required to be included in a Registration Statement covering the sale of
Registrable Securities, (iv) in connection with any dividend reinvestment or
similar plan, (v) for the sole purpose of offering securities to another entity
or its security holders in connection with the acquisition of assets or
securities of such entity or any similar transaction or (vi) in which the only
Elanco Common Stock being Registered is Elanco Common Stock issuable upon
conversion of debt securities that are also being Registered) (an “Elanco Public
Sale”), then, as soon as practicable (but in no event less than fifteen (15)
days prior to the proposed date of filing such Registration Statement), Elanco
shall give written notice of such proposed filing to each Holder, and such
notice shall offer such Holders the opportunity to Register under such
Registration Statement such number of Registrable Securities as each such Holder
may request in writing (a “Piggyback Registration”).  Subject to
Section 2.2(a) and Section 2.2(c), Elanco shall include in such Registration
Statement all such Registrable Securities that are requested to be included
therein within fifteen (15) days after the receipt of any such notice; provided,
however, that if, at any time after giving written notice of its intention to
Register any securities and prior to the effective date of the Registration
Statement filed in connection with such Registration, Elanco shall determine for
any reason not to Register or to delay Registration of such securities, Elanco
may, at its election, give written notice of such determination to each such
Holder and, thereupon, (i) in the case of a determination not to Register, shall
be relieved of its obligation to Register any Registrable Securities in
connection with such Registration, without prejudice, however, to the rights of
any Holder to request that such Registration be effected as a Demand
Registration under Section 2.1, and (ii) in the case of a determination to delay
Registration, shall be permitted to delay Registering any Registrable Securities
for the same period as the delay in Registering such other shares of Elanco
Common Stock.  No Registration effected under this Section 2.2 shall relieve
Elanco of its obligation to effect any Demand Registration under Section 2.1. 
If the offering pursuant to a Registration Statement pursuant to this
Section 2.2 is to be an Underwritten Offering, then each Holder making a request
for a Piggyback Registration pursuant to this Section 2.2(a) shall, and Elanco
shall use reasonable best efforts to coordinate arrangements with the
underwriters so that each such Holder may, participate in such Underwritten
Offering.  If the offering pursuant to such Registration Statement is to be on
any other basis, then each Holder making a request for a Piggyback Registration
pursuant to this Section 2.2(a) shall, and Elanco shall use reasonable best
efforts to coordinate arrangements so that each such Holder may, participate in
such offering on such basis.  Elanco’s filing of a Shelf Registration shall not
be deemed to be an Elanco Public Sale; provided, however, that the proposal to
file any Prospectus supplement filed pursuant to a Shelf Registration with
respect to an offering of Elanco Common Stock for its own account and/or for the
account of any other Persons will be an Elanco Public Sale unless such offering
qualifies for an exemption from the Elanco Public Sale definition in this
Section 2.2(a); provided, further that if Elanco files a Shelf Registration for
its own account and/or for the account of any other Persons, Elanco agrees that
it shall use its reasonable best efforts to include in such Registration
Statement such disclosures as may be required by Rule

 

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430B under the Securities Act in order to ensure that the Holders may be added
to such Shelf Registration at a later time through the filing of a Prospectus
supplement rather than a post-effective amendment.

 

(b)                                 Right to Withdraw.  Each Holder shall have
the right to withdraw such Holder’s request for inclusion of its Registrable
Securities in any Underwritten Offering pursuant to this Section 2.2 at any time
prior to the execution of an underwriting agreement with respect thereto by
giving written notice to Elanco of such Holder’s request to withdraw and,
subject to the preceding clause, each Holder shall be permitted to withdraw all
or part of such Holder’s Registrable Securities from a Piggyback Registration at
any time prior to the effective date thereof.

 

(c)                                  Priority of Piggyback Registration.  If the
managing underwriter or underwriters of any proposed Underwritten Offering of a
class of Registrable Securities included in a Piggyback Registration informs
Elanco and the Holders in writing that, in its or their opinion, the number of
securities of such class which such Holder and any other Persons intend to
include in such Underwritten Offering exceeds the number which can be sold in
such Underwritten Offering without being likely to have an adverse effect on the
price, timing or distribution of the securities offered or the market for the
securities offered, then the securities to be included in such Underwritten
Offering shall be reduced to such number that can be sold without such adverse
effect and the securities to be included in the Underwritten Offering shall be
(i) first, all securities of Elanco or any other Persons for whom Elanco is
effecting the Underwritten Offering, as the case may be, proposes to sell;
(ii) second, Registrable Securities requested by Eli Lilly to be included in
such Underwritten Offering; (iii) third, Registrable Securities requested by all
other Holders to be included in such Underwritten Offering on a pro rata basis;
and (iv) fourth, all other securities requested and otherwise eligible to be
included in such Underwritten Offering (including securities to be sold for the
account of Elanco) on a pro rata basis.

 

2.3                               Selection of Underwriter(s), Etc.  In any
Underwritten Offering pursuant to Section 2.1 or Section 2.2 that is not an
Elanco Public Sale, Eli Lilly, in the event Eli Lilly is participating, or the
Holders of a majority of the outstanding Registrable Securities being included
in the Underwritten Offering, in the event Eli Lilly is not participating, shall
select the underwriter(s), financial printer, solicitation and/or exchange agent
(if any) and Holder’s counsel for such Underwritten Offering. In any Elanco
Public Sale, Elanco shall select the underwriter(s), financial printer,
solicitation and/or exchange agent (if any) and Eli Lilly, in the event Eli
Lilly is participating, or the Holders of a majority of the outstanding
Registrable Securities being included in the Elanco Public Sale, in the event
Eli Lilly is not participating, shall select Holder’s counsel.

 

2.4                               Registration Procedures.

 

(a)                                 In connection with the Registration and/or
sale of Registrable Securities pursuant to this Agreement, through an
Underwritten Offering or otherwise, Elanco shall use reasonable best efforts to
effect or cause the Registration and the sale of such Registrable Securities in
accordance with the intended methods of disposition thereof and:

 

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(i)                                     prepare and file the required
Registration Statement including all exhibits and financial statements required
under the Securities Act to be filed therewith, and before filing with the SEC a
Registration Statement or Prospectus, or any amendments or supplements thereto,
(A) furnish to the underwriters, if any, and to the Holders, copies of all
documents prepared to be filed, which documents will be subject to the review of
such underwriters and such Holders and their respective counsel, and (B) not
file with the SEC any Registration Statement or Prospectus or amendments or
supplements thereto to which Holders or the underwriters, if any, shall
reasonably object;

 

(ii)                                  except in the case of a Shelf Registration
or Convertible or Exchange Registration, prepare and file with the SEC such
amendments and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all of the Shares Registered thereon until the
earlier of (A) such time as all of such Shares have been disposed of in
accordance with the intended methods of disposition set forth in such
Registration Statement or (B) the expiration of nine (9) months after such
Registration Statement becomes effective, plus the number of days of any
Registration Suspension;

 

(iii)                               in the case of a Shelf Registration, prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all Shares subject thereto
for a period ending on thirty-six (36) months after the effective date of such
Registration Statement;

 

(iv)                              in the case of a Convertible or Exchange
Registration, prepare and file with the SEC such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
of the Shares subject thereto until such time as the rules, regulations and
requirements of the Securities Act and the terms of any applicable convertible
securities no longer require such Shares to be Registered under the Securities
Act;

 

(v)                                 notify the participating Holders and the
managing underwriter or underwriters, if any, and (if requested) confirm such
advice in writing and provide copies of the relevant documents, as soon as
reasonably practicable after notice thereof is received by Elanco (A) when the
applicable Registration Statement or any amendment thereto has been filed or
becomes effective, when the applicable Prospectus or any amendment or supplement
to such Prospectus has been filed, (B) of any written comments by the SEC or any
request by the SEC or any other Governmental Authority for amendments or
supplements to such Registration Statement or such Prospectus or for additional
information, (C) of the issuance by the SEC of any stop order suspending the
effectiveness of such Registration Statement or any order preventing or
suspending the use of any preliminary or final Prospectus or the initiation or
threatening of any proceedings for such purposes, (D) if, at any time, the
representations and warranties of Elanco in any applicable underwriting
agreement cease to be true and correct in all material respects, and (E) of the
receipt by Elanco of any notification with respect to the

 

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suspension of the qualification of the Registrable Securities for offering or
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose;

 

(vi)                              subject to Section 2.1(d), promptly notify
each selling Holder and the managing underwriter or underwriters, if any, when
Elanco becomes aware of the occurrence of any event as a result of which the
applicable Registration Statement or the Prospectus included in such
Registration Statement (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein (in the case of such Prospectus and any preliminary Prospectus, in light
of the circumstances under which they were made) not misleading or, if for any
other reason it shall be necessary during such time period to amend or
supplement such Registration Statement or Prospectus in order to comply with the
Securities Act and, in either case as promptly as reasonably practicable
thereafter, prepare and file with the SEC, and furnish without charge to the
selling Holder and the managing underwriter or underwriters, if any, an
amendment or supplement to such Registration Statement or Prospectus which will
correct such statement or omission or effect such compliance;

 

(vii)                           use its reasonable best efforts to prevent or
obtain the withdrawal of any stop order or other order suspending the use of any
preliminary or final Prospectus;

 

(viii)                        promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters, if any,
and the Holders may reasonably request in order to permit the intended method of
distribution of the Registrable Securities; and make all required filings of
such Prospectus supplement or post-effective amendment as soon as reasonably
practicable after being notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;

 

(ix)                              furnish to each selling Holder and each
underwriter, if any, without charge, as many conformed copies as such Holder or
underwriter may reasonably request of the applicable Registration Statement and
any amendment or post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);

 

(x)                                 deliver to each selling Holder and each
underwriter, if any, without charge, as many copies of the applicable Prospectus
(including each preliminary Prospectus) and any amendment or supplement thereto
as such Holder or underwriter may reasonably request (it being understood that
Elanco consents to the use of such Prospectus or any amendment or supplement
thereto by each selling Holder and the underwriters, if any, in connection with
the offering and sale of the Registrable Securities covered by such Prospectus
or any amendment or supplement thereto) and such other documents as such selling
Holder or underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities by such Holder or underwriter;

 

(xi)                              on or prior to the date on which the
applicable Registration Statement is declared effective or becomes effective,
use its reasonable best efforts to register or qualify, and cooperate with each
selling Holder, the managing underwriter or underwriters, if any, and their
respective counsel, in connection with the registration or qualification of such

 

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Registrable Securities for offer and sale under the securities or “Blue Sky”
laws of each state and other jurisdiction of the United States as any selling
Holder or managing underwriter or underwriters, if any, or their respective
counsel reasonably request in writing and do any and all other acts or things
reasonably necessary or advisable to keep such registration or qualification in
effect for so long as such Registration Statement remains in effect and so as to
permit the continuance of sales and dealings in such jurisdictions of the United
States for so long as may be necessary to complete the distribution of the
Registrable Securities covered by the Registration Statement; provided that
Elanco will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to taxation or general service of process in any such jurisdiction
where it is not then so subject;

 

(xii)                           in connection with any sale of Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with each selling Holder and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive Securities Act legends; and to register such Registrable Securities
in such denominations and such names as such selling Holder or the
underwriter(s), if any, may request at least two (2) Business Days prior to such
sale of Registrable Securities; provided that Elanco may satisfy its obligations
hereunder without issuing physical stock certificates through the use of the
Depository Trust Company’s Direct Registration System;

 

(xiii)                        cooperate and assist in any filings required to be
made with the Financial Industry Regulatory Authority and each securities
exchange, if any, on which any of Elanco’s securities are then listed or quoted
and on each inter-dealer quotation system on which any of Elanco’s securities
are then quoted, and in the performance of any due diligence investigation by
any underwriter (including any “qualified independent underwriter”) that is
required to be retained in accordance with the rules and regulations of each
such exchange, and use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Securities;

 

(xiv)                       not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Registrable Securities
and provide the applicable transfer agent with printed certificates for the
Registrable Securities which are in a form eligible for deposit with The
Depository Trust Company; provided that Elanco may satisfy its obligations
hereunder without issuing physical stock certificates through the use of the
Depository Trust Company’s Direct Registration System;

 

(xv)                          obtain for delivery to and addressed to each
selling Holder and to the underwriter or underwriters, if any, opinions from
outside counsel and the general counsel or deputy general counsel for Elanco, in
each case dated the effective date of the Registration Statement or, in the
event of an Underwritten Offering, the date of the closing under the
underwriting agreement, and in each such case in customary form and content for
the type of Underwritten Offering;

 

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(xvi)                       in the case of an Underwritten Offering, obtain for
delivery to and addressed to Elanco and the underwriter or underwriters and, to
the extent requested, each selling Holder, a comfort letter from Elanco’s or
other applicable independent certified public accountants in customary form and
content for the type of Underwritten Offering, dated the date of execution of
the underwriting agreement and brought down to the closing under the
underwriting agreement;

 

(xvii)                    use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
security holders, as soon as reasonably practicable, but no later than ninety
(90) days after the end of the twelve (12)-month period beginning with the first
day of Elanco’s first quarter commencing after the effective date of the
applicable Registration Statement, an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act and the rules and regulations
promulgated thereunder and covering the period of at least twelve (12) months,
but not more than eighteen (18) months, beginning with the first month after the
effective date of the Registration Statement;

 

(xviii)                 provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by the applicable Registration
Statement from and after a date not later than the effective date of such
Registration Statement;

 

(xix)                       cause all Registrable Securities covered by the
applicable Registration Statement to be listed on each securities exchange on
which any of Elanco’s securities are then listed or quoted and on each
inter-dealer quotation system on which any of Elanco’s securities are then
quoted;

 

(xx)                          provide (A) each Holder participating in the
Registration, (B) the underwriters (which term, for purposes of this Agreement,
shall include a Person deemed to be an underwriter within the meaning of
Section 2(11) of the Securities Act), if any, of the Registrable Securities to
be Registered, (C) the sale or placement agent therefor, if any, (D) counsel for
such underwriters or agent, and (E) any attorney, accountant or other agent or
representative retained by such Holder or any such underwriter, as selected by
such Holder, the opportunity to participate in the preparation of such
Registration Statement, each Prospectus included therein or filed with the SEC,
and each amendment or supplement thereto, and to require the insertion therein
of material, furnished to Elanco in writing, which in the reasonable judgment of
such Holder(s) and their counsel should be included; and for a reasonable period
prior to the filing of such Registration Statement, upon receipt of such
confidentiality agreements as Elanco may reasonably request, make available upon
reasonable notice at reasonable times and for reasonable periods for inspection
by the parties referred to in (A) through (E) above, all pertinent financial and
other records, pertinent corporate documents and properties of Elanco that are
available to Elanco, and cause all of Elanco’s officers, directors and employees
and the independent public accountants who have certified its financial
statements to make themselves available at reasonable times and for reasonable
periods to discuss the business of Elanco and to supply all information
available to Elanco reasonably requested by any such Person in connection with
such Registration Statement as shall be necessary to enable them to exercise
their due diligence responsibility, subject to the foregoing;

 

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(xxi)                       to cause the executive officers of Elanco to
participate in customary “road show” presentations that may be reasonably
requested by the managing underwriter or underwriters in any Underwritten
Offering and otherwise to facilitate, cooperate with, and participate in each
proposed offering contemplated herein and customary selling efforts related
thereto; and

 

(xxii)                    take all other customary steps reasonably necessary to
effect the Registration, offering and sale of the Registrable Securities.

 

(b)                                 As a condition precedent to any Registration
hereunder, Elanco may require each Holder as to which any Registration is being
effected to furnish to Elanco such information regarding the distribution of
such securities and such other information relating to such Holder, its
ownership of Registrable Securities and other matters as Elanco may from time to
time reasonably request in writing.  Each such Holder agrees to furnish such
information to Elanco and to cooperate with Elanco as reasonably necessary to
enable Elanco to comply with the provisions of this Agreement.

 

(c)                                  Eli Lilly agrees, and any other Holder
agrees by acquisition of such Registrable Securities, that, upon receipt of any
written notice from Elanco of the occurrence of any event of the kind described
in Section 2.4(a)(vi), such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to such Registration Statement until such
Holder’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 2.4(a)(vi), or until such Holder is advised in writing
by Elanco that the use of the Prospectus may be resumed, and if so directed by
Elanco, such Holder will deliver to Elanco (at Elanco’s expense) all copies,
other than permanent file copies then in such Holder’s possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice.  In the event Elanco shall give any such notice, the period
during which the applicable Registration Statement is required to be maintained
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each seller of Registrable Securities covered by such Registration Statement
either receives the copies of the supplemented or amended Prospectus
contemplated by Section 2.4(a)(vi) or is advised in writing by Elanco that the
use of the Prospectus may be resumed.

 

2.5                               Holdback Agreements.  To the extent requested
in writing by the managing underwriter or underwriters of any Underwritten
Offering, Elanco agrees not to, and shall exercise commercially reasonable
efforts to obtain agreements (in the underwriters’ customary form) from its
directors, executive officers and beneficial owners of five percent (5%) or more
of Elanco Common Stock not to, directly or indirectly offer, sell, pledge,
contract to sell (including any short sale), grant any option to purchase or
otherwise dispose of any equity securities of Elanco or enter into any hedging
transaction relating to any equity securities of Elanco during the ninety (90)
days beginning on pricing date of such Underwritten Offering (except as part of
such Underwritten Offering or any Distribution or pursuant to registrations on
Form S-8 or S-4 or any successor forms thereto) unless the managing underwriter
or underwriters otherwise agrees to a shorter period.

 

2.6                               Underwriting Agreement in Underwritten
Offerings.  If requested by the managing underwriters for any Underwritten
Offering, Elanco shall enter into an underwriting

 

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agreement with such underwriters for such offering; provided, however, that no
Holder shall be required to make any representations or warranties to Elanco or
the underwriters (other than representations and warranties regarding such
Holder and such Holder’s intended method of distribution) or to undertake any
indemnification obligations to Elanco or the underwriters with respect thereto,
except as otherwise provided in Section 2.9 hereof.

 

2.7                               Convertible or Exchange Registration.  If any
Holder of Registrable Securities offers any options, rights, warrants or other
securities issued by it or any other Person that are offered with, convertible
into or exercisable or exchangeable for any Registrable Securities, the
Registrable Securities underlying such options, rights, warrants or other
securities shall be eligible for Registration pursuant to Section 2.1 and
Section 2.2 hereof (a “Convertible or Exchange Registration”).

 

2.8                               Registration Expenses Paid By Elanco.  In the
case of any Registration of Registrable Securities required pursuant to this
Agreement (including any Registration that is delayed or withdrawn) or proposed
Underwritten Offering pursuant to this Agreement, Elanco shall pay all
Registration Expenses regardless of whether the Registration Statement becomes
effective or the Underwritten Offering is completed.

 

2.9                               Indemnification.

 

(a)                                 Indemnification by Elanco.  Elanco agrees to
indemnify and hold harmless, to the full extent permitted by law, each Holder,
such Holder’s Affiliates and their respective officers, directors, employees,
advisors, and agents and each Person who controls (within the meaning of the
Securities Act or the Exchange Act) such Persons from and against any and all
losses, claims, damages, liabilities (or actions in respect thereof, whether or
not such indemnified party is a party thereto) and expenses, joint or several
(including reasonable costs of investigation and legal expenses) (each, a “Loss”
and collectively “Losses”) arising out of or based upon (i) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was Registered
under the Securities Act (including any final or preliminary Prospectus
contained therein or any amendment thereof or supplement thereto or any
documents incorporated by reference therein), or any such statement made in any
free writing prospectus (as defined in Rule 405 under the Securities Act) that
Elanco has filed or is required to file pursuant to Rule 433(d) of the
Securities Act, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus, preliminary Prospectus or free writing
prospectus, in light of the circumstances under which they were made) not
misleading; provided, however, that Elanco shall not be liable to any particular
indemnified party in any such case to the extent that any such Loss arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any such Registration Statement in reliance upon and
in conformity with written information furnished to Elanco by such indemnified
party expressly for use in the preparation thereof.  This indemnity shall be in
addition to any liability Elanco may otherwise have.  Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Holder or any indemnified party and shall survive the transfer of
such securities by such Holder.

 

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(b)                                 Indemnification by the Selling Holder.  Each
selling Holder agrees (severally and not jointly) to indemnify and hold
harmless, to the full extent permitted by law, Elanco, its directors, officers,
employees, advisors, and agents and each Person who controls Elanco (within the
meaning of the Securities Act and the Exchange Act) from and against any Losses
arising out of or based upon (i) any untrue or alleged untrue statement of a
material fact contained in any Registration Statement under which the sale of
such Registrable Securities was Registered under the Securities Act (including
any final or preliminary Prospectus contained therein or any amendment thereof
or supplement thereto or any documents incorporated by reference therein), or
any such statement made in any free writing prospectus that Elanco has filed or
is required to file pursuant to Rule 433(d) of the Securities Act, or (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
Prospectus, preliminary Prospectus or free writing prospectus, in light of the
circumstances under which they were made) not misleading to the extent, but, in
each case (i) or (ii), only to the extent, that such untrue statement or
omission is contained in any information furnished in writing by such selling
Holder to Elanco specifically for inclusion in such Registration Statement,
Prospectus, preliminary Prospectus or free writing prospectus.  In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder under the sale of
the Registrable Securities giving rise to such indemnification obligation.  This
indemnity shall be in addition to any liability the selling Holder may otherwise
have.  Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of Elanco or any indemnified party.

 

(c)                                  Conduct of Indemnification Proceedings. 
Any Person entitled to indemnification hereunder will (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification (provided that any delay or failure to so notify the
indemnifying party shall relieve the indemnifying party of its obligations
hereunder to the extent that it is materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any Person entitled to indemnification hereunder shall
have the right to select and employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (i) the indemnifying party has agreed in writing
to pay such fees or expenses, (ii) the indemnifying party shall have failed to
assume the defense of such claim within a reasonable time after receipt of
notice of such claim from the Person entitled to indemnification hereunder and
employ counsel reasonably satisfactory to such Person, (iii) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, or (iv) in the
reasonable judgment of any such Person, based upon advice of its counsel, a
conflict of interest may exist between such Person and the indemnifying party
with respect to such claims (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such Person).  If
such defense is not assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without its
consent, but such consent may not be unreasonably withheld, conditioned or
delayed.  If the indemnifying party assumes the defense, the indemnifying party
shall not have the right to settle such action without the consent

 

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of the indemnified party, which consent may not be unreasonably withheld,
conditioned or delayed.  No indemnifying party shall consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of an unconditional release from all liability in respect to such claim or
litigation.  It is understood that the indemnifying party or parties shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm admitted to practice in such jurisdiction at any
one time from all such indemnified party or parties unless (x) the employment of
more than one counsel has been authorized in writing by the indemnified party or
parties, (y) an indemnified party has reasonably concluded (based on advice of
counsel) that there may be legal defenses available to it that are different
from or in addition to those available to the other indemnified parties or (z) a
conflict or potential conflict exists or may exist (based on advice of counsel
to an indemnified party) between such indemnified party and the other
indemnified parties, in each of which cases the indemnifying party shall be
obligated to pay the reasonable fees and expenses of such additional counsel or
counsels.

 

(d)                                 Contribution.  If for any reason the
indemnification provided for in Section 2.9(a) or Section 2.9(b) is unavailable
to an indemnified party or insufficient to hold it harmless as contemplated by
Section 2.9(a) or Section 2.9(b), then the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a result of such Loss
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other hand. 
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission.  Notwithstanding anything in this
Section 2.9(d) to the contrary, no indemnifying party (other than Elanco) shall
be required pursuant to this Section 2.9(d) to contribute any amount in excess
of the amount by which the net proceeds received by such indemnifying party from
the sale of Registrable Securities in the offering to which the Losses of the
indemnified parties relate (before deducting expenses, if any) exceeds the
amount of any damages which such indemnifying party has otherwise been required
to pay by reason of such untrue statement or omission.  The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 2.9(d) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in this Section 2.9(d).  No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.  The amount paid or payable by an indemnified party hereunder
shall be deemed to include, for purposes of this Section 2.9(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against or appearing as a third
party witness in respect of, or otherwise incurred in connection with, any such
loss, claim, damage, expense, liability, action, investigation or proceeding. 
If indemnification is available under this Section 2.9, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in
Section 2.9(a) and Section 2.9(b) hereof without regard to the relative fault of
said indemnifying parties or indemnified party.

 

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2.10                        Reporting Requirements; Rule 144.  Elanco shall use
its reasonable best efforts to be and remain in compliance with the periodic
filing requirements imposed under the SEC’s rules and regulations, including the
Exchange Act, and any other applicable laws or rules, and thereafter shall
timely file such information, documents and reports as the SEC may require or
prescribe under Section 13 or 15(d) (whichever is applicable) of the Exchange
Act.  If Elanco is not required to file such reports during such period, it
will, upon the request of any Holder, make publicly available such necessary
information for so long as necessary to permit sales pursuant to Rule 144 or
Regulation S under the Securities Act, and it will take such further action as
any Holder may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without Registration under
the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 or Regulation S under the Securities Act, as such Rules may be
amended from time to time, or (b) any rule or regulation hereafter adopted by
the SEC.  From and after the date hereof through the first anniversary of the
date upon which no Holder owns any Registrable Securities, Elanco shall
forthwith upon request furnish any Holder (i) a written statement by Elanco as
to whether it has complied with such requirements and, if not, the specifics
thereof, (ii) a copy of the most recent annual or quarterly report of Elanco,
and (iii) such other reports and documents filed by Elanco with the SEC as such
Holder may reasonably request in availing itself of an exemption for the sale of
Registrable Securities without registration under the Securities Act.

 

2.11                        Other Registration Rights.  Elanco shall not grant
to any Persons the right to request Elanco to Register any equity securities of
Elanco, or any securities convertible or exchangeable into or exercisable for
such securities, whether pursuant to “demand,” “piggyback,” or other rights,
unless such rights are subject and subordinate to the rights of the Holders
under this Agreement.

 

ARTICLE III
MISCELLANEOUS

 

3.1                               Term.  This Agreement shall terminate upon
such time as there are no Registrable Securities, except for the provisions of
Section 2.8 and Section 2.9 and all of this Article III, which shall survive any
such termination.

 

3.2                               Notices.  All notices or other communications
under this Agreement shall be in writing and shall be deemed to be duly given
when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:

 

If to Eli Lilly, to:

 

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention: General Counsel

 

If to Elanco, to:

 

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention: General Counsel

 

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Any party may, by notice to the other party, change the address to which such
notices are to be given.

 

3.3                               Successors, Assigns and Transferees.  This
Agreement and all provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.  Elanco may assign this Agreement at any time in connection with a sale
or acquisition of Elanco, whether by merger, consolidation, sale of all or
substantially all of Elanco’s assets, or similar transaction, without the
consent of the Holders; provided that the successor or acquiring Person agrees
in writing to assume all of Elanco’s rights and obligations under this
Agreement.  A Holder may assign its rights and obligations under this Agreement
to any transferee that acquires at least five percent (5%) of the number of
Registrable Securities beneficially owned by Eli Lilly immediately following the
completion of the IPO and executes an agreement to be bound hereby in the form
attached hereto as Exhibit A, an executed counterpart of which shall be
furnished to Elanco.  Notwithstanding the foregoing, if such transfer is subject
to covenants, agreements or other undertakings restricting transferability
thereof, the Registration Rights shall not be transferred in connection with
such transfer unless such transferee complies with all such covenants,
agreements and other undertaking.

 

3.4                               GOVERNING LAW; NO JURY TRIAL.

 

(a)                                 This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of New York,
without regard to the conflict of laws principles thereof that would result in
the application of any law other than the laws of the State of New York.  EACH
OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH OF THE
PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE.

 

(b)                                 With respect to any Action relating to or
arising out of this Agreement, each party to this Agreement irrevocably
(a) consents and submits to the exclusive jurisdiction of

 

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the courts of the State of New York and any court of the United States located
in the Borough of Manhattan in New York City; (b) waives any objection which
such party may have at any time to the laying of venue of any Action brought in
any such court, waives any claim that such Action has been brought in an
inconvenient forum and further waives the right to object, with respect to such
Action, that such court does not have jurisdiction over such party; and
(c) consents to the service of process at the address set forth for notices in
Section 3.2 herein; provided, however, that such manner of service of process
shall not preclude the service of process in any other manner permitted under
applicable law.

 

3.5                               Specific Performance.  In the event of any
actual or threatened default in, or breach of, any of the terms, conditions and
provisions of this Agreement, the party or parties who are or are to be thereby
aggrieved shall have the right to seek specific performance and injunctive or
other equitable relief of its rights under this Agreement, in addition to any
and all other rights and remedies at law or in equity, and all such rights and
remedies shall be cumulative.

 

3.6                               Headings.  The article, section and paragraph
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.

 

3.7                               Severability.  If any provision of this
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party.  Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the parties.

 

3.8                               Amendment; Waiver.

 

(a)                                 This Agreement may not be amended or
modified and waivers and consents to departures from the provisions hereof may
not be given, except by an instrument or instruments in writing making specific
reference to this Agreement and signed by Elanco and the Holders of a majority
of the Registrable Securities; provided that if Eli Lilly or any of its
Affiliates owns Registrable Securities, no amendment to or waiver of any
provision in this Agreement will be effected without the written consent of Eli
Lilly if such amendment or waiver adversely affects the rights of Eli Lilly or
such Affiliates of Eli Lilly.

 

(b)                                 Waiver by any party of any default by the
other party of any provision of this Agreement shall not be deemed a waiver by
the waiving party of any subsequent or other default, nor shall it prejudice the
rights of the other party.

 

3.9                               Further Assurances.  Each of the parties
hereto shall execute and deliver all additional documents, agreements and
instruments and shall do any and all acts and things reasonably requested by the
other party hereto in connection with the performance of its obligations
undertaken in this Agreement.

 

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3.10                        Counterparts.  This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.  Execution of
this Agreement or any other documents pursuant to this Agreement by facsimile or
other electronic copy of a signature shall be deemed to be, and shall have the
same effect as, executed by an original signature.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.

 

 

ELI LILLY AND COMPANY

 

 

 

By:

/s/ David A. Ricks

 

 

Name:

David A. Ricks

 

 

Title:

Chairman, President and Chief Executive Officer

 

 

 

 

 

ELANCO ANIMAL HEALTH INCORPORATED

 

 

 

By:

/s/ Michael-Bryant Hicks

 

 

Name:

Michael-Bryant Hicks

 

 

Title:

Executive Vice President, General Counsel and Corporate Secretary

 

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EXHIBIT A

 

THIS INSTRUMENT forms part of the Registration Rights Agreement (the
“Agreement”), dated as of [·], 2018, by and among Elanco Animal Health
Incorporated, an Indiana corporation, and Eli Lilly and Company, an Indiana
corporation (“Eli Lilly”).  The undersigned hereby acknowledges having received
a copy of the Agreement and having read the Agreement in its entirety, and for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, hereby agrees that the terms
and conditions of the Agreement binding upon and inuring to the benefit of Eli
Lilly shall be binding upon and inure to the benefit of the undersigned and its
successors and permitted assigns as if it were an original party to the
Agreement.

 

IN WITNESS WHEREOF, the undersigned has executed this instrument on this day of
                  .

 

 

 

 

 

 

(Signature of Transferee)

 

 

 

 

 

 

 

Print Name

 

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