Exhibit 4.3  Confidential portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission  EXECUTION VERSION  9 October 2014  NOVARTIS AG  and  GLAXOSMITHKLINE PLC  DEED OF AMENDMENT  relating to the  SHARE AND BUSINESS SALE AGREEMENT  relating to the Vaccines Group, dated 22 April 2014 as amended and restated on 29 May 2014


Linklaters LLP One Silk Street London EC2Y 8HQ  Telephone (+44) 20 7456 2000 Facsimile (+44) 20 7456 2222  Ref L-220595


This Deed(the Deed) is made on 9 October 2014 between:  (1)NOVARTIS AG, a corporation (Aktiengesellschaft) incorporated in Switzerland whose registered office is at Lichtstrasse 35, 4056 Basel, Switzerland (the Seller); and  (2)GLAXOSMITHKLINE PLC, a public limited company incorporated in England and Wales whose registered office is at 980 Great West Road Brentford, Middlesex, TW8 9GS (the Purchaser),  each a party and together the parties.  Whereas:  (A)The Seller and the Purchaser entered into the Original Agreement (as defined below) on 22 April 2014 (the Signing Date).  (B)The Seller and the Purchaser entered into the Amended Agreement (as defined below) on 29 May 2014.  (C)The Seller and the Purchaser now wish to amend and supplement the Amended Agreement on the terms set out herein.  It is agreedas follows:  1Definitions and Interpretation  In this Deed, unless the context otherwise requires, the provisions in this Clause 1 apply.  1.1Incorporation of defined terms  Unless otherwise stated, terms defined in the Amended Agreement shall have the same meaning in this Deed.  1.2Definitions  Amended Agreement means the Original Agreement, as amended and restated on 29 May 2014;  Original Agreement means the Share and Business Sale Agreement relating to the Vaccines Group, dated 22 April 2014; and  1.3Interpretation clauses  1.3.1The principles of interpretation set out in Clause 1 of the Amended Agreement shall have effect as if set out in this Deed, save that references to this Agreement shall be construed as references to this Deed.  1.3.2References to this Deed include the Schedule.  2Amendment  2.1In accordance with Clauses 16.4.3 and 16.5.1 of the Amended Agreement, the parties agree that the Amended Agreement shall be amended and supplemented as set out in the Schedule to this Deed.  2.2The amendment and supplementation of the Amended Agreement pursuant to clause 2.1 shall take effect from the Signing Date, as if this Deed had been entered into on the  1


Signing Date. Therefore, upon this Deed being entered into, this Deed read together with the Amended Agreement shall supersede the Original Agreement in its entirety.  3Miscellaneous  3.1Each party represents and warrants that it has full power and authority to enter into this Deed and to perform its obligations under it.  3.2The provisions of Clauses 13, 16.2 to 16.5 and 16.11 to 16.15 of the Amended Agreement shall apply to this Deed as if set out in full in this Deed and as if references in those Clauses to this Agreement are references to this Deed and references to party or parties are references to parties to this Deed.  2


In witness whereofthis Deed has been delivered on the date first stated above.   Executed as a DEED   by


/s/ Marvelle   SullivanMarvelle Sullivan   andJonathan Emery on   behalf of
/s/ Jonathan EmeryNOVARTISAG  3


Executed   as a DEED by
)GLAXOSMITHKLINE PLCacting by its
)
/s/ Subesh Williamsduly   appointed attorney
)
(Signature   of attorney))in   the presence of:
)Witnesss   signature:

/s/   Richard HiltonName   (print):

Richard   HiltonOccupation:

Solicitor,   Slaughter and MayAddress:

One   Bunhill Row, London, EC1Y8YY  4


Schedule  Amendments to the Amended Agreement  1With effect from the Signing Date:  1.1the definitions of Business and Influenza Business in clause 1.1 of the Amended Agreement are deleted in their entirety and replaced with the following:  Business means the research, development, manufacture, sales, marketing and commercialisation of Vaccines for human use by the Sellers Group as recorded and reported by the Sellers Group from time to time under the Vaccines and Diagnostics segment as described in and consistent with the Novartis 2013 Annual Report and, with respect only to the Vaccines Institute for Global Health, through the Novartis Institutes for BioMedical Research, and including the fill-finish process undertaken at the Rosia Site and, to the extent relevant, the Siena Site, but excluding:  (i)the Influenza Business;  (ii)the Diagnostics Business; and  (iii)any Non-strategic Assets if and to the extent disposed of or transferred otherwise than to the Purchaser or a member of the Purchasers Group in accordance with this Agreement;  Influenza Business means the Cell-based Influenza Business, the Egg-based Influenza Business and the German Flu Operations, taken together;  1.2the following definitions are added to clause 1.1 of the Amended Agreement:  FCC Vaccines means bulk influenza Vaccines produced using cell-based technologies;  German Flu Operations means the operations for the manufacture of FCC Vaccines and MF59® adjuvant located at the Marburg Site;  1.3the words subject to the following sub-clause (iv) of this Clause 2.3.6, are added at the beginning of sub-clause (iii) of clause 2.3.6 of the Amended Agreement;  1.4a new sub-clause (iv) is added to clause 2.3.6 of the Amended Agreement as follows:  all out-of-pocket fees, costs and expenses which (x) are incurred by either party, whether before or after Closing, (y) specifically relate to the separation of the German Flu Operations from the Vaccines Group, and (z) are incurred in respect of works council consultations (including court fees, notary fees and works council legal fees) or physical separation at the Marburg Site (including IT systems workarounds, costs of new access cards and construction works), but excluding the parties own legal fees, shall, to the extent that such fees, costs and expenses arise solely as a result of such works council consultations or physical separation, be split equally between the Seller and the Purchaser. For the avoidance of doubt, this Clause 2.3.6(iv) shall not affect the cost allocation of wider measures necessary to effect the separation of the Business from the Influenza Business.  1.5existing sub-clauses (i) and (ii) of clause 2.3.8 of the Amended Agreement are renumbered (ii) and (iii) respectively, and a new sub-clause (i) is added as follows:  5


such Liabilities where the allocation has been, or is, otherwise agreed between the parties;  1.6the words subject to Clause 8.6 in clause 5.6.1 of the Amended Agreement are deleted and replaced with subject to Clauses 5.6.3 and 8.6;  1.7a new clause 5.6.3 is added to the Amended Agreement as follows:  Any Affiliate Contract between or among Sandoz GmbH or Novartis Pharma Stein AG on the one hand, and any Vaccines Group Company on the other hand, and entered into after the date hereof with the written consent of the Purchaser, shall not terminate prior to Closing in accordance with Clause 5.6.1, and shall transfer to the Purchaser upon Closing pursuant to Clause 2.3.1(viii).  1.8paragraph 3.4 of part B of part 1 of schedule 3 of the Amended Agreement is deleted in its entirety and replaced with the following:  3.4
Property   Description:
Behringwerke:   Emil-von-Behring-Straße 76, 35041 Marburg, GermanyBuilding M 481   (entire building)Date and parties   to Lease:
4/17 May 2004(1)        PharmaServ   Marburg GmbH & Co. KG(2)        Novartis   Vaccines and Diagnostics GmbH  1.9paragraphs 3.7, 3.8 and 3.9 of part B of part 1 of schedule 3 of the Amended Agreement are deleted in their entirety and replaced with the following:  3.7
Property   Description:
Behringwerke:   Emil-von-Behring-Straße 76, 35041 Marburg, GermanyBuilding H 043   (entire building)Date and parties   to Lease:
05   January 2012(1)        PharmaServ   Marburg GmBH & Co. KG(2)        Novartis   Vaccines and Diagnostics GmbH3.8
Property   Description:
Behringwerke: Emil-von-Behring-Straße   76, 35041 Marburg, GermanyBuilding H 001   (partially)Building H 007   (partially)Date and parties   to Lease:
19 / 20   July 2010(1)        PharmaServ   Marburg GmbH & Co. KG(2)        Novartis   Vaccines and Diagnostics GmbH3.9
Property   Description:
Behringwerke:   Emil-von-Behring-Straße 76, 35041 Marburg, Germany  6


Building Z24   (partially)Date and parties   to Lease:
21   December 2011(1)        PharmaServ   Marburg GmbH & Co. KG(2)        Novartis   Vaccines and Diagnostics GmbH  1.10the following definitions are added to paragraph 1.1 of part 3 of schedule 3:  German Carve-out Leases means the leases of the Company Leased Real Properties referred to at paragraphs 3.2 and 3.3 of Part B of Part 1 of Schedule 3 and any other lease(s) of the Company Leased Real Properties at the Marburg Site where the premises demised by such lease(s) are occupied by both the Business and the German Flu Operations;  German Flu Lease(s) has the meaning set out in paragraph 2.1 of this Part 3 of Schedule 3; and  German Vaccines Lease(s) has the meaning set out in paragraph 2.1 of this Part 3 of Schedule 3.  1.11the following paragraphs are added as paragraph 2 of part 3 of schedule 3:  2Specific provisions relating to the Marburg Site  2.1The Seller agrees to procure that Novartis Vaccines and Diagnostics GmbH shall use reasonable efforts to procure the contemporaneous surrender of the German Carve-out Leases and the grant of replacement leases, certain of which shall relate to those parts of the premises demised by the German Carve-out Leases which are used by the Business (the German Vaccines Lease(s)), and certain other of which shall relate to the balance of the premises demised by the German Carve-out Leases (the German Flu Lease(s)).  2.2If Novartis Vaccines and Diagnostics GmbH is able to procure the surrender of the German Carve-out Leases and the grant of the German Vaccines Lease(s) and the German Flu Lease(s) prior to Closing, it is acknowledged that:  2.2.1the German Flu Lease(s) shall be entered into by, or assigned prior to Closing to, an entity in the Sellers Group Retained Business;  2.2.2the German Flu Lease(s) shall not constitute lease(s) of Company Leased Real Property; and  2.2.3the demise of the relevant Company Leased Real Property set out in Part B of Part 1 of this Schedule 3 shall be deemed amended to exclude the premises demised by the German Carve-out Leases and the German Flu Lease(s) and to include reference to the premises demised by the German Vaccines Lease(s).  2.3If Novartis Vaccines and Diagnostics GmbH is not able to procure the surrender of the German Carve-out Leases and the grant of the German Vaccines Lease(s) and the German Flu Lease(s) prior to Closing, the Seller and the Purchaser shall use reasonable efforts to give practical effect to the above-described separation following Closing, and shall consider (without limitation):  7


2.3.1continued negotiations with the relevant Company Landlords to achieve a separation of each German Carve-out Lease into a German Vaccines Lease and a German Flu Lease, the latter of which shall be entered into by, or immediately assigned to, an entity in the Sellers Group Retained Business; or  2.3.2if a separation pursuant to paragraph 2.3.1 of this Part 3 of Schedule 3 is not achievable, a sub-lease of those parts of the premises demised by the German Carve-out Leases which are used by the German Flu Operations to an entity in the Sellers Group Retained Business.  2.4The Seller agrees to procure that Novartis Vaccines and Diagnostics GmbH shall not agree to any terms of any German Vaccines Lease(s) which are not substantially similar to the equivalent terms of the relevant underlying German Carve-out Lease without the consent of the Purchaser (not to be unreasonably withheld or delayed), and shall not agree to any terms of any German Flu Lease(s) which are not substantially similar to the equivalent terms of the relevant underlying German Carve-out Lease without the consent of the Seller (not to be unreasonably withheld or delayed).  2.5In connection with the implementation of the arrangements set out in this paragraph 2 of Part 3 of Schedule 3, the parties agree to work together prior to Closing (or, where paragraph 2.3 of this Part 3 of Schedule 3 applies, after Closing) to agree the provision of any site engineering services reasonably required by the other in order to operate those premises demised by the German Vaccines Lease(s) or the German Flu Lease(s), as applicable, in substantially the same manner as operated immediately prior to Closing. Such services may include, but are not limited to, supply of water, gas and electricity, the operation of clean utility systems (water for injection, clean steam, clean gases, etc.), facility services contract management and administration, preventive and corrective maintenance, and shutdown coordination.  1.12the words , the Influenza Business Transitional Services Agreement are deleted in their entirety from paragraphs 1.1.2 and 1.2.2 of schedule 15 of the Amended Agreement;  1.13the Illustrative Working Capital Statement in part 4 of schedule 16 of the Amended Agreement is deleted and replaced in its entirety with the following:  All amounts in USD thousands  Vaccines Group (excl. Flu business)Illustrative Net Working Capital as   per December 31, 2013BS01_110 Total inventories

400,663BS01_120 Trade receivables (3rd parties and AC)

335,387BS01_130 Receivables own BU

22,683BS01_140 Receivables other BUs

20,419BS01_610 Trade payables (3rd parties and AC)

(176,115
)BS01_620 Payables own BU

(18,295
)BS01_630 Payables other BUs

(40,675
)Illustrative Net Working Capital

544,067  8


1.14the Statement of Net Assets in part 2 of schedule 23 of the Amended Agreement is deleted and replaced in its entirety with the following:  All amounts in $ thousands  Column A

Column B

Column C

Column D

Column E

Column F

Column G

Column H

Column IVaccines   Dataroom   balance   sheetDec 31,   2013

Adjustments*

Vaccines   Divisional   ReportedStatement   of Net   Assets at   Dec 31,   2013

Vaccines   Statement   of Net   Assets of   the   Corporate   part of the   Vaccines   Group   Companies

Statement   of Net
Assets of   the part of   Novartis   Vaccines   Institute for   Global   Health

Excluded   items

Vaccines   Group   Statement   of Net   Assets   Dec 31,   2013

Influenza   business

Vaccines   Group   (excl.
Influenza   business)   Statement   of Net   AssetsDec 31,   2013BS01_010 Property, plant and equipment

















729,492BS01_020 Intangible assets

















1,853,635BS01_034 Financial assets_ associated companies

















777BS01_035 Financial assets - 3rd parties and loans   to AC

















17,981BS01_040 Financial assets &   subsidiaries//JV

















0BS01_042 Deferred tax assets

















78,951BS01_044 Other non-current non-financial assets

















23,129BS01_050 Total financing and loans to   subsidiaries / JV

















58,563BS01_110 Total inventories

















400,663BS01_120 Trade receivables (3rd parties and AC)

















335,387BS01_130 Receivables own BU

















21,818BS01_130 Receivables own BU  Corporate and   Institute for Global Health

















865BS01_140 Receivables other BUs

















20,419BS01_160 Other current assets (3rd parties and   AC)

















70,207BS01_161 Prepaid share-based payments







[***]









0BS01_180 Cash & cash equivalents

















4,393Total Assets

















3,616,280Bs01_511 Financial debt  long-term

















8BS01_520 Total financing and loans from   subsidiaries// JV

















680,633BS01_535 Deferred tax liabilities

















92,072BS01_540 Other non-current liabilities (3rd   parties and AC)

















54,071BS01_610 Trade payables (3rd parties and AC)

















176,115BS01_620 Payables own BU

















15,056BS01_620 Payables own BU  Corporate

















3,239BS01_630 Payables other BUs

















40,675BS01_651 Financial debt  Short-term (3rd parties   and AC)

















1,395BS01_660 Income taxes payable

















55,060BS01_670 Accrued and other current liabilities   (3rd parties and AC)

















238,671BS01_671 Accrued share-based payments

















0Total Liabilities

















1,356,995Net Assets

















2,259,285  9


* The difference for BS01_010 Property, plant and equipment relates to the plant built in Pernambuco Brazil, which had been excluded in the dataroom balance sheet.  The difference for BS01_160 Other current assets is composed of other current assets related to the Diagnostics Business, but which have not been transferred to Grifols; these were excluded in the dataroom balance sheet.  Line BS01_620 and Line BS01_630 have been combined into the line Intercompany payable in the dataroom balance sheet and items related to Pernambuco have been excluded.  The difference for BS01_670 Accrued and other current liabilities is composed of items related to the Diagnostics business, which have not been transferred to Grifols and were therefore excluded in the dataroom balance and items related to the Plant in Pernambuco, which have also been excluded in the dataroom balance sheet.  10


EXECUTION VERSION  29 May 2014  NOVARTIS AG  and  GLAXOSMITHKLINE PLC  DEED OF AMENDMENT AND RESTATEMENT  relating to the   SHARE AND BUSINESS SALE AGREEMENT  relating to the Vaccines Group, dated 22 April 2014    Linklaters LLP One Silk Street London EC2Y 8HQ  Telephone (+44) 20 7456 2000 Facsimile (+44) 20 7456 2222  Ref L-220595


This Deed(the Deed) is made on 29 May 2014 between:  (1)NOVARTIS AG, a corporation (Aktiengesellschaft) incorporated in Switzerland whose registered office is at Lichtstrasse 35, 4056 Basel, Switzerland (the Seller); and  (2)GLAXOSMITHKLINE PLC, a public limited company incorporated in England and Wales whose registered office is at 980 Great West Road Brentford, Middlesex, TW8 9GS (the Purchaser),  each a party and together the parties.  Whereas:  (A)The Seller and the Purchaser entered into the Original Agreement (as defined below) on 22 April 2014 (the Signing Date).  (B)In connection with the Original Agreement, the Seller provided the Original Disclosure Letter (as defined below) to the Purchaser.  (C)The Seller and the Purchaser now wish to amend and restate:  (i)the Original Agreement, in the form of the Amended Agreement (as defined below); and  (ii)the Original Disclosure Letter, in the form of the Amended Disclosure Letter (as defined below).  It is agreedas follows:  1Definitions and Interpretation  In this Deed, unless the context otherwise requires, the provisions in this Clause 1 apply.  1.1Incorporation of defined terms  Unless otherwise stated, terms defined in the Original Agreement shall have the same meaning in this Deed.  1.2Definitions  Amended Agreement means the Original Agreement, as amended and restated in the form set out in Schedule 1 to this Deed;  Amended Disclosure Letter means the Original Disclosure Letter, as amended and restated in the form set out in Schedule 2 to this Deed;  Original Agreement means the Share and Business Sale Agreement relating to the Vaccines Group, dated 22 April 2014; and  Original Disclosure Letter means the letter given on the Signing Date from the Seller to the Purchaser disclosing information constituting exceptions to the Sellers Warranties.  1.3Interpretation clauses  1.3.1The principles of interpretation set out in Clause 1 of the Original Agreement shall have effect as if set out in this Deed, save that references to this Agreement shall be construed as references to this Deed.  1.3.2References to this Deed include the Schedules.  1


2Amendment  2.1In accordance with Clauses 16.4.3 and 16.5.1 of the Original Agreement, the parties agree that the Original Agreement shall be amended and restated as set out in Schedule 1 to this Deed.  2.2The parties agree that the Original Disclosure Letter shall be amended and restated as set out in Schedule 2 to this Deed.  2.3The amendment and restatement of the Original Agreement pursuant to clause 2.1 and the amendment and restatement of the Original Disclosure Letter pursuant to clause 2.2 shall take effect from the Signing Date, as if the Amended Agreement and the Amended Disclosure Letter had been entered into on the Signing Date. Therefore, upon this Deed being entered into:  2.3.1the Amendment Agreement shall supersede the Original Agreement in its entirety; and  2.3.2the Amended Disclosure Letter shall supersede the Original Disclosure Letter in its entirety.  3Miscellaneous  3.1Each party represents and warrants that it has full power and authority to enter into this Deed and to perform its obligations under it.  3.2The provisions of Clauses 13, 16.2 to 16.5 and 16.11 to 16.15 of the Amended Agreement shall apply to this Deed as if set out in full in this Deed and as if references in those Clauses to this Agreement are references to this Deed and references to party or parties are references to parties to this Deed.  2


In witness whereofthis Deed has been delivered on the date first stated above.   Executed as a DEED   by


/s/ Roy   PapatheodorouRoy Papatheodorou   andJonathan Emery on   behalf of
/s/ Jonathan EmeryNOVARTISAG  3


Executed   as a DEED by
)GLAXOSMITHKLINE PLCacting by its
)
/s/   David Redfernduly   appointed attorney
)
(Signature   of attorney))in   the presence of:
)Witnesss   signature:

/s/   Claire JacksonName   (print):

Claire   JacksonOccupation:

SolicitorAddress:

One   Bunhill Row, London  4


TABLE OF SCHEDULES  (The following schedules and exhibits to the agreement identified above have been omitted in reliance upon Rule 601(b)(2) of Regulation S-K. The Registrant hereby undertakes to furnish such schedules and exhibits to the Commission supplementally upon request.)  Schedule No.

Schedule NameSchedule   1 - Schedule 3, Part 1

Company   Real PropertySchedule   1 - Schedule 3, Part 2

Transferred   Real PropertySchedule   1 - Schedule 5

Excluded   EmployeesSchedule   1 - Schedule 6

International   AssigneesSchedule   1 - Schedule 8, Part 3

List   of Products, Products under Registration and Pipeline ProductsSchedule   1 - Schedule 16, Part 3

Illustrative   Closing StatementSchedule   1 - Schedule 16, Part 4

Illustrative   Working Capital StatementSchedule   1 - Schedule 21

Key   EmployeesSchedule   1 - Schedule 22

Ongoing   Clinical TrialsSchedule   1 - Schedule 23, Part 2

Statement   of Net AssetsSchedule   2

Amended   Disclosure Letter  5


Schedule 1  Amended Agreement  6


CONFORMED   COPY  Dated 22 April 2014  as amended and restated on 29 May 2014 and further  amended on 9 October 2014  NOVARTIS AG  and  GLAXOSMITHKLINE PLC  SHARE AND BUSINESS SALE AGREEMENT  relating to the Vaccines Group  GRAPHICLinklaters LLP
One Silk Street
London EC2Y 8HQ
United KingdomTelephone (+44 20) 7456 2000Facsimile (+44 20) 7456 2222Ref L-220595


Share and Business Sale Agreement  This Agreementis made on 22 April 2014, amended and restated on 29 May 2014 and further amended on 9 October 2014.  between:  (1)NOVARTIS AG, a corporation (Aktiengesellschaft) incorporated in Switzerland whose registered office is at Lichtstrasse 35, 4056 Basel, Switzerland (the Seller); and  (2)GLAXOSMITHKLINE PLC, a public limited company incorporated in England and Wales whose registered office is at 980 Great West Road Brentford, Middlesex, TW8 9GS, United Kingdom (the Purchaser),  each a party and together the parties.  Whereas:  (A)the Seller and certain of the Sellers Affiliates, including the Vaccines Group Companies (as defined below), are engaged in the Business;  (B)as of the date of this Agreement, the Seller and certain of the Sellers Affiliates directly or indirectly own shares and other equity interests in the Vaccines Group Companies;  (C)the Seller has agreed to sell (or procure the sale of) the Vaccines Group (as defined below) and to assume the obligations imposed on the Seller under this Agreement;  (D)the Purchaser has agreed to purchase (or procure the purchase of) the Vaccines Group and to assume the obligations imposed on the Purchaser under this Agreement;  (E)the Seller and certain of the Sellers Affiliates are also engaged in the Influenza Business, and shall retain the Influenza Business following the date hereof (such Influenza Business not to be the subject of the transactions between the Seller and the Purchaser contemplated by this Agreement). The Seller may carry out a Re-organisation (as defined below) on or prior to Closing to facilitate separation of the business from the Influenza Business; and  (F)in connection with the transactions contemplated by this Agreement, the Purchaser and the Seller, or certain of their respective Affiliates, have or will enter into the Ancillary Agreements.  It is agreedas follows:  1Interpretation  In this Agreement, unless the context otherwise requires, the provisions in this Clause 1 apply:  1.1Definitions  2013 DCOGS means the highlighted sections of the COGS analysis in the Agreed Terms;  2013 Gross Profit means US$274 million (being the difference between net sales (excluding other revenue) of US$935 million and cost of goods sold of US$661 million);  2013 Income Statement means the 2013 income statement of the Vaccines Group and the Influenza Business in the Agreed Terms;  1


Accounts means, for each Vaccines Group Company, the audited financial statements of that Vaccines Group Company, prepared in accordance with legislation as in force and applicable to that Vaccines Group Company for the accounting reference period ended on the Accounts Date, comprising the balance sheet, the profit and loss account and the notes to the accounts;  Accounts Date means, in respect of:  (i)Chiron Behring Vaccines Private Limited, 31 March 2013; and  (ii)each other Vaccines Group Company, 31 December 2012;  Action means the taking of any steps by any Governmental Entity to seek a Judgment which would have the effect of preventing the consummation of the transactions contemplated by this Agreement by the Purchaser;  Affiliate means:  (i)with respect to any person (other than a party to this Agreement), any other person that Controls, is Controlled by or is under common Control with such person; or  (ii)with respect to a party to this Agreement, any other person that is Controlled by such party,  and Affiliates shall be interpreted accordingly;  Affiliate Contract means a Contract between or among any member of the Sellers Group (other than the Vaccines Group Companies) on the one hand, and any Vaccines Group Company on the other hand, but excluding any Ancillary Agreement;  Agreed Terms means, in relation to a document, such document in the terms agreed between the Seller and the Purchaser and signed for identification purposes by the Sellers Lawyers and the Purchasers Lawyers, with such alterations as may be agreed in writing between the Seller and the Purchaser from time to time;  Agreement means this share and business sale agreement;  Allocation has the meaning given to it in paragraph 1 of Schedule 13;  Allowance means any amount payable or repayable to customers in respect of a contractual allowance or discount due on the sales of products;  Ancillary Agreements means the Implementation Agreement, the Local Transfer Documents, the Disclosure Letter, the Tax Indemnity, the France Offer Letter, the France SPA, the Netherlands Offer Letter, the Netherlands APA, the Transitional Services Agreement, the Manufacturing, Supply and Distribution Agreement, the Influenza Business Manufacturing and Supply Agreement, the Purchaser Intellectual Property Licence Agreement, the Intellectual Property Assignment Agreements and the Pharmacovigilance Agreement;  Anti-Bribery Law means any Applicable Law that relates to bribery or corruption, including the US Foreign Corrupt Practices Act of 1977 and the UK Bribery Act 2010, in each case as amended, re-enacted or replaced from time to time;  Applicable Law means any supra-national, federal, national, state, municipal or local statute, law, ordinance, regulation, rule, code, order (whether executive, legislative, judicial or otherwise), judgment, injunction, notice, decree or other requirement or rule of law or  2


legal process (including common law), or any other order of, or agreement issued, promulgated or entered into by, any Governmental Entity or any rule or requirement of any national securities exchange, including all Healthcare Laws, and GCP, GLP, and GMP, each as may be amended from time to time;  Appointment Notice has the meaning given to it in paragraph 1.3 of Schedule 16;  Associated Person means, in relation to the Sellers Group, a person (including any director, officer, employee, agent or other intermediary) who performs services for or on behalf of any member of the Sellers Group or who holds shares of capital stock, partnership interests, limited liability company membership interests and units, shares, interest and other participations in any member of the Sellers Group (in each case when performing such services or acting in such capacity);  Assumed Liabilities means all Liabilities relating to the Vaccines Group Businesses other than: (i) the Excluded Liabilities; (ii) any Relevant Pension and Employment Liability; and (iii) any Liabilities in respect of Tax (other than Tax which has been provided for or reflected in the Closing Statement and Tax which has been assumed by the Purchasers group under an express provision of this Agreement);  Base Working Capital means, in respect of the Vaccines Group Companies and Vaccines Group Businesses, the amount shown in paragraph 4 of Part 2 of Schedule 16;  Benefit Plans means the US Benefit Plans and the Non-US Benefit Plans;  Beta Interferon Patent Rights means the Patents listed in Part 3 of Schedule 4 (the Beta Interferon Patents) together with the rights of Novartis Vaccines and Diagnostics, Inc. under the Merck 2012 Licence;  Business means the research, development, manufacture, sales, marketing and commercialisation of Vaccines for human use by the Sellers Group as recorded and reported by the Sellers Group from time to time under the Vaccines and Diagnostics segment as described in and consistent with the Novartis 2013 Annual Report and, with respect only to the Vaccines Institute for Global Health, through the Novartis Institutes for BioMedical Research, and including the fill-finish process undertaken at the Rosia Site and, to the extent relevant, the Siena Site, but excluding:  (i)the Influenza Business;  (ii)the Diagnostics Business; and  (iii)any Non-strategic Assets if and to the extent disposed of or transferred otherwise than to the Purchaser or a member of the Purchasers Group in accordance with this Agreement;  Business Day means a day which is not a Saturday, a Sunday or a public holiday in the canton of Basel-Stadt (Switzerland) or London;  Business Information means: (i) Commercial Information; (ii) Medical Information; and (iii) any other information Predominantly Related to the Business;  Business Sellers means the members of the Sellers Group (other than the Vaccines Group Companies) that own assets of or otherwise conduct any of the Vaccines Group Business;  3


Call for New Tender means any calls for a tender (including any tender for a basket of products), whether a new tender or the renewal of an existing tender, which includes the Products and which is published after Closing of which the Seller and/or any of the Sellers Affiliates become aware and which relates in whole or in part to the sale of Products;  Cash Balances means cash in hand or credited to any account with a financial institution and securities which are readily convertible into cash;  Cash Pooling Arrangements means the cash pooling arrangements of members of the Sellers Group in which the Vaccines Group Companies participate;  Cell-based Influenza Business means:  (i)the business conducted by the Sellers Group from time to time of research, development, manufacture, sales, distribution, marketing and commercialisation of:  (a)influenza Vaccines using cell-based technologies, including such business conducted at the Holly Springs Site;  (b)adjuvants conducted at the Holly Springs Site; and  (c)other Vaccines products to the extent that such business is conducted or contemplated to be conducted by the Sellers Group at the Holly Springs Site in accordance with its obligations to, or as requested by, the US government or regulatory authorities; and  (ii)technical development, manufacturing and supply of Enoxaparin, Copaxone or any other pharmaceutical or biological products (other than Vaccines) at the Holly Springs Site, including, but not limited to, pursuant to agreements or arrangements with Sandoz Inc. or its Affiliates;  Certificate means a certificate signed by a director, officer or an authorised signatory of the Seller in the form set out in Schedule 9, to be provided to the Purchaser immediately prior to Closing;  CFIUS means the Committee on Foreign Investment in the United States;  CFIUS Approval means written notice from CFIUS that any review or investigation of the Transaction under Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. App. Section 2170), has been concluded and there are no unresolved national security concerns with respect to the Transaction or the President shall have determined not to take action with respect to the Transaction;  Clinical Trials/Data Liability means any Liability arising out of, relating to or resulting from any breach of Applicable Law in connection with the conduct of, or reporting or data in relation to, clinical studies or trials (including post-approval studies) in relation to the Vaccines Group;  Closing means the completion of the sale of the Shares and the Vaccines Group Businesses pursuant to this Agreement and any Ancillary Agreement;  Closing Date means the date on which Closing takes place;  Closing Statement means the statement setting out the Working Capital, the Working Capital Adjustment, the Vaccines Group Companies Cash Balances, the Intra-Group Non-Trade Receivables, the Third Party Indebtedness, the Intra-Group Non-Trade Payables  4


and the Tax Adjustment, to be prepared by the Seller and agreed or determined in accordance with Clause 7 and Schedule 16;  COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985 of the United States, as amended, section 4980B of the Code, Title I Part 6 of ERISA, and any similar US state group health plan continuation law, together with its implementing regulations;  Code means the U.S. Internal Revenue Code of 1986, as amended, together with its implementing regulations;  Commercial Information means information that is, as of the Closing Date, owned by the Seller and/or its Affiliates and relates predominantly to the Commercialisation of any Products;  Commercial Practices Liability means any Liability arising out of, relating to or resulting from any breach of Applicable Law in connection with the Commercialisation of products;  Commercialise means to promote, market, distribute and/or sell a Product and Commercialising and Commercialisation shall be construed accordingly;  Companies means the companies, details of which are set out in paragraph 1 of Schedule 2, and Company means any one of them;  Company Lease has the meaning given to it in paragraph 1.1 of Part 3 of Schedule 3;  Company Leased Real Properties has the meaning given to it in paragraph 1.1 of Part 3 of Schedule 3;  Company Owned Real Properties has the meaning given to it in paragraph 1.1 of Part 3 of Schedule 3;  Company Real Properties means the Company Owned Real Properties and the Company Leased Real Properties, and Company Real Property means any one of them;  ConsumerContribution Agreement means the contribution agreement dated the date of this Agreement between Leo Constellation Limited, the Purchaser and the Seller, relating to the establishment of a joint venture between the Purchaser and the Seller;  Contract means any binding contract, agreement, instrument, lease, licence or commitment, excluding: (i) any lease or other related or similar agreements, undertakings and arrangements with respect to the leasing or ownership of the Properties (to which the provisions set out in Schedule 3 shall apply); and (ii) any contract with any Employee;  Contracts Liabilities means Liabilities relating to the: (i) Transferred Contracts; (ii) Transferred Intellectual Property Contracts; and (iii) all other contracts or parts thereof transferred, assigned, novated or assumed by the Purchaser pursuant to this Agreement or to which a Vaccines Group Company is or was a party or under which a Vaccines Group Company has any Liability, and a Contracts Liability shall mean any one of them;  Control means the power to direct the management and policies of a person (directly or indirectly), whether through ownership of voting securities, by Contract or otherwise (and the term Controlled shall be interpreted accordingly);  Co-Owned Vaccines Group Intellectual Property Right means any Vaccines Group Intellectual Property Right that is owned in part by a third party;  5


Copyright means any works of authorship, copyrights, database rights, mask work rights and registrations and applications therefor;  [***];  Decision means the issuing of any decision by a competition, antitrust, foreign investment,  national, local, supranational or supervisory or other government, governmental, quasi-governmental, trade, or regulatory body, agency, branch, subdivision, department, commission, official or authority, including any Tax Authority and any governmental department and any court or other tribunal, that would have the effect of prohibiting the acquisition of the Vaccines Group by the Purchaser;  Deferred Employee means any person to whom the Seller, any Vaccines Group Company or any other member of the Sellers Group has made an offer of employment for a role in the Business (as carried on by the Vaccines Group) in compliance with Clause 5 and whose employment in the Business (as carried on by the Vaccines Group) will take effect on a date following the Closing Date, save that no person shall become a Deferred Employee unless and until the Seller has provided to the Purchaser a copy of the offer letter setting out the agreed principal terms of employment and/or employment agreement (if executed) applicable to such person;  Diagnostics Business means the human blood and blood products diagnostics business (and certain related activities) sold by Novartis Vaccines and Diagnostics Inc. and its affiliates to G-C Diagnostics Corp. pursuant to a share and asset purchase agreement dated 10 November 2013;  Diagnostics GESA means the Global Employee Services Agreement and Amendment No. 3 to Share and Asset Purchase Agreement dated as of 9 January 2014 by and between Novartis Vaccines and Diagnostics, Inc., Novatis Corporation, G-C Diagnostics Corp., and Grifols, S.A.;  Diagnostics TSA Liabilities means any Liability arising out of, relating to or resulting from the Diagnostics TSA;  Diagnostics TSA means the Transition Services Agreement dated as of 9 January 2014 between Novartis Vaccines and Diagnostics, Inc. and G-C Diagnostics Corp.;  Disclosure Letter means the letter dated on the same date as this Agreement from the Seller to the Purchaser disclosing information constituting exceptions to the Sellers Warranties;  Draft Closing Statement has the meaning given to it in Clause 7.1;  Effective Time means 11.59 p.m. (local time in the relevant location) on the Closing Date or, if the Closing Date is not the last day of a month but the first Business Day of a month, 11.59 p.m. on the last day of the immediately preceding month;  Egg-based Influenza Business means the business conducted by the Sellers Group from time to time of research, development, manufacture, sales, distribution, marketing and commercialisation of influenza Vaccines and other products using egg-based technologies and related adjuvant technologies;  Employee Benefit Indemnification Amount has the meaning given to it in Schedule 12;  Employee Benefits has the meaning given to it in Schedule 12;  6


Employees means the Vaccines Business Employees and the Vaccines Group Company Employees, and Employee means any one of them;  Encumbrance means any claim, charge, mortgage, lien, option, equitable right, power of sale, pledge, hypothecation, usufruct, retention of title, right of pre-emption, right of first refusal or other security interest of any kind or an agreement, arrangement or obligation to create any of the foregoing, and for the avoidance of doubt, shall exclude any licences of or claims of infringement relating to, Intellectual Property Rights;  Environmental Laws means any and all Applicable Law regulating or imposing Liability or standards of conduct concerning pollution or protection of the environment (including surface water, groundwater or soil);  Environmental Liabilities means any Liability arising out of, relating to or resulting from any Environmental Law or environmental, health or safety matter or condition, including natural resources, but excluding any Product Liability;  Environmental Permit means any permit, licence, consent or authorisation required by Environmental Laws issued by any relevant competent authority and used in relation to the operation or conduct of Manufacturing at each Property, and Environmental Permit shall be construed accordingly;  ERISA means the Employee Retirement Income Security Act of 1974 of the United States, as amended, together with its implementing regulations;  Estimated Employee Benefit Adjustment means the Sellers reasonable estimate (in so far as practicable), made in good faith after consulting with the Purchaser, of 95 per cent. of the anticipated aggregate of the Employee Benefit Indemnification Amounts, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;  Estimated Intra-Group Non-Trade Payables means the Sellers reasonable estimate of the Intra-Group Non-Trade Payables, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;  Estimated Intra-Group Non-Trade Receivables means the Sellers reasonable estimate of the Intra-Group Non-Trade Receivables, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;  Estimated Tax Adjustment means the Sellers reasonable estimate of the Tax Adjustment, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;  Estimated Third Party Indebtedness means the Sellers reasonable estimate of the Third Party Indebtedness, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;  Estimated Vaccines Group Companies Cash Balances means the Sellers reasonable estimate of the aggregate of the Vaccines Group Companies Cash Balances, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;  Estimated Working Capital means the Sellers reasonable estimate of the Working Capital, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;  Estimated Working Capital Adjustment means the amount by which the Estimated Working Capital is greater or less than the Base Working Capital, any such excess amount being treated as a positive number and any shortfall being treated as a negative number;  7


Excluded Assets means the property, rights and assets referred to in Clause 2.3.2 or Schedule 5;  Excluded Contracts means, collectively, each Contract which is not Predominantly Related to the Business;  Excluded Employees means the employees of any member of the Sellers Group (including the Vaccines Group Companies) who are listed in Schedule 5, any Vaccines Group Company Employees who do not work wholly or substantially in the Business (as carried on by the Vaccines Group), and such other employees as may be agreed in writing between the Seller and the Purchaser after the date of this Agreement but before the Closing Date;  Excluded Liabilities means:  (i)all Liabilities:  (a)relating to the Vaccines Group Businesses other than to the extent taken into account in the Closing Statement;  (b)of the Vaccines Group Companies (other than Liabilities in respect of Tax),  in either case, to the extent that they have arisen or arise (whether before or after Closing) as a result of, or otherwise relate to, an act, omission, fact, matter, circumstance or event undertaken, occurring, in existence or arising before Closing, other than any Relevant Pension and Employment Liability and any Liabilities in respect of Tax provided for or reflected in the Closing Statement; and  (ii)all Liabilities relating to the Sellers Group Retained Business and the Excluded Assets; and  (iii)any Seller Allowance Rebate and Royalty Amount;  Exclusively Related to the Business means exclusively related to, or exclusively used or held for use exclusively, in connection with the Business;  FCA means the Financial Conduct Authority;  FCC Vaccines means bulk influenza Vaccines produced using cell-based technologies;  FDA means the United States Food and Drug Administration (or its successor);  Final Allocation Schedule has the meaning given to it in paragraph 8 of Schedule 13;  Final Payment Date means five Business Days after the date on which the process described in Part 1 of Schedule 16 for the preparation of the Closing Statement is complete;  France Assumed Liabilities means the Assumed Liabilities to the extent they relate to the France Business;  France Business means that part of the Vaccines Group, comprising:  (i)Novartis Vaccines and Diagnostics S.A.S. and the part of the Business conducted by Novartis Vaccines and Diagnostics S.A.S.;  (ii)the France Assumed Liabilities;  (iii)the France Employees; and  8


(iv)any other assets that are exclusively related to the France Business;  France Closing has the meaning given to it in the France SPA;  France Employees means the Employees employed by Novartis Vaccines and Diagnostics S.A.S.;  France Offer Letter means the letter from the Purchaser to the Seller in respect of the binding offer from the Purchaser to acquire the France Business dated on or around the date hereof;  France Put Option Exercise has the meaning given to it in the France Offer Letter;  France SPA has the meaning given to it in the France Offer Letter;  FSAs has the meaning given to it in paragraph 7 of Schedule 11;  FSMA means the Financial Services and Markets Act 2000;  Full Title Guarantee means on the basis that the covenants implied under Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994 where a disposition is expressed to be made with full title guarantee are deemed to be given by the Seller (on behalf of the relevant Share Seller or Business Seller) on Closing;  German Flu Operations means the operations for the manufacture of FCC Vaccines and MF59® adjuvant located at the Marburg Site;  Good Clinical Practices or GCP means the then-current standards, practices and procedures promulgated or endorsed by (i) the ICH Harmonised Tripartite Guidelines for Good Clinical Practice (CPMP/ICH/135/95) and any other guidelines for good clinical practices for trials on medicinal products in the European Union; (ii) the FDA as set forth in the guidelines entitled Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance, including related regulatory requirements imposed by the FDA; and (iii) the equivalent Applicable Law in any relevant country;  Good Laboratory Practices or GLP means the then-current standards, practices and procedures promulgated or endorsed by: (i) the European Commission Directive 2004/10/EC relating to the application of the principles of good laboratory practices as well as The rules governing medicinal products in the European Union, Volume 3, Scientific guidelines for medicinal products for human use (ex - OECD principles of GLP); (ii) the then-current standards, practices and procedures promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58; and (iii) the equivalent Applicable Law in any relevant country;  Good Manufacturing Practices or GMP means the then-current standards, practices and procedures promulgated or endorsed by: (i) the European Commission Directive 91/356/EEC, as amended by Directive 2003/94/EC and 91/412/EEC respectively, as well as The rules governing medicinal products in the European Union, Volume 4, Guidelines for good manufacturing practices for medicinal products for human and veterinary use; (ii) the FDA and the provisions of 21 C.F.R. Parts 210 and 211; (iii) the principles detailed in the ICH Q7A guidelines; and (iv) all Applicable Law with respect to each of (i) through (iii);  Governmental Entity means any supra-national, federal, national, state, county, local, municipal or other governmental, regulatory or administrative authority, agency, commission or other instrumentality, any court, tribunal or arbitral body with competent jurisdiction, or any national securities exchange or automated quotation service including, any governmental regulatory authority or agency responsible for the grant approval,  9


clearance, qualification, licensing or permitting of any aspect of the research, development, manufacture, marketing distribution or sale of the Products including the FDA, the European Medicines Agency, or any successor agency thereto;  Governmental Liability means any Liability arising out of, relating to or resulting from any claim, demand, action, suit, proceedings or investigation by a Governmental Entity (other than a Tax Authority) brought or undertaken in connection with products sold or developed by, or operations or practices of, the Vaccines Group prior to Closing;  GSK Break Fee has the meaning given to it in the Implementation Agreement;  Hazardous Substance means any gasoline or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, hazardous wastes, toxic substances, asbestos, pollutants, or contaminants defined as such in or regulated under any applicable Environmental Law;  Headline Price has the meaning given to it in Clause 3.1.1(i);  Healthcare Laws means the federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)); the Anti-Inducement Law (42 U.S.C. § 1320a-7a (a)(5)); the civil False Claims Act (31 U.S.C. §§ 3729 et seq.); the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)); the Exclusion Laws (42 U.S.C. § 1320a-7); the Medicare statute (Title XVIII of the Social Security Act), including Social Security Act §§ 1860D-1 to 1860D-43 (relating to Medicare Part D and the Medicare Part D Coverage Gap Program); the Medicaid statute (Title XIX of the Social Security Act); the Physician Payment Sunshine Act (42 U.S.C. § 1320a-7h) and any analogous state laws; the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and any other similar law, including the price reporting requirements and the requirements relating to the processing of any applicable rebate, chargeback or adjustment, under applicable rules and regulations relating to the Medicaid Drug Rebate Program (42 U.S.C. § 1396r-8), any state supplemental rebate program, Medicare average sales price reporting (42 U.S.C. § 1395w-3a), the Public Health Service Act (42 U.S.C. § 256b), the Veterans Health Care Act (38 U.S.C. § 8126), regulatory requirements applicable to sales on the Federal Supply Schedule or under any state pharmaceutical assistance program or United States Department of Veterans Affairs agreement, all legal requirements relating to the billing or submission of claims, collection of accounts receivable, underwriting the cost of, or provision of management or administrative services in connection with, any and all of the foregoing, by the Sellers Group and any successor government programs, and all foreign equivalents of the foregoing;  Holly Springs Site means properties located in Holly Springs, North Carolina, United States of America at which the Influenza Business undertakes Manufacturing activities;  HSR Act means the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, together with its implementing regulations;  IFRS means International Financial Reporting Standards, comprising the accounting standards and interpretations issued, adopted and/or approved by the International Accounting Standards Board;  Illustrative Working Capital Statement has the meaning given to it in Part 2 of Schedule 16;  10


Implementation Agreement means the implementation agreement dated the date of this Agreement between the Seller and the Purchaser relating to, amongst other things, the implementation of the Transaction;  In-Market Inventory means all inventory of Products for Commercialisation that, at any particular time: (i) is beneficially owned by a member of the Sellers Group; and (ii) is in finished packed form and released for Commercialisation; and (iii) is located: (a) in (or in transit to) the relevant Market; or (b) in (or in transit to) a multi-market warehouse owned or operated by a member of the Sellers Group or by a third party; or (c)               at a Property pending despatch following release by the relevant qualified person to the relevant market or multi-market warehouse;  Indebtedness means all loans and other financing liabilities and obligations in the nature of borrowed moneys and overdrafts and moneys borrowed, but excluding trade debt and liabilities arising in the ordinary course of business;  Influenza Business means the Cell-based Influenza Business, the Egg-based Influenza Business and the German Flu Operations, taken together;  Influenza Business Manufacturing and Supply Agreement means the manufacturing and supply agreement expected to be entered into between the Seller or a member of the Sellers Group and the Purchaser or a member of the Purchasers Group on Closing on terms consistent with the heads of terms in the Agreed Terms, pursuant to which the Purchaser will manufacture and supply certain products to the Influenza Business;  Information Technology means computer, hardware, software and network;  Intellectual Property Assignment Agreements means the assignments between the Seller and/or one or more of its Affiliates and the Purchaser and/or one or more of its Affiliates on terms consistent with the Agreed Terms, to be entered into at Closing, in respect of the transfer of certain Intellectual Property Rights in each of the relevant jurisdictions;  Intellectual Property Rights means all: (i) Patents; (ii) Know-How; (iii) Trademarks; (iv) internet domain names; (v) Copyrights; (vi) rights in designs; (vii) database rights; and (viii) all rights or forms of protection, anywhere in the world, having equivalent or similar effect to the rights referred to in paragraphs (i) to (vii) above, in each case whether registered or unregistered and including applications for registration of any such thing;  International Assignees means the employees of any member of the Sellers Group (including the Vaccines Group Companies) who are listed in Schedule 6 (as updated after the date of this Agreement as noted in Schedule 6 to exclude any international assignees working in the Influenza Business), and such other employees as may be agreed in writing between the Seller and the Purchaser after the date of this Agreement but before the Closing Date;  Intra-Group Non-Trade Payables means all outstanding loans or other financing liabilities or obligations (including, for the avoidance of doubt, interest accrued, dividends declared or payable but not paid) owed by a Vaccines Group Company to a member of the Sellers Group (other than a Vaccines Group Company) as at the Effective Time as derived from the Closing Statement, but excluding: (i) Intra-Group Trading Balances; and (ii) any item which falls to be included in calculating the Vaccines Group Companies Cash Balances or the Third Party Indebtedness;  11


Intra-Group Non-Trade Receivables means all outstanding loans or other financing liabilities or obligations (including, for the avoidance of doubt, interest accrued, dividends declared or payable but not paid) owed by a member of the Sellers Group (other than a Vaccines Group Company) to a Vaccines Group Company as at the Effective Time as derived from the Closing Statement, but excluding: (i) Intra-Group Trading Balances; and (ii) any item which falls to be included in calculating the Vaccines Group Companies Cash Balances or the Third Party Indebtedness;  Intra-Group Trading Balances means all trade accounts and notes receivable or payable arising in the ordinary course between any two members of the Sellers Group, in each case to the extent related to the Vaccines Group, to which lines BS01_630 Payables Other BUs, BS01_140 Receivables Other BUs, BS01_620 Payables Own BU and BS01_130 Receivables Own BU of the Statement of Net Assets apply, together with any unpaid financing charges accrued thereon;  IP Liability means any Liability arising out of, relating to or resulting from any actual or alleged infringement, misappropriation or other violation of Intellectual Property Rights of third parties;  Judgment means any order, writ, judgment, injunction, decree, stipulation, determination, decision or award entered by or with any Governmental Entity of competent jurisdiction;  Key Personnel means the Employees listed in Schedule 21;  Key Sites means the Marburg Site, the Rosia Site and the Siena Site;  Know-How means all existing and available technical information, know-how and data, including inventions (whether patentable or not), discoveries, trade secrets, specifications, instructions, processes and formulae, including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical, safety, quality control, preclinical and clinical data;  Lease has the meaning given to it in paragraph 1.1 of Part 4 of Schedule 3;  Liabilities means all liabilities, claims, damages, proceedings, demands, orders, suits, costs, losses and expenses of every description, whether deriving from contract, common law, statute or otherwise, whether present or future, actual or contingent, ascertained or unascertained or disputed and whether owed or incurred severally or jointly or as principal or surety;  LIBOR means the London interbank offered rate, being the interest rate offered in the London inter-bank market for three month US dollar deposits as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen at 11 a.m. (London) on the second Business Day prior to the Closing Date;  Licensed Intellectual Property Contract means any Vaccines Group Intellectual Property Contract constituting or containing a licence of Intellectual Property Rights in respect of the Business or Products;  Listing Rules means the listing rules made by the FCA under section 73A of FSMA;  Local Transfer Document has the meaning given to it in Clause 2.6.1;  Long Stop Date has the meaning given to it in Clause 4.3;  12


Losses means all losses, liabilities, costs (including legal costs and experts and consultants fees), charges, expenses, actions, proceedings, claims and demands;  MA Costs has the meaning given to it in paragraph 4 of Part 2 of Schedule 8;  MA Documentation has the meaning given to it in paragraph 1.4 of Part 2 of Schedule 8;  Manufacture, Manufacturing or Manufactured means the planning, purchasing of materials for, production, processing, compounding, storage, filling, packaging, labelling, leafleting, warehousing, quality control testing, waste disposal, quality release, sample retention and stability testing of products;  Manufacturing Inventory means any packed inventory of Products and/or products for Commercialisation that is: (i) in finished form (save for any secondary packaging undertaken outside of a Property); (ii) beneficially owned by any member of the Sellers Group; (iiii) held at a Property; and (iv) not yet released by the qualified person at a Property; and excluding in each case, for the avoidance of doubt, any In-Market Inventory and Manufacturing Stocks;  Manufacturing Liability means any Liability arising out of, relating to or resulting from any breach of Applicable Law in connection with the manufacturing of products;  Manufacturing Licences means any certificates, permits, licences, consents and approvals issued by any Governmental Entity, used in the operation or conduct of Manufacturing at each Property, and Manufacturing Licence shall be construed accordingly;  Manufacturing Stocks means, as at Closing, all stocks of raw materials, active pharmaceutical ingredients, ingredients, adjuvants, drug substances, intermediates, packaging materials, components, devices and other production and pre-production consumables and work-in-progress that are beneficially owned by any member of the Sellers Group for use in the Manufacture of Products or Pipeline Products and held at a Property;  Manufacturing, Supply and Distribution Agreement means the manufacturing, supply and distribution agreement to be entered into between the Seller and the Purchaser at Closing on terms consistent with the heads of terms in the Agreed Terms;  Marburg Site means the Properties located in Marburg (Germany) at which the Vaccines Group undertakes Manufacturing activities;  Marketing Authorisation Data means the existing and available dossiers containing the relevant Know-How used by the Seller and/or its Affiliates to obtain and maintain the Marketing Authorisations;  Marketing Authorisation Holder means the holder of the relevant Marketing Authorisation;  Marketing Authorisation Re-registration has the meaning given to it in paragraph 1.1.2 of Part 2 of Schedule 8;  Marketing Authorisation Re-Registration Date means the date on which the relevant Governmental Entity approves, or is deemed to approve, the relevant Marketing Authorisation Re-registration;  13


Marketing Authorisation Transfer Date means the date on which the relevant Governmental Entity approves, or is deemed to approve, the relevant Marketing Authorisation Transfer;  Marketing Authorisation Transfer has the meaning given to it in paragraph 1.1.1 of Part 2 of Schedule 8;  Marketing Authorisation Transferee means the member of the Purchasers Group or, where no member of the Purchasers Group satisfies the requirements under Applicable Law to be transferred the relevant Marketing Authorisation, such Third Party as is nominated by the Purchaser, in either case to whom the relevant Marketing Authorisation is to be transferred;  Marketing Authorisations means the marketing authorisations issued or applications for Marketing Authorisations with respect to the Products and all supplements, amendments and revisions thereto;  Markets means the markets in which the Products are marketed and sold under the relevant Marketing Authorisation, and Market shall be construed accordingly;  Material Adverse Effect means any matter, change, event or circumstance arising or discovered on or after the date of this Agreement and prior to Closing (including a breach of the Sellers obligations under Clause 5 or Clause 9.1) (a Relevant Matter) that, individually or in the aggregate with other Relevant Matters, if known to the Purchaser prior to the date of this Agreement, could reasonably have expected to have resulted in the Purchaser offering to acquire the Vaccines Group on the terms of this Agreement at a discount to the Headline Price of 30 per cent. or more and, in determining such reduction, regard shall be had to the actual basis on which the Purchaser determined the Headline Price. A Relevant Matter shall not constitute or count towards a Material Adverse Effect to the extent resulting or arising from:  (i)any change that is generally applicable to, or generally affects, the industries or markets in which the Vaccines Group operates (including changes arising as a result of usual seasonal variations) or arises from or relates to changes in Applicable Law or accounting rules or changes in any authoritative interpretation of any Applicable Law by any Governmental Entity;  (ii)any change in financial, securities or currency markets or general economic or political conditions or changes in prevailing interest rates or exchange rates;  (iii)the execution of this Agreement, the public announcement thereof or the pendency or consummation of the transactions contemplated hereby (including any cancellations of or delays in customer orders or other decreases in customer demand, any reduction in revenues and any disruption in supplier, distributor, customer or similar relationships); or  (iv)the taking of any action expressly required by this Agreement or by any Ancillary Agreement or otherwise taken with the advance written consent of the Purchaser,  except, in relation to either paragraph (i) or paragraph (ii) above, if that change adversely affects the Vaccines Group in a disproportionate manner relative to other comparable businesses operating in the same industry and geographic markets as the Vaccines Group (in which case it may constitute or count towards a Material Adverse Effect);  14


Material Employee Jurisdictions means China, Germany, India, Italy, the United Kingdom and the United States of America;  Medical Information means information relating to clinical and technical matters, such as therapeutic uses for the approved indications, drug-disease information, and other product characteristics Predominantly Related to the Business which is available to or used by the Seller and/or its Affiliates as of the Closing Date;  Merck 2012 Licence means the Settlement and Licence Agreement between Novartis Vaccines and Diagnostics Inc. and Merck KGaA and Ares Trading SA dated 14 November 2012;  Milestone Payments has the meaning given to it in paragraph 10 of Schedule 17;  Minority Interest Entities means the entities, details of which are set out in paragraph 3 of Schedule 2, and Minority Interest Entity means any one of them;  Netherlands APA has the meaning given to it in the Netherlands Offer Letter;  Netherlands Assumed Liabilities means the Assumed Liabilities to the extent they relate to the Netherlands Business;  Netherlands Business means that part of the Vaccines Group, comprising:  (i)the Vaccines Group Businesses that relate predominantly to the part of the Business conducted in the Netherlands;  (ii)the Netherlands Assumed Liabilities;  (iii)the Netherlands Employees; and  (iv)any other assets that are exclusively related to the Netherlands Business;  Netherlands Closing has the meaning given to it in the Netherlands APA;  Netherlands Employees means the Employees employed in the Netherlands;  Netherlands Offer Letter means the letter from the Purchaser to the Seller in respect of the binding offer from the Purchaser to acquire the Netherlands Business dated on or around the date hereof;  Netherlands Put Option Exercise has the meaning given to it in the Netherlands Offer Letter;  Non-strategic Assets means the assets of the Vaccines Group exclusively related to the Products Encepur and Ixiaro and any Liabilities relating to those Products;  Non-US Benefit Plans has the meaning given to it in paragraph 16.3.1 of Schedule 18;  Notice has the meaning given to it in Clause 16.11.1;  Novartis 2013 Annual Report means the 2013 annual report of Novartis AG, including the consolidated financial statements of the Sellers Group for the financial year ending on 31 December 2013;  Novartis Break Fee has the meaning given in the Implementation Agreement;  Ongoing Clinical Trials means the ongoing clinical studies sponsored or supported by the Sellers Group (including post-approval studies) or otherwise recommended by a Governmental Entity, and regulatory commitments in respect of the Products and the  15


Pipeline Products, listed in Schedule 22 and Ongoing Clinical Trial shall mean any one of them;  Out-Licensing Programme means the out-licensing and enforcement of Intellectual Property Rights that are not used in or developed for the Business and generally relate to base technology useful in drug discovery and/or manufacturing processes, including any contracts or Intellectual Property Rights related thereto but excluding the Beta Interferon Patent Rights;  Out-Licensing Programme Intellectual Property Rights means the Intellectual Property Rights used in relation to the Out-Licensing Programme;  Out of Scope Patent means any Patent of the Sellers Group at the date of Closing, but excluding (i) the Transferred Intellectual Property Rights; (ii) any Patents licensed under the Purchaser Intellectual Property Licence Agreement; (iii) Out-Licensing Programme Intellectual Property Rights; and (iii) any Patents in any Non-strategic Assets;  Owned Information Technology means all Information Technology of any Vaccines Group Company to the extent Exclusively Related to the Business;  Owned Intellectual Property Contracts means the Contracts Exclusively Related to the Business which relate to Intellectual Property Rights and that are held by the Vaccines Group Companies, including any such Contracts set out in Part 2 of Schedule 4;  Owned Intellectual Property Rights means the Intellectual Property Rights of any Vaccines Group Company to the extent Exclusively Related to the Business, including the Intellectual Property Rights of any Vaccines Group Company set out in Part 1 of Schedule 4;  Patent Term Extensions means any and all extensions of a term of a Patent granted under the Patent laws or regulations of any country, the European Union, or any other Governmental Entity;  Patents means patents, design patents, patent applications, and any reissues, re-examinations, divisionals, continuations, continuations-in-part, provisionals, and extensions thereof or any counterparts to any of the foregoing (including rights resulting from any post-grant proceedings relating to any of the foregoing);  PA Transfer Date means, in relation to a Product or Product Application, the date upon which the relevant Governmental Entity approves and notifies the Product Approval or Product Application (as applicable) naming the Purchaser or the relevant Affiliate of the Purchaser (or designee thereof) as the holder of such Product Approval or Product Application in the relevant country or territory covered by that Product Approval or Product Application;  Payment has the meaning given to it in Clause 1.9;  Permit has the meaning given to it in paragraph 9.2 of Schedule 18;  Permitted Encumbrance means:  (i)Encumbrances imposed by Applicable Law;  (ii)Encumbrances imposed in the ordinary course of business which are not yet due and payable or which are being contested in good faith;  (iii)Encumbrances which are listed in Schedule 7;  16


(iv)pledges or deposits to secure obligations under Applicable Law relating to workers compensation, unemployment insurance or to secure public or statutory obligations; and  (v)liens, title retention arrangements or deposits to secure the performance of bids, trade contracts (other than for borrowed money), conditional sales contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of the Business;  Personal Property means all tangible personal property legally and beneficially owned by the Sellers Group which is Predominantly Related to the Business and is located at a Property at Closing;  Pharmacovigilance Agreement means the agreement between the Seller and the Purchaser, to be entered into at Closing, in respect of pharmacovigilance and regulatory matters relating to the Products;  Pipeline Product means:  (i)each product in development by the Business set out under the heading Pipeline Products in Part 3 of Schedule 8; and  (ii)any other product in development Exclusively Related to the Business;  Pipeline Product Approvals means the approvals in relation to the Pipeline Products;  Predominantly Related to the Business means exclusively or predominantly related to, or used or held for use exclusively or predominantly, in connection with the Business;  Proceedings means any legal actions, proceedings, suits, litigations, prosecutions, investigations, enquiries, mediations or arbitrations;  Product Applications means all applications for Product Approval filed with respect to Products Under Registration, with each individual application being a Product Application;  Product Approvals means all permits, licences, certificates, clearances, registrations or other authorisations or consents issued by any Governmental Entity to the Seller or one of its Affiliates with respect to the Products or the use, research, development, marketing, distribution or sale thereof, including the Marketing Authorisations;  Product Filings means all filings, written representations, declarations, listings, registrations, reports or submissions with or to any Governmental Entity, including adverse event reports and all submitted data relating to each Product;  Product Liabilities means any Liability arising out of, relating to or resulting from actual or alleged harm, injury, damage or death to persons in connection with the use of any product (including in any clinical trial or study);  Product Partners means any third parties which pursuant to a Contract with Seller or any Affiliate of Seller co-develop, co-promote, co-market, or otherwise have a licence or other right to research, develop, manufacture, promote, distribute, market, or sell any Product, including all manufacturers and suppliers of any such Product;  Products means:  (i)the products set out under the heading Products in Part 3 of Schedule 8; and  17


(ii)any other products Exclusively Related to the Business;  Products Under Registration means:  (i)the products set out under the heading Products Under Registration in Part 3 of Schedule 8, which are pending Product Approval as of the date hereof; and  (ii)any other products under registration Exclusively Related to the Business;  Properties means the Company Real Properties and the Transferred Real Properties and Property means any one of them;  Proprietary Information means all confidential and proprietary information of the Seller or its Affiliates that is Predominantly Related to the Business, including confidential Medical Information, confidential Know How and confidential Commercial Information;  Purchase Price has the meaning given to it in Clause 3.1.1;  Purchase Price Bank Account means the account notified by the Seller to the Purchaser no later than two Business Days prior to the Closing Date;  PurchaserArticles of Association means the articles of association of the Purchaser in force and effect from time to time;  Purchaser Intellectual Property Licence Agreement means the agreement between the Seller and/or one or more of its Affiliates and the Purchaser and/or one or more of its Affiliates on terms consistent with the Agreed Terms, to be entered into at Closing, in respect of the grant of licences from the Seller to the Purchaser of certain Intellectual Property Rights;  Purchasers Disagreement Notice has the meaning given to it in paragraph 1.3 of Schedule 16;  Purchasers Group means the Purchaser and its Affiliates from time to time;  Purchasers Lawyers means Slaughter and May of One Bunhill Row, London EC1Y 8YY, United Kingdom;  PurchaserShareholder Meeting has the meaning given to it in Clause 4.1.6;  PurchaserShareholder Resolution has the meaning given to it in Clause 4.1.6;  PurchaserShareholders means the holders of ordinary shares in the capital of the Purchaser from time to time;  Rebate means any amount payable or repayable to customers or Governmental Entities in respect of a contractual rebate or other rebate including under applicable Healthcare Laws (or under similar laws or regulations) due on sales of products;  Registered Intellectual Property Rights means Intellectual Property Rights that are registered, issued, filed, or applied for under the authority of any Governmental Entity;  Registered Vaccines Group Intellectual Property Rights means all Vaccines Group Intellectual Property Rights that are Registered Intellectual Property Rights;  Regulation has the meaning given to it in Clause 4.1.1;  18


Relevant Employees means the Relevant Vaccines Business Employees and the Relevant Vaccines Group Company Employees and Relevant Employee means any one of them;  Relevant Employers means the Business Sellers and such other members of the Sellers Group who employ the Relevant Vaccines Business Employees;  Relevant Employers FSAs has the meaning given to it in paragraph 7 of Schedule 11;  Relevant Matter has the meaning given to it in the definition of Material Adverse Effect;  Relevant Part means the relevant part of the Shared Business Contracts which relates exclusively to the Business (or the relevant part of the Business that is transferred to the Purchaser at Closing);  Relevant Parties has the meaning given to it in paragraph 1.1.1 of Schedule 17;  Relevant Pension and Employment Liability means (i) any Liabilities assumed by the Purchaser or a member of the Purchasers Group as contemplated by Schedule 11; and (ii) any Transferred Employee Benefit Liabilities (as defined in Schedule 12) which the Purchaser agrees to assume in accordance with Schedule 12;  Relevant Period means the period of two years prior to the date of this Agreement;  Relevant Persons has the meaning given to it in Clause 8.2.2;  Relevant Vaccines Business Employees means the Vaccines Business Employees immediately prior to the Closing Date and Relevant Vaccines Business Employee means any one of them;  Relevant Vaccines Group Company Employees means the Vaccines Group Company Employees immediately prior to the Closing Date (excluding any who do not work wholly or substantially in the Business (as carried on by the Vaccines Group)) and Relevant Vaccines Group Company Employee means any one of them;  Reorganisation has the meaning given to it in Clause 2.3.5;  Reporting Accountants means the London office of Ernst & Young or, if that firm is unable or unwilling to act in any matter referred to them under this Agreement, the London office of Deloitte or, if that firm is also unable or unwilling to act in any matter referred to them under this Agreement, an internationally recognised and independent firm of accountants who does not act as auditor to the Seller or the Purchaser, to be agreed by the Seller and the Purchaser within seven days of a notice by one to the other requiring such agreement or, failing such agreement, to be nominated on the application of either of them by or on behalf of the Institute of Chartered Accountants of England and Wales;  Required Item has the meaning given to it in paragraph 2 of Schedule 13;  Required Notifications has the meaning given to it in Clause 4.2.1;  Rosia Site means the Properties located in Rosia (Italy) at which the Vaccines Group undertakes Manufacturing activities;  Royalty means any royalty payable in respect of sales of the products;  Royalty Payments has the meaning given to it in paragraph 10 of Schedule 17;  Sanctions Laws has the meaning given to it in paragraph 9.5 of Schedule 18;  19


Seller Allowance Rebate and Royalty Amount means any Allowance, Rebate or Royalty payable after Closing by the Purchaser or any member of the Purchasers Group, to the extent it relates to the sales of any products made prior to Closing;  Seller Marks means any of the marks (including in either or both logo and local script form) Novartis, Sandoz, Alcon and Ciba Vision used alone or in combination with other words or marks;  Seller Restricted Marks means any of the marks (including in either or both logo and local script form) Novartis, Sandoz, Alcon and Ciba Vision;  Seller Partner means any counterparty to a development, contract research, commercialisation, manufacturing, distribution, sales, marketing, supply, consulting or other collaboration Contract with the Seller or any Affiliate of the Seller;  Sellers Disagreement Notice has the meaning given to it in paragraph 1.4 of Schedule 16;  Sellers Group means the Seller and its Affiliates from time to time;  Sellers Group Insurance Policies means all insurance policies (whether under policies maintained with third party insurers or any member of the Sellers Group), other than Vaccines Group Insurance Policies, maintained by the Seller or any member of the Sellers Group in relation to the Vaccines Group or under which, immediately prior to Closing, any Vaccines Group Company or the Seller or member of the Sellers Group in relation to the Vaccines Group Businesses is entitled to any benefit, and Sellers Group Insurance Policy means any one of them;  Sellers Group Retained Business means, from time to time, all businesses of the Sellers Group, including, the Influenza Business, but excluding the Business;  Sellers Knowledge has the meaning given to it in Clause 9.1.4;  Sellers Lawyers means Linklaters LLP of One Silk Street, London EC2Y 8HQ, United Kingdom;  Sellers Warranties means the warranties given by the Seller pursuant to Clause 9 and Schedule 18, and Sellers Warranty means any one of them;  Service Provider means an Associated Person who is a legal person;  Share Seller means, in relation to each of the Companies and Minority Interest Entities referred to in column (2) of Schedule 1, the company whose name is set out opposite that Company or Minority Interest Entity in column (1);  Shared Business Contracts means any Contract which relates both:  (i)to the Business or any part of the Business to be transferred to the Purchaser at Closing; and  (ii)to any part of the Sellers Group Retained Business, any product other than the Products, or any Excluded Asset,  and to which a member of the Sellers Group is a party or in respect of which a member of the Sellers Group has any liability or obligation at Closing, and Shared Business Contract shall mean any of them;  20


Shared Employees means employees of any member of the Sellers Group who work wholly or substantially in the Business (as carried on by the Vaccines Group) pursuant to service level agreements with the Vaccines Group Companies and other members of the Sellers Group but excluding, for the avoidance of any doubt, any Vaccines Group Company Employee and any employees included on the list of employees provided pursuant to paragraph 15.2 of Schedule 18;  Shares means the shares in the capital of the Companies and the Minority Interest Entities specified in Schedule 1;  Siena Site means the Properties located in Siena (Italy) at which the Vaccines Group undertakes Manufacturing activities;  Statement of Net Assets means the statement of net assets as at the Statement of Net Assets Date, as set out in Part 2 of Schedule 23;  Statement of Net Assets Date means 31 December 2013;  Statement of Net Assets Rules means the rules in accordance with which the Statement of Net Assets was prepared, as set out in Part 2 of Schedule 23;  Subsidiaries means the companies listed in paragraph 2 of Schedule 2 and Subsidiary means any one of them;  Target Asset Agreements has the meaning given to it in the Implementation Agreement;  Taxation or Tax means all supra-national, federal, state, county, local, municipal, foreign and other taxes, assessments, duties or similar charges of any kind whatsoever (other than deferred tax), including all corporate franchise, income, gross receipts, sales, use, ad valorem, receipts, value added, profits, licence, withholding, payroll, employment, excise, premium, property, net worth, capital gains, transfer, stamp, documentary, social security, alternative minimum, occupation, recapture and other taxes regardless as to whether any such taxes, assessments, duties or similar charges are chargeable directly or primarily against or attributable directly or primarily to a Vaccines Group Company or any other person, and including all interest, penalties and additions imposed with respect to such amounts by any Tax Authority or with respect to any failure to file any Tax Return;  Tax Adjustment means the amount by which:  (a)the aggregate amount of the income taxes and sales taxes payable by the Vaccines Group Companies, as at the Effective Time and as derived from the Closing Statement;  exceeds or is less than  (b)the aggregate amount of the current income tax and sales tax receivables of the Vaccines Group Companies as at the Effective Time as derived from the Closing Statement,  and any such excess amount shall be treated as a positive number and any shortfall shall be treated as a negative amount;  Tax Authority has the meaning ascribed to it in the Tax Indemnity;  Tax Consolidation has the meaning ascribed to it in the Tax Indemnity;  Tax Group has the meaning ascribed to it in the Tax Indemnity;  21


Tax Indemnity means the deed of covenant against taxation, in the Agreed Terms, to be entered into on the Closing Date between the Seller and the Purchaser;  Tax Return has the meaning ascribed to it in the Tax Indemnity;  Tax Warranties means the Sellers Warranties set out in paragraph 13 of Schedule 18;  Third Party has the meaning given to it in Clause 16.4.2;  Third Party Claim has the meaning given to it in Clause 11.4;  Third Party Consents means all consents, licences, approvals, permits, authorisations or waivers required from third parties for the assignment or transfer to the Purchaser of any of the Transferred Contracts, Transferred Intellectual Property Contracts or Shared Business Contracts or Co-Owned Vaccines Group Intellectual Property Rights or Transferred Plant and Equipment, and Third Party Consent means any one of them;  Third Party Indebtedness means the aggregate amount as at the Effective Time of all outstanding Indebtedness owed by the Vaccines Group Companies to any third party less any Indebtedness owed by any third party to any Vaccines Group Company as derived from the Closing Statement (but excluding any item included in respect of any Vaccines Group Companies Cash Balances or Intra-Group Non-Trade Payables), and, for the purposes of this definition, third party shall exclude any member of the Sellers Group;  Threshold Amount means, in the case of Ixiaro, US$ 50 million, and in the case of Encepur, US$ 200 million;  Time-Limited Excluded Liability means an Excluded Liability which is:  (i)a Contracts Liability;  (ii)an Environmental Liability;  (iii)a Manufacturing Liability; or  (iv)a Commercial Practices Liability;  Trademarks means trademarks, service marks, trade names, certification marks, service names, industrial designs, brand names, brand marks, trade dress rights, identifying symbols, logos, emblems, and signs or insignia and all goodwill of the business in relation to which any of the foregoing are used (but no other or greater goodwill);  Transaction has the meaning given to it in Clause 4.1.1;  Transfer Regulations means the relevant national measure by which the employment of a Relevant Vaccines Business Employee automatically transfers to the Purchaser or a relevant member of the Purchasers Group;  Transferred Accounts Payable means all trade accounts and notes payable arising in the ordinary course of the Sellers Group (other than any Vaccines Group Company) to the extent related to the Business, and outstanding at the Effective Time,  together with any unpaid financing charges accrued thereon;  Transferred Accounts Receivable means all trade accounts and notes receivable arising in the ordinary course of the Sellers Group (other than any Vaccines Group Company) to the extent related to the Business, and outstanding at the Effective Time,  together with any unpaid financing charges accrued thereon;  22


Transferred Books and Records means all books, ledgers, files, reports, plans, records, manuals and other materials (in any form or medium) to the extent of, or maintained predominantly for, the Business by the Sellers Group (excluding the Vaccines Group Companies) (other than emails), but excluding:  (i)any such items to the extent that: (A) they are related to any Excluded Assets or Excluded Liabilities, (B) they are related to any corporate, Tax, human resources or stockholder matters of the Seller or its Affiliates (other than the Vaccines Group Companies), (C) any Applicable Law prohibits their transfer or (D) any transfer thereof otherwise would subject the Seller or any of its Affiliates to any material liability; and  (ii)any laboratory notebooks to the extent containing research and development information unrelated to the Business;  Transferred Contracts means:  (i)the Contracts, other than Transferred Intellectual Property Contracts, that are Predominantly Related to the Business between a member of the Sellers Group (excluding the Vaccines Group Companies), on the one hand, and any third party, on the other hand (other than this Agreement and any Ancillary Agreement), but excluding any Excluded Contract;  (ii)subject to paragraph 1 of Schedule 10 the Relevant Part of the Shared Business Contracts; and  (iii)the Diagnostics TSA;  Transferred Employees means (i) the Vaccines Business Employees to whom the Purchaser (or a member of the Purchasers Group) offers employment and who accept such employment and become employed by the Purchaser (or a member of the Purchasers Group) in accordance with Schedule 11; (ii) any Relevant Vaccines Business Employees who transfer to the Purchaser (or a member of the Purchasers Group) by operation of the Transfer Regulations and do not object to such transfer (to the extent permitted by the Transfer Regulations) in accordance with Schedule 11; and (iii) the Relevant Vaccines Group Company Employees, and Transferred Vaccines Business Employees means the employees in (i) and (ii), Transferred Vaccines Group Company Employees means the employees in (iii) and Transferred Employee, Transferred Vaccines Business Employee and Transferred Vaccines Group Company Employee respectively means any one of them;  Transferred Information Technology means all Information Technology of any member of the Sellers Group (other than a Vaccines Group Company) to the extent Exclusively Related to the Business;  Transferred Intellectual Property Contracts means Contracts Exclusively Related to the Business which relate to Intellectual Property Rights (but excluding the rights under any such Contracts that are held by the Vaccines Group Companies), including any such Contracts set out in Part 2 of Schedule 4 and the Merck 2012 Licence;  Transferred Intellectual Property Rights means the Intellectual Property Rights of any member of the Sellers Group (other than a Vaccines Group Company) Exclusively Related to the Business, including the Intellectual Property Rights of any member of the Sellers Group (other than a Vaccines Group Company) set out in Parts 1 and 3 of Schedule 4;  23


Transferred Inventory means all inventories (including Manufacturing Inventory and Manufacturing Stocks and In-Market Inventory), wherever located, including all raw materials, work in progress, finished Products and packaging and labelling material in respect of the Products and otherwise Predominantly Related to the Business (but excluding any such items held by the Vaccines Group Companies) whether held at any location or facility of a member of the Sellers Group or in transit to a member of the Sellers Group, in each case as of the Effective Time;  Transferred Leased Real Properties has the meaning given to it in paragraph 1.1 of Part 4 of Schedule 3;  Transferred Owned Real Properties has the meaning given to it in paragraph 1.1 of Part 4 of Schedule 3;  Transferred Plant and Equipment means:  (i)the Transferred Information Technology; and  (ii)all plant, furniture, furnishings, vehicles, equipment, tools and other tangible Personal Property (other than Transferred Inventory or Transferred Information Technology) of the Sellers Group that are Predominantly Related to the Business (but excluding any such items owned by the Vaccines Group Companies);  Transferred Real Properties means:  (i)the Transferred Owned Real Properties;  (ii)the Transferred Leased Real Properties; and  (iii)all other freehold, leasehold or other immovable property Predominantly Related to the Business, other than any freehold, leasehold or other immovable property within the definition of Excluded Assets,  and Transferred Real Property means any one of them;  Transitional Services Agreement means the transitional services agreement to be entered into between the Seller and the Purchaser at Closing on terms consistent with the heads of terms in the Agreed Terms, pursuant to which: (i) the Seller will provide or procure the provision of certain transitional services to the Purchaser; and (ii) the Purchaser will provide or procure the provision of certain transitional services to the Influenza Business;  US Benefit Plans means all United States employee benefit plans (within the meaning of section 3(3) of ERISA), severance, change in control or employment, vacation, incentive, bonus, stock option, stock purchase, or restricted stock plans, programmes, agreements or policies benefiting the Vaccines Business Employees;  US Transferred Employees has the meaning given to it in paragraph 7.1 of Schedule 11;  Vaccines means a preparation comprising (i) an antigen, (ii) an epitope of an antigen, or (iii) a polynucleotide encoding an antigen derived directly or indirectly from, or mimicking, an agent (including, but not limited to, a compound, a toxin, a microbe including a pathogen or component thereof), wherein such preparation may further comprise a composition capable of modulating an immune response, including preparations intended to improve a humans immune response to a microbe that has been linked to cancer, wherein said preparation is intended for purposes of inducing an immune response in a  24


human, including, but not limited to, a functional immune response or immunological memory to the particular or related antigen or agent, thereby causing or improving an immune response to a challenge by the particular or related agent. Vaccines shall not include preparations intended to improve a humans immune response to or to treat other non-infectious conditions, whether or not related to pathogens, such as certain autoimmune diseases, Alzheimers disease and certain cancers, or non-antigen preparations comprising immune system components intended to function analogous to corresponding native components within the patient, such as antibodies or white blood cells (both unmodified or modified to better treat disease);  Vaccines Business Employees means the employees of any member of the Sellers Group who work wholly or substantially in the Business (as carried on by the Vaccines Group) from time to time including, for the avoidance of any doubt, the International Assignees other than the Vaccines Group Company Employees, the Excluded Employees and the Shared Employees and provided that, in relation to the Sellers Warranties only, the words from time to time shall be deemed to be replaced by at the date of this Agreement and Vaccines Business Employee means any one of them;  Vaccines Group means the Vaccines Group Companies and the Vaccines Group Businesses, taken as a whole;  Vaccines Group Businesses means the businesses of the Business (but excluding the businesses of the Business carried on by the Vaccines Group Companies) as set out in Clause 2.3.1, but subject always to Clause 2.3.2, and Vaccines Group Business means any one of them;  Vaccines Group Companies means the Companies and the Subsidiaries, and Vaccines Group Company means any one of them;  Vaccines Group Companies Cash Balances means the aggregate amount of the Cash Balances held by or on behalf of the Vaccines Group Companies (excluding 50 per cent. of the Cash Balances held by Chiron Behring Vaccines Private Limited and Zhejiang Tianyuan Bio-Pharmaceutical Co., Ltd.) at the Effective Time;  Vaccines Group Company Employees means the employees from time to time of any of the Vaccines Group Companies other than the Excluded Employees, and provided that, in relation to the Sellers Warranties only, the words from time to time shall be deemed to be replaced by at the date of this Agreement, and Vaccines Group Company Employee means any one of them;  Vaccines Group Goodwill means all goodwill of the Vaccines Group Businesses, but excluding any Trademark goodwill;  Vaccines Group Information Technology means the Transferred Information Technology and the Owned Information Technology;  Vaccines Group Insurance Policies means all insurance policies held exclusively by and for the benefit of the Vaccines Group Companies and Vaccines Group Insurance Policy means any one of them;  Vaccines Group Intellectual Property Contracts means the Transferred Intellectual Property Contracts and the Owned Intellectual Property Contracts;  Vaccines Group Intellectual Property Rights means the Transferred Intellectual Property Rights and the Owned Intellectual Property Rights;  25


Vaccines Patent means any Vaccines Group Intellectual Property Right which is a Patent;  VAT means within the European Union such Taxation as may be levied in accordance with (but subject to derogations from) Council Directive 2006/112/EC and outside the European Union any Taxation levied by reference to added value or sales;  WARN Act means the Worker Adjustment and Retraining Notification Act of 1988 of the United States;  Working Capital means the aggregate amount of the working capital of the Vaccines Group Companies and Vaccines Group Businesses set out in the Closing Statement (which shall not include any amount in respect of Tax), at the Effective Time, as derived from the Closing Statement; and  Working Capital Adjustment means the amount by which the Working Capital exceeds or is less than the Base Working Capital, any such excess being treated as a positive amount and any such shortfall being treated as a negative amount.  1.2Shares  References to shares shall include, where relevant, quotas.  1.3Singular, plural, gender  References to one gender include all genders and references to the singular include the plural and vice versa.  1.4References to persons and companies  References to:  1.4.1a person include any individual, company, partnership or unincorporated association (whether or not having separate legal personality); and  1.4.2a company include any company, corporation or any body corporate, wherever incorporated.  1.5Schedules etc.  References to this Agreement shall include any Recitals and Schedules to it and references to Clauses and Schedules are to Clauses of, and Schedules to, this Agreement. References to paragraphs and Parts are to paragraphs and Parts of the Schedules.  1.6Reference to documents  References to any document (including this Agreement), or to a provision in a document, shall be construed as a reference to such document or provision as amended, supplemented, modified, restated or novated from time to time.  1.7References to enactments  Except as otherwise expressly provided in this Agreement, any express reference to an enactment (which includes any legislation in any jurisdiction) includes references (i) to that enactment as amended, consolidated or re-enacted by or under any other enactment before or after the date of this Agreement; (ii) any enactment which that enactment re-enacts (with or without modification); and (iii) any subordinate legislation (including  26


regulations) made before or after the date of this Agreement under that enactment as amended, consolidated or re-enacted as described in paragraph (i) or (ii) above, except to the extent that any of the matters referred to in paragraphs (i) to (iii) above occurs after the date of this Agreement and increases or alters the liability of the Seller or Purchaser under this Agreement.  1.8Information  References to books, records or other information mean books, records or other information in any form including paper, electronically stored data, magnetic media, film and microfilm.  1.9References to indemnify  Unless specified to the contrary, references to indemnify and indemnifying any person against any circumstance include indemnifying and holding that person harmless on an after-Tax basis and:  1.9.1references to the Purchaser indemnifying each member of the Sellers Group shall constitute undertakings by the Purchaser to the Seller for itself and on behalf of each other member of the Sellers Group;  1.9.2references to the Seller indemnifying each member of the Purchasers Group shall constitute undertakings by the Seller to the Purchaser for itself and on behalf of each other member of the Purchasers Group;  1.9.3to the extent that the obligation to indemnify relates to any Shares (including any Vaccines Group Companies) or other assets or liabilities transferred by a Share Seller or Business Seller (as the case may be) to a member of the Purchasers Group pursuant to this Agreement, references to the Seller indemnifying the Purchaser and references to the Seller indemnifying the Purchaser or any member of the Purchasers Group shall constitute undertakings by the Seller, to indemnify or procure the indemnification of the relevant purchaser of the Shares transferred by that Share Seller or the relevant purchaser of the assets or liabilities transferred by that Business Seller (as the case may be), and references to the Purchaser indemnifying the Seller and references to the Purchaser indemnifying the Seller and each member of the Sellers Group shall constitute undertakings by the Purchaser to indemnify or procure the indemnification of the relevant member of the Sellers Group; and  1.9.4where under the terms of this Agreement one party is liable to indemnify or reimburse another party in respect of any costs, charges or expenses, the payment shall include an amount equal to any VAT thereon not otherwise recoverable by the other party or any member of any group or consolidation of which it forms part for VAT purposes, subject to that party using reasonable endeavours to recover or to procure recovery of such amount of VAT as may be practicable.  For the purposes of this Clause 1.9, indemnifying and holding harmless a person on an after-Tax basis means that the amount payable pursuant to the indemnity (the Payment) shall be calculated in such a manner as will ensure that, after taking into account:  27


(i)any Tax required to be deducted or withheld from the Payment and any additional amounts required to be paid by the payer of the Payment in consequence of such withholding;  (ii)the amount and timing of any additional Tax which becomes (or would, but for the use of any credit or other relief which would otherwise have been available to reduce the Tax liabilities of any member of the Sellers Group, have become) payable by the recipient of the Payment (or a member of the Sellers Group or the Purchasers Group, as the case may be) as a result of the Payments being subject to Tax in the hands of that person; and  (iii)the amount and timing of any Tax benefit which is obtained by the recipient of the Payment (or a member of the Sellers Group or the Purchasers Group, as the case may be) to the extent that such Tax benefit is attributable to the matter giving rise to the indemnity payment or to the receipt of the Payment,  which amount and timing is to be determined by the auditors of the recipient at the shared expense of both relevant parties and is to be certified as such to the party making the Payment, the recipient of the Payment is in no better and no worse after Tax position as that in which it would have been if the matter giving rise to the indemnity payment had not occurred, provided that if either party to this Agreement shall have assigned or novated the benefit of this Agreement in whole or in part or shall, after the date of this Agreement, have changed its Tax residence or the permanent establishment to which the rights under this Agreement are allocated then no Payment to that party shall be increased by reason of the operation of paragraphs (i) to (iii) above to any greater extent than would have been the case had no such assignment, novation or change taken place.  1.10References to wholly or substantially in the Business (as carried on by the Vaccines Group)  References to wholly or substantially in the Business (as carried on by the Vaccines Group) in relation to any employee employed by a member of the Sellers Group means that such employee spends more than 70 per cent. of their time working in the Business (as carried on by the Vaccines Group) at the relevant time.  1.11Legal terms  References to any English legal term shall, in respect of any jurisdiction other than England and Wales, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction.  1.12Non-limiting effect of words  The words including, include, in particular and words of similar effect shall not be deemed to limit the general effect of the words that precede them.  1.13Currency conversion  1.13.1Subject to Clause 1.13.2, any amount to be converted from one currency into another currency for the purposes of this Agreement shall be converted into an equivalent amount at the Conversion Rate prevailing at the Relevant Date. For the purposes of this Clause 1.13:  28


Conversion Rate means the spot reference rate for a transaction between the two currencies in question as quoted by the European Central Bank on the Business Day immediately preceding the Relevant Date or, if no such rate is quoted on that date, on the preceding date on which such rates are quoted;  Relevant Date means, save as otherwise provided in this Agreement, the date on which a payment or an assessment is to be made, save that, for the following purposes, the date shall mean:  (i)for the purposes of Clause 5, the date of this Agreement;  (ii)for the purposes of Clause 7 and Schedules 16 and 23, the Closing Date; or  (iii)for the purposes of Clause 10, the date of this Agreement; and  (iv)for the purposes of the monetary amounts set out in Schedule 18, the date of this Agreement.  1.13.2The conversion of an amount from one currency into another as may be required in connection with the matters contemplated in Schedule 17 shall be carried out in accordance with the accounting policies and practices of the Purchasers Group in operation from time to time.  2Sale and Purchase of the Vaccines Group  2.1Sale and Purchase of the Vaccines Group  On and subject to the terms of this Agreement and the Local Transfer Documents:  2.1.1the Seller shall procure that the Share Sellers and Business Sellers shall sell, and  2.1.2the Purchaser shall purchase or shall procure the purchase by one or more other members of the Purchasers Group of,  the Vaccines Group as a going concern.  2.2Sale of the Shares  2.2.1The Seller shall procure that the Share Sellers shall sell the Shares, which shall be sold with Full Title Guarantee free from Encumbrances and together with all rights and advantages attaching to them as at Closing (including the right to receive all dividends or distributions declared, made or paid on or after Closing).  2.2.2The Seller shall procure that, on or prior to Closing, any and all rights of pre-emption over the Shares and the Shares or equity interests in any subsidiaries are waived irrevocably by the persons entitled thereto.  2.3Sale of the Vaccines Group Businesses  2.3.1The Seller shall sell, or shall procure that the Business Sellers shall sell, the assets comprising the Vaccines Group Businesses, under this Agreement or, where relevant, the Local Transfer Documents with Full Title Guarantee (save in respect of the Transferred Intellectual Property Rights which are not Registered Intellectual Property Rights) and free from Encumbrances other than Permitted Encumbrances (save for the Transferred Real Properties, which shall be sold free from  29


Encumbrances other than as provided in paragraph 1.9 of Schedule 3), such assets being:  (i)the Transferred Real Properties;  (ii)the Transferred Plant and Equipment;  (iii)the Transferred Inventory;  (iv)the Transferred Accounts Receivable;  (v)the Transferred Books and Records;  (vi)subject to and in accordance with Schedule 10, the Transferred Intellectual Property Rights;  (vii)subject to and in accordance with Schedule 10, the Transferred Intellectual Property Contracts;  (viii)subject to and in accordance with Schedule 10, the Transferred Contracts;  (ix)subject to and in accordance with Schedule 8, all Product Approvals and all Product Applications and all other permits, licences, certificates, registrations, marketing or other authorisations or consents issued by a Governmental Entity Predominantly Related to the Business and not held by the Vaccines Group Companies;  (x)subject to and in accordance with Schedule 8, all Marketing Authorisation Data not held by the Vaccines Group Companies;  (xi)all Business Information not held at Closing by the Vaccines Group Companies;  (xii)all rights of the Purchaser, its Affiliates and the Vaccines Group Companies as contemplated by Schedule 11 and Schedule 12;  (xiii)the Vaccines Group Goodwill; and  (xiv)all other property, rights and assets owned or held by the Sellers Group (other than the Vaccines Group Companies) and Predominantly Related to the Business at Closing (other than any property, rights and assets of the Vaccines Group expressly excluded from the sale under this Agreement).  2.3.2There shall be excluded from the sale of the Vaccines Group under this Agreement and the Local Transfer Documents the following:  (i)the Sellers Group Retained Business, including the Influenza Business;  (ii)the Non-strategic Assets to the extent not transferred to the Purchaser or a member of the Purchasers Group at Closing;  (iii)the Out-Licensing Programme;  (iv)any Intellectual Property Right that is not a Vaccines Group Intellectual Property Right (subject to the Purchaser Intellectual Property Licence Agreement and any Contract relating to Intellectual Property Rights that is not a Vaccines Group Intellectual Property Contract or the Relevant Part of a Shared Business Contract);  30


(v)any Information Technology other than Vaccines Group Information Technology;  (vi)the Seller Marks;  (vii)any product and any permits, licences, certificates, registrations, marketing or other authorisations or consents issued by any Governmental Entity in respect of any products, or any applications therefor, other than (a) the Products, Product Approvals, Products Under Registration and Pipeline Product Approvals; and (b) Permits Predominantly Related to the Business;  (viii)all cash, marketable securities and negotiable instruments, and all other cash equivalents, of the Sellers Group (other than the Vaccines Group Companies);  (ix)all real property and any leases therefor and interests therein, other than the Properties;  (x)the land and buildings of the Sellers Group at 4560 Horton Street, Emeryville CA, United States of America;  (xi)the land and buildings of the Sellers Group at Jaboatão dos Guararapes, State of Pernambuco (Brazil), together with all buildings, fixtures, and improvements erected thereon, and any other assets, rights and Contracts related thereto;  (xii)the company seal, minute books, charter documents, stock or equity record books and such other books and records pertaining to the Seller or its Affiliates (other than the Vaccines Group Companies and the Transferred Books and Records), as well as any other records or material relating to the Seller or its Affiliates (other than Vaccines Group Companies) generally and not involving or related to the Vaccines Group;  (xiii)any right of the Seller or its Affiliates to be indemnified in respect of Assumed Liabilities;  (xiv)all Tax assets (including Tax refunds and prepayments), other than Tax Assets of any Vaccines Group Company);  (xv)all Tax Returns of the Sellers Group (other than the Vaccines Group Companies) and all Tax Returns relating to Tax Groups of which persons other than Vaccines Group Companies are members and, in each case, all books and records (including working papers) related thereto;  (xvi)any rights in respect of any insurance policies of the Sellers Group as provided in Clause 14;  (xvii)all artwork, paintings, drawings, sculptures, prints, photographs, lithographs and other artistic works of the Sellers Group that are not embodiments of Vaccines Group Intellectual Property Rights;  (xviii)any rights of the Sellers Group (other than the Vaccines Group Companies) under any Intra-Group Non-Trade Payables or Intra-Group Non-Trade Receivables (excluding Transferred Accounts Receivable);  31


(xix)any rights of the Seller or its Affiliates (other than the Vaccines Group Companies) contemplated by Schedule 11 and Schedule 12;  (xx)any equity interest in any person other than a Vaccines Group Company or a Minority Interest Entity;  (xxi)the Excluded Contracts;  (xxii)all rights of the Sellers Group under this Agreement and the Ancillary Agreements;  (xxiii)the Purchase Price Bank Account;  (xxiv)the Manufacturing, production and research activity carried on by the Sellers Group at the Holly Springs Site; and  (xxv)the Diagnostics GESA.  2.3.3The Seller agrees to procure the transfer (to the extent it is able so to do) and the Purchaser agrees to accept (or procure the acceptance by another member of the Purchasers Group of) the transfer of, and to assume, pay, satisfy, discharge, perform or fulfil (or procure that another member of the Purchasers Group will assume, pay, satisfy, discharge, perform or fulfil) the Assumed Liabilities with effect from Closing.  2.3.4Clause 2.3.3 shall not apply to, and the Purchaser shall not be obliged to accept (or procure the acceptance by another member of the Purchasers Group of), the transfer of or to assume, pay, satisfy, discharge, perform or fulfil, or procure that another member of the Purchasers Group will assume, pay, satisfy, discharge, perform or fulfil:  (i)any Excluded Liability; or  (ii)any Liability to the extent it relates to an Excluded Asset.  2.3.5With prejudice to Clauses 2.1, 2.2, 2.3.1 to 2.3.4, 2.4 and 2.5 on or prior to Closing, the Seller may:  (i)assign or otherwise transfer assets, liabilities and (only where in compliance with Clause 5 (other than Clause 5.2.2)) employees between members of the Sellers Group as may be reasonably required to facilitate separation of the Business from the Influenza Business; and  (ii)otherwise, carry out or procure one or more reorganisations of the Sellers Group (including assigning or otherwise transferring assets and liabilities between members of the Sellers Group but excluding assigning or otherwise transferring assets or liabilities to Vaccines Group Companies) as may reasonably be required to facilitate the Transaction,  each, a Reorganisation.  2.3.6In respect of any Reorganisation:  (i)the Seller shall notify the Purchaser of any proposed Reorganisation, the steps proposed to be implemented and such other information as the Purchaser may reasonably request regarding the proposed Reorganisation in advance of it being implemented;  32


(ii)the Seller shall, in good faith, consult with, and take into account the reasonable views of, and any reasonable requests made by, the Purchaser in relation to any Reorganisation before it is implemented, including any proposals to reduce or avoid Liability or cost being suffered or incurred by any member of the Purchasers Group or any Vaccines Group Company;  (iii)subject to the following sub-clause (iv) of this Clause 2.3.6, all fees, costs and expenses of implementing any Reorganisation (or any part thereof) shall be borne by the Sellers Group; and  (iv)all out-of-pocket fees, costs and expenses which (x) are incurred by either party, whether before or after Closing, (y) specifically relate to the separation of the German Flu Operations from the Vaccines Group, and (z) are incurred in respect of works council consultations (including court fees, notary fees and works council legal fees) or physical separation at the Marburg Site (including IT systems workarounds, costs of new access cards and construction works), but excluding the parties own legal fees, shall, to the extent that such fees, costs and expenses arise solely as a result of such works council consultations or physical separation, be split equally between the Seller and the Purchaser. For the avoidance of doubt, this Clause 2.3.6(iv) shall not affect the cost allocation of wider measures necessary to effect the separation of the Business from the Influenza Business.  2.3.7In respect of the separation of the Influenza Business from the Vaccines Group, the parties shall work together in good faith to facilitate such separation.  2.3.8The Seller undertakes to the Purchaser (for itself and as trustee for each other member of the Purchasers Group and each Vaccines Group Company) that, with effect from Closing, the Seller will indemnify on demand and hold harmless the relevant member of the Purchasers Group (including each Vaccines Group Company) against and in respect of any and all Liabilities arising in connection with any Reorganisation (or part thereof) undertaken by the Seller, other than:  (i)such Liabilities where the allocation has been, or is, otherwise agreed between the parties;  (ii)any Liabilities of any Vaccines Group Company in respect of Tax (which shall be dealt with under the Tax Indemnity); and  (iii)any Liabilities in connection with this Agreement or any document entered into as provided by this Agreement (including the provisions of Clause 8.12) or any Ancillary Agreement.  2.4Employees and Employee Benefits  2.4.1The provisions of Schedule 11 shall apply in respect of the Employees.  2.4.2The provisions of Schedule 12 shall apply in respect of Employee Benefits.  2.5Properties  The provisions of Schedule 3 shall apply in respect of the Properties.  33


2.6Local Transfer Documents  2.6.1On Closing or at such other time as agreed between the parties, the Seller shall procure that the Share Sellers and Business Sellers execute, and the Purchaser shall execute (or procure the execution by one or more other members of the Purchasers Group of), such agreements, transfers, conveyances and other documents, as may be required pursuant to the relevant local law and otherwise as may be agreed between the Seller and the Purchaser to implement the transfer of (i) the Shares and (ii) the Vaccines Group Businesses, in each case on Closing (the Local Transfer Documents and each, a Local Transfer Document). The parties do not intend this Agreement to transfer title to any of the Shares. Title shall be transferred by the applicable Local Transfer Document.  2.6.2To the extent that the provisions of a Local Transfer Document are inconsistent with or (except to the extent they implement a transfer in accordance with this Agreement) additional to the provisions of this Agreement:  (i)the provisions of this Agreement shall prevail; and  (ii)so far as permissible under the laws of the relevant jurisdiction, the Seller and the Purchaser shall procure that the provisions of the relevant Local Transfer Document are adjusted, to the extent necessary to give effect to the provisions of this Agreement or, to the extent this is not permissible, the Seller shall indemnify the Purchaser against all Liabilities suffered by the Purchaser or its Affiliates or, as the case may be, the Purchaser shall indemnify the Seller against all Liabilities suffered by the Seller or its Affiliates, in either case through or arising from the inconsistency between the Local Transfer Document and this Agreement or the additional provisions (except to the extent they implement a transfer in accordance with this Agreement).  2.6.3If there is an adjustment to the Purchase Price under Clause 7.3 which relates to a part of the Vaccines Group which is the subject of a Local Transfer Document, then, if required to implement the adjustment and so far as permissible under Applicable Law, the Purchaser shall (or shall procure that the relevant member of the Purchasers Group will), and the Seller shall procure that its relevant Affiliate shall, enter into a supplemental agreement reflecting such adjustment and the allocation of such adjustment.  2.6.4The Seller shall not, and shall procure that none of its Affiliates shall bring any claim against the Purchaser or any member of the Purchasers Group in respect of or based upon the Local Transfer Documents save to the extent necessary to implement any transfer of the Shares or Vaccines Group Businesses as contemplated by this Agreement. To the extent that the Seller or a member of the Sellers Group does bring a claim in breach of this Clause, the Seller shall indemnify the Purchaser and each member of the Purchasers Group against all Liabilities which the Purchaser or that member of the Purchasers Group may suffer through or arising from the bringing of such a claim.  2.6.5The Purchaser shall not, and shall procure that none of its Affiliates shall, bring any claim against the Seller or any member of the Sellers Group in respect of or based upon the Local Transfer Documents save to the extent necessary to implement any transfer of the Shares or Vaccines Group Businesses as contemplated by this  34


Agreement. To the extent that the Purchaser or a member of the Purchasers Group does bring a claim in breach of this Clause, the Purchaser shall indemnify the Seller and each member of the Sellers Group against all Liabilities which the Seller or any member of the Sellers Group may suffer through or arising from the bringing of such a claim.  3Consideration  3.1Amount  3.1.1The aggregate consideration for the purchase of the Vaccines Group under this Agreement and the Local Transfer Documents (the Purchase Price) shall be an amount in US dollars equal to the sum of:  (i)US$5,255,000,000 (the Headline Price);  plus  (ii)the Vaccines Group Companies Cash Balances and the Intra-Group Non-Trade Receivables;  minus  (iii)the Third Party Indebtedness;  minus  (iv)the Intra-Group Non-Trade Payables;  minus  (v)any Employee Benefit Indemnification Amount paid in accordance with Schedule 12;  minus  (vi)the Tax Adjustment;  plus  (vii)the Working Capital Adjustment; and  plus  (viii)the Milestone Payments and the Royalty Payments.  3.2Payment of Purchase Price  The Purchase Price shall be paid by the Purchaser (for itself and on behalf of each relevant member of the Purchasers Group):  (i)other than in the case of the Milestone Payments and the Royalty Payments, by way of cash payments to the Purchase Price Bank Account pursuant to Clauses 6.3 and 7.6; and  (ii)in the case of the Milestone Payments and the Royalty Payments, pursuant to and in accordance with Schedule 17.  35


3.3Allocation of Purchase Price  The Purchase Price shall be allocated in accordance with Schedule 13.  3.4VAT  3.4.1The provisions of Schedule 14 shall apply in respect of VAT.  3.4.2The Seller and the Purchaser agree that the consideration given under this Agreement in respect of the sale of the Vaccines Group Businesses and the Shares is exclusive of any VAT. To the extent that VAT is chargeable in respect of that sale or any part thereof, the Purchaser shall, against delivery of a valid VAT invoice (or equivalent, if any), in addition to any other amount expressed in this Agreement to be payable by the Purchaser, pay or procure the payment to the Seller (on behalf of the relevant Business Seller or Share Seller as applicable) any amount of any VAT so chargeable for which the Seller (or the relevant Share Seller or Business Seller, as the case may be) is liable to account, in accordance with Schedule 14.  3.5Treatment of Payments  3.5.1If any payment is made or procured (i) by the Seller to the Purchaser or relevant member of the Purchasers Group, or (ii) by a Purchaser to the Seller or a member of the Sellers Group, in either case in respect of any claim under or for any breach of this Agreement or pursuant to an indemnity (or equivalent covenant to pay) under this Agreement, the payment shall be treated, so far as possible, as an adjustment of the consideration paid by the relevant member of the Purchasers Group for the Shares or the particular part of the Vaccines Group to which the payment and/or claim relates under this Agreement and the consideration shall be deemed to be increased or reduced (as applicable) by the amount of such payment, provided that this Clause 3.5.1 shall not require any amount to be treated as an amount in respect of the Purchase Price for the purposes of Clause 16.10 if it would not otherwise have been so treated  3.5.2If:  (i)the payment and/or claim relates to the shares in more than one Vaccines Group Company or to more than one category of Vaccines Group Business, it shall be allocated in a manner which reflects the impact of the matter to which the payment and/or claim relates, failing which it shall be allocated rateably to the shares in the Vaccines Group Companies or Vaccines Group Businesses concerned by reference to the proportions in which the consideration is allocated in accordance with Schedule 13; or  (ii)the payment and/or claim relates to no particular shares in any Vaccines Group Company or no particular category of Vaccines Group Business, it shall be allocated rateably to all the Shares and all the Vaccines Group Businesses by reference to the proportions in which the consideration is allocated in accordance with Schedule 13,  and in each case the consideration shall be deemed to have been reduced by the amount of such payment.  36


3.6Non-strategic Assets  3.6.1If, prior to Closing, any member of the Sellers Group completes the disposal of a Non-strategic Asset to a third party in accordance with clause 5.2.1, the Seller shall pay to the Purchaser at Closing the greater of:  (i)the relevant Threshold Amount; or  (ii)an amount equal to the consideration (less any Taxes, costs and expenses incurred by any member of the Sellers Group in connection with such disposal) received for the relevant Non-strategic Asset.  Any payment obligation of the Seller arising pursuant to this clause 3.6.1 shall be set-off against the Purchasers payment obligation pursuant to clause 6.3.1.  3.6.2If, following Closing, any member of the Sellers Group receives consideration for the disposal of a Non-strategic Asset, the Seller shall pay to the Purchaser, within five Business Days of the date of receipt of the consideration, the greater of:  (i)the Threshold Amount; or  (ii)an amount equal to the consideration (less any Taxes, costs and expenses incurred by any member of the Sellers Group in connection with such disposal) received for the relevant Non-strategic Asset.  4Conditions  4.1Conditions Precedent  The sale and purchase of the Vaccines Group is conditional upon satisfaction or, where applicable, waiver of the following conditions, or their satisfaction subject only to Closing:  4.1.1to the extent that the proposed acquisition of all or any of the Shares or Vaccines Group Businesses (the Transaction) either constitutes (or is deemed to constitute under Article 4(5) or Article 5(2)) a concentration with a Community dimension within the meaning of Council Regulation (EC) 139/2004 (as amended) (the Regulation) or is to be examined by the European Commission as a result of a decision under Article 22(3) of the Regulation:  (i)the European Commission taking a decision (or being deemed to have taken a decision) under Article 6(1)(b) or, if the Commission has initiated proceedings pursuant to Article 6(1)(c), under Article 8(1) or 8(2) of the Regulation declaring the Transaction compatible with the common market; or  (ii)the European Commission taking a decision (or being deemed to have taken a decision) to refer the whole or part of the Transaction to the competent authorities of one or more Member States under Articles 4(4) or 9(3) of the Regulation; and  (a)each such authority taking a decision with equivalent effect to Clause 4.1.1(i) with respect to those parts of the Transaction referred to it; and  (b)the European Commission taking any of the decisions under Clause 4.1.1(i) with respect to any part of the Transaction retained by it.  37


4.1.2any waiting period (and any extension thereof) under the HSR Act applicable to the Transaction having expired;  4.1.3to the extent required or otherwise agreed between the parties as appropriate to permit the parties to consummate the Transaction in the jurisdictions listed in Schedule 24, any additional clearances, approvals, waivers, no-action letters and consents having been obtained and any additional waiting periods having expired under applicable antitrust, merger control or foreign investment rules set forth in Schedule 24;  4.1.4receipt of CFIUS Approval if CFIUS has initiated a review of the transactions contemplated by this Agreement, whether pursuant to Clause 4.2.3 or otherwise;  4.1.5no Governmental Entity having enacted, issued, promulgated, enforced or entered any Applicable Law or Judgment (whether temporary, preliminary or permanent) that is in effect at the Closing Date and that has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of such transactions;  4.1.6the passing at a duly convened and held general meeting of the Purchaser Shareholders of an ordinary resolution validly approving the Target Asset Agreements (as defined in the Implementation Agreement) and any sale and purchase under the Put Option Agreement (as defined in the Implementation Agreement) in accordance with the Purchaser Articles of Association, the Listing Rules and all other Applicable Law (such resolution being the Purchaser Shareholder Resolution and such meeting being the Purchaser Shareholder Meeting;  4.1.7the Seller not delivering a Novartis AG Board Certificate (as defined in the Implementation Agreement), in accordance with clause 3 of the Implementation Agreement, prior to the conclusion of the vote on the Purchaser Shareholder Resolution at the Purchaser Shareholder Meeting;  4.1.8none of the Key Sites (each taken as a whole) being, or being reasonably likely to be, from or after Closing:  (i)incapable of operation in whole or part by the Purchasers Group without a member of the Purchasers Group being in breach of any Applicable Law or any other material duty or obligation; or  (ii)otherwise incapable of operation in whole or part by virtue of some other event, matter, or circumstance,  but only where the circumstances giving rise to the inability of the Purchasers Group to operate a Key Site would, or would be reasonably likely to (whether alone or together with any other such circumstances), result in:  (a)a Key Site being prohibited from, or otherwise being substantially incapable of, operation for a period of at least three consecutive or non-consecutive months in the 12 month period immediately following the Closing Date; and  (b)the manufacturing output of that Key Site in the 12 month period following the Closing Date falling by 30 per cent. or more as compared to the manufacturing output at that Key Site in the 12  38


month period ending on the corresponding date in the immediately preceding year; and  4.1.9the obtaining in form and substance satisfactory to the Purchaser of any consent, amendment, waiver or approval that the Purchaser, acting reasonably and in good faith, notifies to the Seller prior to 21 May 2014 that it wishes to obtain or be obtained for its benefit prior to Closing in relation to the [***]; and  4.1.10each of the other Target Asset Agreements having become unconditional in accordance with its terms (save for any condition in those agreements relating to this Agreement or the other of those agreements having become unconditional).  4.2Responsibility for Satisfaction  4.2.1The Purchaser and the Seller shall prepare and file the notifications necessary for the fulfilment of the conditions in Clauses 4.1.1 to 4.1.3 (the Required Notifications) as soon as reasonably practicable (with notifications under the HSR Act to be filed by 29 May 2014). Notwithstanding anything to the contrary contained in this Agreement, the Purchaser shall have primary responsibility for obtaining all consents, approvals or actions of any Governmental Entity which are required in connection with the Required Notifications.  4.2.2The Purchaser shall be responsible for payment of all filing and other fees and expenses in connection with the Required Notifications and the satisfaction of the conditions in Clauses 4.1.1 to 4.1.3.  4.2.3CFIUS:  (i)The Seller and the Purchaser shall consult, cooperate and keep each other reasonably informed regarding communications with, and requests for additional information from, CFIUS with respect to the Transaction. The Seller and the Purchaser shall use their respective reasonable best efforts to provide promptly all information that is pursuant to a request by CFIUS.  (ii)Within 60 calendar days after the execution of this Agreement, any party wishing to submit a formal joint voluntary notice to CFIUS pursuant to 31 C.F.R. Section 800.401, et. seq. (CFIUS Filing) shall provide the other party with written notice of its intent to make a CFIUS Filing (Election Date). Prior to making its election to submit a CFIUS Filing, the party wishing to make a CFIUS Filing shall consult in good faith with senior executives of the other party. If neither the Seller nor the Purchaser provides notice to submit a formal joint voluntary notice to CFIUS, a CFIUS Filing will not be made unless requested by CFIUS.  (iii)If either the Seller or the Purchaser elects to make a CFIUS Filing following the procedures and consultations in Clause 4.2.3(i) or if CFIUS requires a filing, then:  (a)the Seller and the Purchaser shall use their respective reasonable best efforts to submit a draft CFIUS Filing no later than 15 Business Days following the Election Date, and a final CFIUS Filing the earlier of (1) five business days after submitting the draft CFIUS filing or (2) five calendar days after the receipt of any comments from CFIUS staff regarding the draft CFIUS Filing;  39


(b)the Seller and the Purchaser will provide each other with the reasonable opportunity to review and comment on any information provided to CFIUS to the extent permitted by Applicable Law, with the exception of personal identifier information required under Section 800.402(c)(6)(vi)(B) of the CFIUS regulations, 31 C.F.R.. Competitively sensitive information, or information not related to the transactions contemplated by this Agreement, may be restricted to each partys external counsel to the extent reasonably considered necessary or advisable by the providing party;  (c)the Seller and the Purchaser shall each have an opportunity to approve and mutually agree on the joint contents of the CFIUS Filing and shall be jointly responsible for the accuracy of such contents.  The Seller and the Purchaser respectively, shall each be responsible for the accuracy of contents of the CFIUS Filing that exclusively relate to itself, its business, and any subsidiaries, parents or other related parties; and  (d)The Seller and the Purchaser shall use their respective reasonable best efforts to obtain CFIUS Approval as promptly as practicable and shall consult with each other on strategic matters related to obtaining such CFIUS Approval, provided that the Purchaser shall have no obligation to agree to any mitigation or other restrictive provision that could reasonably be considered to have a substantial impact on either the Business or the Purchaser.  4.2.4The party responsible for satisfaction of each condition pursuant to this Clause 4.2 shall give notice to the other party of the satisfaction of the relevant condition within one Business Day of becoming aware of the same.  4.2.5The parties shall cooperate with each other in connection with the satisfaction of the conditions in Clauses 4.1.1 to 4.1.3. The parties will consult and cooperate reasonably with one another, consider in good faith the views of one another, and provide to the other party in advance any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals they or their agents make or submit to a Governmental Entity. Without limiting the foregoing, the parties agree to: (a) give each other reasonable advance notice of all meetings with any Governmental Entity; (b) give each other an opportunity to participate in each of such meetings; (c) to the extent practicable, give each other reasonable advance notice of all substantive oral communications with any Governmental Entity; (d) if any Governmental Entity initiates a substantive oral communication, promptly notify the other party of the substance of such communication; (e) provide each other with a reasonable advance opportunity to review and comment upon all written communications (including any analyses, presentations, memoranda, briefs, arguments, opinions and proposals) with a Governmental Entity; (f) provide each other with copies of all written communications to or from any Governmental Entity; and (g) not advance arguments in connection with any regulatory review or litigation proceeding related to this Agreement (other than litigation between the parties) over the objection of the other party that would reasonably be likely to have a significant adverse impact on that other party, provided however, that neither party shall be required to comply with paragraph (b) above to the extent that the  40


Governmental Entity objects to the participation of a party, or with paragraph (e) or (f) above to the extent that such disclosure may raise regulatory concerns (in which case, the disclosure may be made on an outside counsel basis).  4.2.6The Purchaser shall, and shall cause its Affiliates to use reasonable endeavours to procure the satisfaction of the conditions in Clauses 4.1.1 to 4.1.3 as soon as reasonably possible (and, in any event, not later than the Longstop Date). Notwithstanding any other provision of this Agreement to the contrary, the Purchaser shall and, shall cause its Affiliates to use best endeavours to propose, negotiate, offer to commit and effect (and if such offer is accepted, commit to and effect), by consent decree, undertaking, hold separate order, or otherwise, the sale, divestiture, licence or disposition of its Nimenrix and Mencevax products on a global basis (excluding existing manufacturing capabilities) as may be required or desirable in order to procure the satisfaction of the conditions in Clauses 4.1.1 to 4.1.3 as soon as reasonably possible (and, in any event, not later than the Longstop Date) and to avoid the commencement of any Action or the issuing of any Decision to prohibit the acquisition or any other transaction contemplated by this Agreement or, if such Action is already commenced, to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any Action so as to enable the Closing to occur as soon as reasonably possible (and, in any event, not later than the Longstop Date):  4.2.7The Seller shall, and shall cause the Vaccines Group to use reasonable endeavours to cooperate with the Purchaser in connection with procuring the satisfaction of the conditions in Clauses 4.1.1 to 4.1.3 as soon as reasonably possible (and, in any event, not later than the Longstop Date), including providing to the Purchaser such information with respect to the Vaccines Group as the Purchaser may reasonably require in connection with satisfaction of its obligations under this Clause.  4.2.8The Purchaser and Seller shall cooperate to confirm, within 21 Business Days from signing of this Agreement, any additional merger notification requirements reasonably required or advisable in respect of the Transaction in jurisdictions beyond those listed in Schedule 24, and shall cooperate with each other, within the meaning of Clause 4.2.6, in achieving any additional clearances, approvals and consents or waiting period expirations in such jurisdictions. For the avoidance of doubt, Closing shall not be conditional upon such additional clearances, approvals and consents or waiting period expirations.  4.2.9The Purchaser and Seller shall cooperate, in the manner contemplated in Clause 4.2.6, and use reasonable endeavours to ensure that no Governmental Entity shall enact, issue, promulgate, enforce or enter any Applicable Law or Judgment as contemplated under Clause 4.1.5. In the event that any Governmental Entity enacts, issues, promulgates, enforces or enters any Applicable Law or Judgment as contemplated under Clause 4.1.5, the Seller and the Purchaser shall cooperate and use reasonable endeavours to put in place arrangements that would allow the Transaction to complete to the greatest possible extent in compliance with the relevant Applicable Law or Judgment.  4.2.10Without prejudice to the provisions of Schedule 3, each of the Seller and the Purchaser shall, and shall procure that each of its respective Affiliates shall, cooperate with each other in relation to the satisfaction of the condition set out in  41


Clause 4.1.8, and shall use its reasonable endeavours to ensure that the condition set out in Clause 4.1.8 is satisfied at Closing.  4.2.11The Seller shall use best efforts to obtain the consents, amendments, waivers and approvals referred to in Clause 4.1.9 prior to the Closing Date. The cost of obtaining such consents, amendments, waivers and approvals shall be borne by the Seller, including any payment or other incentive that may (whether required to be offered or not) be offered to [***] and/or [***] or any of their respective Affiliates in order to obtain such consents, amendments, waivers and approvals. The Purchaser shall, and shall cause its Affiliates to cooperate with the Seller in connection with obtaining the consents, amendments, waivers and approvals referred to in Clause 4.1.9 and use its reasonable endeavours to ensure that such conditions are satisfied at Closing, including providing to the Seller such information as the Seller may reasonably require in connection with the satisfaction of its obligations under this Clause 4.2.11.  4.3Non-Satisfaction by the Long Stop Date  4.3.1The Purchaser may at any time waive in whole or in part (and conditionally or unconditionally) the conditions set out in Clause 4.1.8 or 4.1.9 by notice in writing to the Seller.  4.3.2If the conditions in Clause 4.1 are not satisfied (or waived in accordance with Clause 4.3.1) as of 22 October 2015 (the Long Stop Date), the Purchaser or the Seller may, in its sole discretion, terminate this Agreement (other than Clauses 1, 13 and 16.2 to 16.14) and no party shall have any claim against the other under it, save for any claim arising from breach of any obligation contained in such Clauses or Clause 4.2. Neither the Seller nor the Purchaser may terminate this Agreement after satisfaction or waiver of the conditions in Clause 4.1, except in accordance with this Agreement.  4.4Termination  4.4.1This Agreement may be terminated at any time prior to Closing:  (i)by written consent of the Seller and the Purchaser;  (ii)by either the Seller or the Purchaser by notice to the other party in the event that any Judgment restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement shall have become final and non-appealable, provided that the party seeking to terminate this Agreement pursuant to this Clause 4.4 has complied with the terms of the Implementation Agreement and this Agreement in connection with having such Judgment vacated or denied; or  (iii)by the Purchaser by notice to the Seller if:  (a)a Material Adverse Effect occurs prior to Closing (which shall include any breach or breaches of Clause 9.1 which alone or together constitute a Material Adverse Effect); or  (b)the Seller fails to provide a Certificate immediately prior to Closing; or  (iv)in accordance with the terms of the Implementation Agreement.  42


4.4.2This Agreement shall terminate automatically at any time prior to Closing in the event that:  (i)any other Target Asset Agreement terminates or is terminated in accordance with its terms; or  (ii)the Novartis Break Fee and/or the GSK Break Fee becomes payable under clause 5.1 or clause 5.8 of the Implementation Agreement, respectively.  4.4.3Save as provided in this Clause 4, neither party shall be entitled to terminate or rescind this Agreement (whether before or after Closing). If this Agreement is terminated pursuant to this Clause 4.4, this Agreement shall be of no further force and effect and there shall be no further liability under this Agreement or any of the Ancillary Agreements on the part of any party, except that Clauses 1, 13 and 16.2 to 16.14, in each case, to the extent applicable, shall survive any termination.  4.4.4Nothing in this Clause 4.4 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement prior to termination of this Agreement.  5Pre-Closing  5.1The Sellers Obligations in Relation to the Business  5.1.1The Seller undertakes to procure that between the date of this Agreement and Closing, it and the relevant members of the Sellers Group shall, so far as permitted by Applicable Law, carry on the Business as carried on by the Vaccines Group as a going concern in the ordinary course as carried on immediately prior to the date of this Agreement save in so far as agreed in writing by the Purchaser (such consent not to be unreasonably withheld or delayed).  5.1.2Without prejudice to the generality of Clause 5.1.1 and subject to Clause 5.2, the Seller undertakes to procure that, with respect to the Business as carried on by the Vaccines Group, between the date of this Agreement and Closing, no member of the Sellers Group shall, except as may be required to comply with this Agreement, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed), take any of the actions listed in Part 1 of Schedule 20.  5.1.3Without prejudice to the generality of Clause 5.1.1, the Seller shall, in each case with respect to the Business as carried on by the Vaccines Group only: (i) undertake to procure the satisfaction of its obligations listed in paragraph 1, Part 2 of Schedule 20; and (ii) procure that the Vaccines Group shall, between the date of this Agreement and Closing, comply with the requirements of paragraph 2, Part 2 of Schedule 20.  5.2Exceptions to Sellers Obligations in Relation to the Conduct of Business  Clause 5.1 shall not operate so as to prevent or restrict:  5.2.1the disposal or transfer by one or more members of the Sellers Group of any or all of the Non-strategic Assets;  5.2.2any matter undertaken by any member of the Sellers Group to facilitate or implement a Reorganisation in accordance with Clause 2.3.5;  43


5.2.3any matter undertaken by any member of the Vaccines Group that is set out in Part 3 of Schedule 20;  5.2.4any action to the extent it is required to be undertaken to comply with Applicable Law; or  5.2.5any matter reasonably undertaken by any member of the Sellers Group in an emergency or disaster situation with the intention of minimising any adverse effect of such situation in relation to the Vaccines Group and where any delay arising by virtue of having to give notice to the Purchaser and await consent would materially prejudice the Vaccines Group,  provided that the Seller shall notify the Purchaser as soon as reasonably practicable of any action taken or proposed to be taken as described in Clause 5.2.4, shall provide to the Purchaser all such information as the Purchaser may reasonably request and shall use reasonable endeavours to consult with the Purchaser in respect of any such action.  5.3The Sellers obligations in relation to insurance  Without prejudice to the generality of this Clause 5, between the date of this Agreement and Closing, the Seller shall or shall procure that the relevant members of the Sellers Group shall maintain in force all Vaccines Group Insurance Policies and all Sellers Group Insurance Policies for the benefit of the Vaccines Group Businesses and Vaccines Group Companies.  5.4The Sellers obligations in relation to cash, Intra-Group Non-Trade Payables and Receivables and Third Party Indebtedness  Prior to Closing, the Seller shall seek to minimise the amounts which would, but for this Clause 5.4, otherwise fall to be treated as:  (i)Intra-Group Non-Trade Payables;  (ii)Intra-Group Non-Trade Receivables;  (iii)Vaccines Group Companies Cash Balances; and  (iv)Third Party Indebtedness,  in each case to the extent reasonably possible, taking into account the consequences of any such reduction for the Sellers Group.  5.5Other Sellers Obligations Prior to Closing  Without prejudice to the generality of this Clause 5, prior to Closing the Seller shall, and shall procure that the relevant Vaccines Group Companies, the Seller and the Sellers Affiliates shall allow the Purchaser and its respective agents, upon reasonable notice, reasonable access to, and to take copies of, the books, records and documents of or relating in whole or in part to the Vaccines Group, provided that the obligations of the Seller under this Clause shall not extend to allowing access to information which is (i) reasonably regarded as confidential to the activities of the Seller and the Sellers Group otherwise than in relation to the Vaccines Group or (ii) commercially sensitive; or (iii) other information of the Vaccines Group if such information cannot be shared with the Purchaser prior to Closing in compliance with Applicable Law (though the Seller shall seek to share such information with the Purchaser to the extent and in such a manner as would comply with Applicable Law).  44


5.6Affiliate Contracts  5.6.1Other than as provided in the Ancillary Agreements and subject to Clauses 5.6.3 and 8.6, the Seller and the Purchaser shall procure that:  (i)the Cash Pooling Arrangements; and  (ii)each Affiliate Contract in force immediately prior to Closing,  shall terminate prior to Closing and each counterparty thereto shall, effective as of Closing, settle all outstanding financial obligations arising out of such Affiliate Contracts and unconditionally release and irrevocably discharge each other party thereto from (i) any and all further obligations to perform or any further performance of the various covenants, undertakings, warranties and other obligations contained in such Affiliate Contract and (ii) any and all claims and Liabilities whatsoever arising out of, in any way connected with, as a result of or in respect of such Affiliate Contract.  5.6.2As soon as practicable following the date of this Agreement, and in any event within one month of the date of this Agreement, the Seller shall provide a copy of each Affiliate Contract that is material to the Vaccines Group and is in writing to the Purchaser. Within two months of the date of this Agreement, the Purchaser shall notify the Seller of the services provided under the Affiliate Contracts from the Sellers Group which the Purchaser reasonably requires in order to operate the business of the Vaccines Group as it is carried on at the date of this Agreement to continue to receive on the same terms as contained in the relevant Affiliate Contract for a maximum period of 6 months following Closing provided that such services are not addressed by the Ancillary Agreements.  5.6.3Any Affiliate Contract between or among Sandoz GmbH or Novartis Pharma Stein AG on the one hand, and any Vaccines Group Company on the other hand, and entered into after the date hereof with the written consent of the Purchaser, shall not terminate prior to Closing in accordance with Clause 5.6.1, and shall transfer to the Purchaser upon Closing pursuant to Clause 2.3.1(viii).  5.7Tax Groups  5.7.1The Seller shall take all reasonable steps to procure that any Tax Consolidation existing between any member of the Sellers Group Company and any Vaccines Group Company be terminated on or before Closing, so far as permitted by the applicable law, or otherwise on the earliest date on which such termination is permitted under applicable law, and the Seller and the Purchaser shall take such action as is necessary to procure or effect this, including timely submitting any necessary Tax documents.  5.7.2Pending the taking effect of the action referred to in Clause 5.7.1, and for so long thereafter as may be necessary, the Purchaser shall (subject to the provisions of the Tax Indemnity) procure that such information is provided to the Seller as may reasonably be required to enable any relevant member of the Sellers Group to make all Tax Returns and other filings required of it in respect of the Tax Consolidation.  5.7.3The Seller and the Purchaser shall cooperate in good faith to take, and procure that each member of the Sellers Group and the Purchasers Group takes, all  45


reasonable procedural or administrative steps (including the making of elections and filings with relevant Tax Authorities) which are reasonably necessary to procure the minimisation of the extent to which Tax liabilities of members of the Sellers Group (other than Vaccines Group Companies) can be assessed on members of the Purchasers Group or on Vaccines Group Companies.  5.7.4The Seller shall take all reasonable steps to procure that Chiron Panacea Vaccines Limited is finally liquidated and ceases to exist before Closing.  6Closing  6.1Date and Place  Closing shall take place simultaneously with closing under the other Target Asset Agreements at 11.59 p.m. (Central European Time) at the offices of Freshfields Bruckhaus Deringer, 65 Fleet Street, London EC4Y 1HS (other than in respect of any Local Transfer Documents agreed between the parties to be executed in another jurisdiction) on the last Business Day of the month in which fulfilment or waiver of the last of the condition(s) set out in Clause 4.1 to be fulfilled or waived takes place, except that:  6.1.1where the last day of such month is not a Business Day, Closing shall instead take place on the first Business Day of the following month; and  6.1.2where less than five Business Days remain between such fulfilment or waiver and the last Business Day of the month, Closing shall take place:  (i)on the last Business Day of the following month;  (ii)where the last day of such month is not a Business Day, Closing shall instead take place on the first Business Day of the month following the month referred to in Clause 6.1.2(i); or  (iii)at such other location, time or date as may be agreed between the Purchaser and the Seller in writing.  provided that:  (a)Closing shall not take place and shall not be effective in any circumstances unless closing also takes place under and in accordance with the terms of the other Target Asset Agreements at the same time; and  (b)in determining the date on which the last of the conditions set out in Clause 4.1 is fulfilled or waived, the date shall be the date on which the last of the conditions set out in Clauses 4.1.1, 4.1.2, 4.1.3, 4.1.4, 4.1.6, 4.1.7 and 4.1.9 is fulfilled or waived unless any of the conditions set out in Clauses 4.1.5 and 4.1.8 is not fulfilled or waived on that date, in which case the date shall then be the first following date on which all of the conditions set out in Clauses 4.1.5 and 4.1.8 are fulfilled or waived.  6.2Closing Events  6.2.1On Closing, the parties shall comply with their respective obligations specified in Schedule 15. The Seller may waive some or all of the obligations of the Purchaser as set out in Schedule 15 and the Purchaser may waive some or all of the obligations of the Seller as set out in Schedule 15.  46


6.2.2The parties acknowledge that the transfer of Product Approvals and Product Applications to the Purchaser or other members of the Purchasers Group may be subject to the approval of applicable Governmental Entities, and that, notwithstanding anything in this Agreement to the contrary, each Product Approval and Product Application shall continue to be held by the relevant member of the Sellers Group from the Closing Date until the relevant PA Transfer Date.  6.2.3The parties shall perform their respective obligations with respect to:  (i)the transfer of the Product Approvals, Product Applications and Pipeline Product Approvals as set out in Schedule 8;  (ii)the transfer of Contracts (other than Product Approvals, Product Applications and Pipeline Product Approvals) and the Transferred Intellectual Property Contracts as set out in Schedule 10 and the treatment of Shared Business Contracts; and  (iii)to the extent the Purchaser has elected to have the Relevant Part of a Shared Business Contract transferred to it, the separation of each Shared Business Contract as set out in Schedule 10.  6.3Payment on Closing  6.3.1On Closing the Purchaser shall pay (for itself and on behalf of each relevant member of the Purchasers Group in accordance with Clause 16.6) an amount in cleared funds, to the Seller to the Purchase Price Bank Account, which is equal to the sum of:  (i)the Headline Price;  plus  (ii)the Estimated Vaccines Group Companies Cash Balances and the Estimated Intra-Group Non-Trade Receivables;  minus  (iii)the Estimated Third Party Indebtedness  minus  (iv)the Estimated Intra-Group Non-Trade Payables;  minus  (v)any Estimated Employee Benefit Adjustment;  minus  (vi)the Estimated Tax Adjustment  plus  (vii)the Estimated Working Capital Adjustment.  6.4Notifications to determine payments on Closing  6.4.1Five Business Days prior to Closing, the Seller shall notify the Purchaser of:  (i)the Estimated Vaccines Group Companies Cash Balances;  47


(ii)the Estimated Third Party Indebtedness;  (iii)the Estimated Intra-Group Non-Trade Receivables;  (iv)the Estimated Intra-Group Non-Trade Payables;  (v)any Estimated Employee Benefit Adjustment;  (vi)the Estimated Tax Adjustment;  (vii)the Estimated Working Capital; and  (viii)the Estimated Working Capital Adjustment,  and shall at the same time provide to the Purchaser reasonable supporting calculations and information to enable the Purchaser to review the basis on which the estimates have been prepared.  6.4.2The Sellers notification pursuant to Clause 6.4.1 shall specify the relevant debtor and creditor for each Estimated Intra-Group Payable and Estimated Intra-Group Receivable.  6.4.3Immediately following Closing:  (i)the Purchaser shall procure that each Vaccines Group Company repays to the relevant member of the Sellers Group the amount of any Estimated Intra-Group Non-Trade Payables and shall acknowledge on behalf of each Group Company the payment of the Estimated Intra-Group Non-Trade Receivables in accordance with Clause 6.4.3(ii); and  (ii)the Seller shall procure that each relevant member of the Sellers Group repays to the relevant Vaccines Group Company the amount of any Estimated Intra-Group Non-Trade Receivables and shall acknowledge on behalf of each relevant member of the Sellers Group the payment of the Estimated Intra-Group Non-Trade Payables in accordance with Clause 6.4.3(i).  6.4.4The repayments made pursuant to Clause 6.4.3 shall be adjusted in accordance with Clauses 7.3 and 7.4 when the Closing Statement becomes final and binding in accordance with Clause 7.2.1.  6.5Breach of Closing Obligations  If any party fails to comply with any material obligation in Clauses 6.2, 6.3 or 6.4, or Schedule 15 in relation to Closing, the Purchaser, in the case of non-compliance by the Seller, or the Seller, in the case of non-compliance by the Purchaser, shall be entitled (in addition to and without prejudice to all other rights or remedies available) by written notice to the Seller or the Purchaser fix a new date for Closing which, except as agreed by the parties, shall be the last day of the month next ending or, if that day is not a Business Day, the first Business Day falling after that day, in which case the provisions of Schedule 15 shall apply to Closing as so deferred, but provided such deferral may only occur once.  In all circumstances Closing shall only occur simultaneously with closing under the other Target Asset Agreements.  48


7Post-Closing Adjustments  7.1Closing Statements  7.1.1The Seller shall procure that as soon as practicable following Closing there shall be drawn up a draft of the Closing Statement (the Draft Closing Statement) in accordance with Schedule 16 in relation to the Vaccines Group Companies and Vaccines Group Businesses, on a combined basis.  7.1.2The Closing Statement shall be drawn up as at the Effective Time.  7.2Determination of Closing Statement  7.2.1The Draft Closing Statement as agreed or determined pursuant to paragraph 1 of Part 1 of Schedule 16:  (i)shall constitute the Closing Statement for the purposes of this Agreement; and  (ii)shall be final and binding on the parties.  7.2.2The Working Capital, the Vaccines Group Companies Cash Balances, the Third Party Indebtedness, the Intra-Group Non-Trade Receivables, the Intra-Group Non-Trade Payables and the Tax Adjustment shall be derived from the Closing Statement.  7.3Adjustments to Purchase Price  7.3.1Vaccines Group Companies Cash Balances:  (i)if the Vaccines Group Companies Cash Balances are less than the Estimated Vaccines Group Companies Cash Balances, the Seller shall repay to the Purchaser an amount equal to the deficiency; or  (ii)if the Vaccines Group Companies Cash Balances are greater than the Estimated Vaccines Group Companies Cash Balances, the Purchaser shall pay to the Seller an additional amount equal to the excess.  7.3.2Intra-Group Non-Trade Receivables:  (i)if the Intra-Group Non-Trade Receivables are less than the Estimated Intra-Group Non-Trade Receivables, the Seller shall repay to the Purchaser an amount equal to the deficiency; or  (ii)if the Intra-Group Non-Trade Receivables are greater than the Estimated Intra-Group Non-Trade Receivables, the Purchaser shall pay to the Seller an additional amount equal to the excess.  7.3.3Third Party Indebtedness:  (i)if the Third Party Indebtedness is greater in magnitude than the Estimated Third Party Indebtedness, the Seller shall repay to the Purchaser an amount equal to the excess; or  (ii)if the Third Party Indebtedness is less in magnitude than the Estimated Third Party Indebtedness, the Purchaser shall pay to the Seller an additional amount equal to the deficiency.  49


7.3.4Intra-Group Non-Trade Payables:  (i)if the Intra-Group Non-Trade Payables are greater in magnitude than the Estimated Intra-Group Non-Trade Payables, the Seller shall repay to the Purchaser an amount equal to the excess; or  (ii)if the Intra-Group Non-Trade Payables are less in magnitude than the Estimated Intra-Group Non-Trade Payables, the Purchaser shall pay to the Seller an additional amount equal to the deficiency.  7.3.5Tax Adjustment  (i)if the Tax Adjustment is greater than the Estimated Tax Adjustment, the Seller shall repay to the Purchaser an amount equal to the difference; or  (ii)if the Tax Adjustment is less than the Estimated Tax Adjustment, the Purchaser shall pay to the Seller an additional amount equal to the difference.  7.3.6Working Capital:  (i)if the Working Capital Adjustment is less than the Estimated Working Capital Adjustment, the Seller shall repay to the Purchaser an amount equal to the deficiency; or  (ii)if the Working Capital Adjustment exceeds the Estimated Working Capital Adjustment, the Purchaser shall pay to the Seller an additional amount equal to the excess.  7.4Adjustments to repayment of Intra-Group Non-Trade Payables and Intra-Group Non-Trade Receivables  Following the determination of the Closing Statement pursuant to Clause 7.2 and paragraph 1 of Part 1 of Schedule 16, if the amount of any Intra-Group Non-Trade Payable and/or any Intra-Group Non-Trade Receivable contained in the Closing Statement is greater or less than the amount of the corresponding Estimated Intra-Group Non-Trade Payable or Estimated Intra-Group Non-Trade Receivable, then the Seller and the Purchaser shall procure that such adjustments to the repayments pursuant to Clause 6.4.3 are made as are necessary to ensure that (taking into account such adjustments) the actual amount of each Intra-Group Non-Trade Payable and each Intra-Group Non-Trade Receivable has been repaid by each Group Company to the relevant member of the Sellers Group or by the relevant member of the Sellers Group to the relevant Group Company, as the case may be.  7.5Interest  Any payment to be made in accordance with Clause 7.3 shall include interest thereon calculated from the Closing Date to the date of payment at a rate per annum of LIBOR.  7.6Payment  7.6.1Any payments pursuant to Clause 7.3 or 7.4, and any interest payable pursuant to Clause 7.5, shall be made on or before the Final Payment Date.  50


7.6.2Where any payment is required to be made pursuant to Clause 7.3 or Clause 7.5 (in relation to a payment pursuant to Clause 7.3) the payment made on account of the Purchase Price shall be reduced or increased accordingly.  7.6.3Where any payment is required to be made pursuant to Schedule 12, the payment made shall be deemed to be a reduction to the Purchase Price.  8Post-Closing Obligations  8.1Indemnities  8.1.1Indemnity by the Purchaser against Assumed Liabilities  The Purchaser hereby undertakes to the Seller (for itself and on behalf of each other member of the Sellers Group and their respective directors, officers, employees and agents) that, with effect from Closing, the Purchaser will indemnify on demand and hold harmless each member of the Sellers Group and their respective directors, officers, employees and agents against and in respect of any and all Assumed Liabilities.  8.1.2Indemnities by Seller  Subject to Clause 8.1.3, the Seller hereby undertakes to the Purchaser (for itself and on behalf of each other member of the Purchasers Group and their respective directors, officers, employees and agents) that, with effect from Closing, the Seller will indemnify on demand and hold harmless each member of the Purchasers Group and their respective directors, officers, employees and agents against and in respect of any and all:  (i)Excluded Liabilities; and  (ii)Liabilities, including legal fees, to the extent they have arisen or arise (whether before or after Closing) as a result of or otherwise relate to any act, omission, fact, matter, circumstance or event undertaken, occurring or in existence or arising before Closing so far as related to: (A) any breach of any anti-bribery warranty, including without limitation those set forth in paragraphs 9.1 through 9.6 of Schedule 18, not being true and correct when made; (B) any government inquiries or investigations involving the Seller or its Affiliates or associated persons; (C) save to the extent in existence as at the date of this Agreement, any limitation, restriction or other reduction in drug registrations, licenses, listings or marketing approvals, government pricing or reimbursement rates relating to the Products including specifically the value of lost future profits as a result of any such limitation, restriction or reduction; or (D) any other claim, litigation, investigation or proceeding to the extent related to any of the foregoing (A) to (C), including but not limited to costs of investigation and defense and legal fees.  8.1.3Limitations on Indemnities  Subject to Clause 8.1.4, the Seller shall not be liable under Clause 8.1.2 in respect of:  (i)any Time-Limited Excluded Liability unless a notice of claim in respect of the matter giving rise to such Liability is given by the Purchaser to the  51


Seller within ten years of Closing, provided that this sub-Clause (i) shall not apply in respect of any claim by the Purchaser which relates to:  (a)a Product Liability;  (b)a Governmental Liability;  (c)a Clinical Trials/Data Liability;  (d)an IP Liability; or  (e)an Excluded Asset;  (ii)any claim if and to the extent that the relevant Liability is included in the Closing Statement; or  (iii)any individual claim (or a series of claims arising from similar or identical facts or circumstances) where the Liability (disregarding the provisions of this Clause 8.1.3(iii))) in respect of any such claim or series of claims does not exceed US$10 million, provided that, for the avoidance of doubt, where the Liability in respect of any such claim or series of claims exceeds US$10 million, the Liability of the Seller shall be for the whole amount of such claim(s) and not just the excess.  8.1.4Disapplication of limitations  None of the limitations contained in Clause 8.1.3 shall apply to any claim to the extent that such claim which arises or is increased, or to the extent to which it arises or is increased, as the consequence of, or which is delayed as a result of, fraud by any member of the Sellers Group or any director, officer or employee of any member of the Sellers Group.  8.2Conduct of Claims  8.2.1Assumed Liabilities  (i)If the Seller becomes aware after Closing of any claim by a third party which constitutes or may constitute an Assumed Liability, the Seller shall as soon as reasonably practicable:  (a)give written notice thereof to the Purchaser, setting out such information as is available to the Seller as is reasonably necessary to enable the Purchaser to assess the merits of the potential claim;  (b)take all appropriate actions to preserve evidence; and  (c)provide the Purchaser with periodic updates on the status of the claim upon request and shall not admit, compromise, settle, discharge or otherwise deal with such claim without the prior written agreement of the Purchaser (such agreement not to be unreasonably withheld or delayed).  (ii)The Seller shall, and shall procure that each Share Seller and Business Seller shall, take such action as the Purchaser may reasonably request to avoid, dispute, resist, appeal, compromise, defend or mitigate any claim which constitutes or may constitute an Assumed Liability subject to the Seller and each Share Seller and Business Seller being indemnified and  52


secured to their reasonable satisfaction by the Purchaser against all Liabilities which may thereby be incurred. In connection therewith, the Seller shall make or procure to be made available to the Purchaser or their duly authorised agents on reasonable notice during normal business hours all relevant books of account, records and correspondence relating to the Vaccines Group Businesses which have been retained by the Sellers Group (and shall permit the Purchaser to take copies thereof at its expense) for the purposes of enabling the Purchaser to ascertain or extract any information relevant to the claim.  8.2.2Excluded Liabilities  (i)If the Purchaser becomes aware after Closing of any claim by a third party which constitutes or may constitute an Excluded Liability or relates to an Excluded Liability or any investigations related thereto, regardless of whether the Purchaser believes that such claim would be made against a member of the Purchasers Group or a member of the Sellers Group, the Purchaser shall as soon as reasonably practicable:  (a)give written notice thereof to the Seller, setting out such information as is available to the Purchaser as is reasonably necessary to enable the Seller to assess the merits of the potential claim;  (b)take all appropriate actions to preserve evidence; and  (c)provide the Seller with periodic updates on the status upon request and shall not admit, compromise, settle, discharge or otherwise deal with such claim without the prior written agreement of the Seller (such agreement not to be unreasonably withheld or delayed).  (ii)The Purchaser shall take such action as the Seller may reasonably request to avoid, dispute, resist, appeal, compromise, defend or mitigate any claim which constitutes or may constitute an Excluded Liability subject to the Purchaser being indemnified and secured to its reasonable satisfaction by the Seller against all Liabilities which may thereby be incurred.  (iii)In addition, where any such claim or investigation involves a Governmental Entity, the Purchaser shall, subject to Applicable Law, the requirements of the Relevant Governmental Entity and the Seller providing an appropriate confidentiality undertaking in favour of the Purchasers Group, provide to the Seller, at least five Business Days in advance (or, where not possible, as soon as reasonably possible), any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals they or their agents make or submit to a Governmental Entity. Without limiting the foregoing, the parties agree, subject to the Applicable Law, and the requirements of the relevant Governmental Entity, and the Seller providing an appropriate confidentiality undertaking in favour of the Purchasers Group, to:  (a)give the Seller reasonable advance notice of all meetings with any Governmental Entity;  (b)give the Seller an opportunity to participate in each of such meetings;  53


(c)to the extent practicable, give the Seller reasonable advance notice of all substantive oral communications with any Governmental Entity;  (d)if any Governmental Entity initiates a substantive oral communication, promptly notify the Seller of the substance of such communication;  (e)provide the Seller with a reasonable advance opportunity to review and comment upon all substantive written communications (including any substantive correspondence, analyses, presentations, memoranda, briefs, arguments, opinions and proposals) that the Purchaser or its agents intend to make or submit to a Governmental Entity in connection with such claim;  (f)provide the Seller with copies of all substantive written communications to or from any Governmental Entity; and  (g)not advance arguments with the Governmental Entity without prior agreement of the Seller that would reasonably be likely to have a significant adverse impact on the Seller, provided however, that the Purchaser shall not be required to comply with paragraph (b) above to the extent that the Governmental Entity objects to the participation of a party, or with paragraph (e) or (f) above to the extent that such disclosure may raise regulatory concerns (in which case, the disclosure may be made on an outside counsel basis).  (iv)Other than in respect of any claim to the extent it relates to an IP Liability, a Commercial Practices Liability or a Governmental Liability (other than in respect of any Liability arising solely by virtue of a breach of any Contract with any Governmental Entity which breach does not also constitute a breach of Applicable Law), the Seller shall be entitled at its own expense and in its absolute discretion, by notice in writing to the Purchaser, to take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest any such claim (including making counterclaims or other claims against third parties) in the name of and on behalf of the Purchaser or other member of the Purchasers Group concerned and to have the conduct of any related proceedings, negotiations or appeals. In taking action on behalf of any member of the Purchasers Group as permitted by this Clause 8.2, the Seller shall, in good faith, take into account and have due regard to any reputational matters or issues arising out of the claim for any member of the Purchasers Group or any of their respective directors, officers, employees or agents which are brought to its attention by the Purchaser or a member of the Purchasers Group.  (v)Without limitation to the Sellers rights pursuant to Clause 8.10, the Purchaser shall make or procure to be made available to the Seller or its duly authorised agents on reasonable notice during normal business hours full and free access to all relevant books of account, records and correspondence relating to the Vaccines Group which are in the possession of the Purchaser or any member of the Purchasers Group (and shall permit  54


the Seller to take copies thereof) for the purposes of enabling the Seller to ascertain or extract any information relevant to the claim.  (vi)The Purchaser shall, and shall procure that each other member of the Purchasers Group shall, on reasonable notice from the Seller, give such assistance to the Seller as it may reasonably require in relation to the claim including providing the Seller or any member of the Sellers Group and its representative and advisers with access to and assistance from directors, officers, managers, employees, advisers, agents or consultants of the Purchaser and/or of each other member of the Purchasers Group (collectively, the Relevant Persons) and the Purchaser will use its reasonable endeavours to procure that such Relevant Persons comply with any reasonable requests from the Seller and generally co-operates with and assists the Seller and other members of the Sellers Group.  (vii)When seeking assistance under Clauses 8.2.2(v) and (vi), the Seller, or any other relevant member of the Sellers Group, shall use reasonable endeavours to minimise interference with the Purchaser and the Purchasers Groups conduct of the relevant business or the performance by the Relevant Persons of their employment duties.  8.3Release of Guarantees  8.3.1The Purchaser shall use reasonable endeavours to procure as soon as reasonably practicable after Closing, the release of the Seller or any member of the Sellers Group from any securities, guarantees or indemnities given by or binding upon the Seller or any member of the Sellers Group in respect of the Assumed Liabilities or in connection with a liability of any of the Vaccines Group Companies (other than an Excluded Liability). Pending such release, the Purchaser shall indemnify the Seller and any member of the Sellers Group against all amounts paid by any of them (acting reasonably) pursuant to any such securities, guarantees or indemnities in respect of such Assumed Liabilities or such liability of the Vaccines Group Companies (other than an Excluded Liability).  8.3.2The Seller shall use reasonable endeavours to procure by Closing or, to the extent not done by Closing, as soon as reasonably practicable after Closing, the release of the Vaccines Group Companies from any securities, guarantees or indemnities given by or binding upon the Vaccines Group Companies in respect of any liability of the Seller or any member of the Sellers Group. Pending such release, the Seller shall indemnify the Vaccines Group Companies against all amounts paid by any of them (acting reasonably) pursuant to any such securities, guarantees or indemnities in respect of such liability of the Seller which arises after Closing.  8.4Transferred Accounts Payable  If at any time after Closing, the Seller or any of its Affiliates pays any monies in respect of any Transferred Accounts Payable, then the Purchaser shall pay or procure payment to the Seller (for the relevant Business Seller), as soon as reasonably practicable the amount paid, plus any Taxation suffered or incurred by the Sellers Group which would not have arisen but for the payment and receipt of such monies.  55


8.5Transferred Accounts Receivable  If at any time after Closing, a Business Seller receives any monies in respect of any Transferred Accounts Receivable, then the Business Seller shall pay or procure payment to the Purchaser, as soon as reasonably practicable the amount recovered, less any Taxation suffered or incurred by the Sellers Group which would not have arisen but for the receipt and payment of such monies.  8.6Intra-Group Trading Balances  Any Intra-Group Trading Balances shall be settled after Closing in the ordinary course of business and, in any event, within 60 days of Closing.  8.7Transfer of Marketing Authorisations  8.7.1The transfer of the Marketing Authorisations following Closing shall take place in accordance with Part 2 of Schedule 8 and the terms of the Manufacturing, Supply and Distribution Agreement.  8.7.2Between the Closing Date and the Marketing Authorisation Transfer Date, the Seller agrees to assist the Purchaser in accordance with Part 4 of Schedule 8 in respect of any tenders relating to the Products.  8.8Wrong Pockets Obligations  8.8.1Except as provided in Schedules 3, 8, 10, 11 and 12, if any property, right or asset forming part of the Vaccines Group (other than any property, right or asset expressly excluded from the sale under this Agreement) has not been transferred to the Purchaser or to another member of the Purchasers Group and should have transferred pursuant to the terms of this Agreement, the Seller shall procure that such property, right or asset (and any related liability which is an Assumed Liability) is transferred to the Purchaser, or to such other member of the Purchasers Group as the Purchaser may nominate reasonably acceptable to the Seller, as soon as practicable and at no cost to the Purchaser.  8.8.2If, following Closing, any property, right or asset not forming part of the Vaccines Group (other than any property, right or asset expressly included in the sale under this Agreement) is found to have been transferred to the Purchaser or to another member of the Purchasers Group and should not have transferred pursuant to the terms of this Agreement, the Purchaser shall procure that such property, right or asset is transferred to the transferor or another member of the Sellers Group nominated by the Seller reasonably acceptable to the Purchaser as soon as practicable and at no cost to the Seller.  8.9Covenant not to sue  8.9.1The Seller hereby undertakes not to enforce, at any time after Closing, any Out of Scope Patent against the Purchasers Group in relation to the Purchasers Group carrying on the Business as at the date of Closing.  8.9.2The Purchaser hereby undertakes not to enforce, at any time after Closing, any Vaccines Patent against the Sellers Group in relation to the Sellers Group carrying on the Sellers Group Retained Business as at the date of Closing.  56


8.10The Purchasers Continuing Obligations  8.10.1The Purchaser shall procure that as soon as practicable after Closing, each of the Vaccines Group Companies shall change its name so that it does not contain any of the Seller Restricted Marks or any name which is likely to be confused with the same and shall provide the Seller with appropriate evidence of such change of name.  8.10.2Except as provided in the Ancillary Agreements, the Purchaser shall not, and shall procure that no member of the Purchasers Group shall, after Closing, use the Seller Restricted Marks or any confusingly similar name or mark, any extensions thereof or developments thereto in any business which competes with the Sellers business, or any other business of the Seller or any member of the Sellers Group in which the Seller Restricted Marks are used for a minimum period of five (5) years following Closing and thereafter for so long as any member of the Sellers Group continues to retain an interest in the relevant Seller Restricted Marks.  8.10.3The Purchaser shall, and shall procure that the relevant Vaccines Group Companies shall, retain for a period of 10 years from Closing (and, upon notice from the Seller between 9 and 10 years from Closing, for a further period of 5 years), and not dispose of or destroy, the books, records and documents of the Vaccines Group to the extent they relate to the period prior to Closing and shall, and shall procure that the relevant Vaccines Group Companies shall, if reasonably requested by the Seller, allow the Seller reasonable access to such books, records and documents (including the right to take copies at the Sellers expense) and to the employees of the Vaccines Group or former employees of the Vaccines Group who are employees of any member of the Purchasers Group.  8.10.4During the 90 days following the Closing Date, the Purchaser shall provide and cause to be provided to the Seller the information reasonably required to enable the Seller to prepare and audit the standard monthly reporting forms of the Sellers Group, to the extent that such financial reporting relates to the Vaccines Group, in respect of the period prior to the Closing and in respect of the calendar month in which the Closing occurs. The Purchaser shall provide such financial reporting in respect of the calendar month in which Closing occurs to the Seller within six Business Days of the last day of the relevant month.  8.11The Sellers Continuing Obligations  For a period of 10 years from Closing (and, upon notice from the Purchaser between 9 and 10 years from Closing, for a further period of 5 years), the Seller shall make or procure to be made available to the Purchaser or their duly authorised agents on reasonable notice during normal business hours:  8.11.1all relevant books, accounts, other records and correspondence relating to the Vaccines Group which have been retained by the Sellers Group (and shall permit the Purchaser to take copies thereof); and  8.11.2reasonable access to employees of the Sellers Group who have knowledge relating to any of the Products (including any inventor of the Products) for the purposes of the defence, prosecution or enforcement of any Vaccines Group Intellectual Property Rights, or as required by law or a Governmental Entity, provided that the Purchaser shall promptly reimburse the Seller for expenses  57


reasonably incurred by the Seller in relation to providing such access if it exceeds 25 man hours in aggregate per annum.  8.12Influenza Business  8.12.1General  (i)Without prejudice to Clauses 2.1, 2.2, 2.3.1 to 2.3.4, 3 and 4, the parties shall, acting reasonably and as soon as practicable, enter into such arrangements as are required to enable the Influenza Business (or parts thereof) retained by the Seller, purchased by the Purchaser, or purchased by one or more third party purchasers (as applicable) to continue to operate the Influenza Business (or parts thereof) on substantially the same basis as it was operated by the Seller immediately prior to the date of this Agreement. Such arrangements may include:  (a)a transitional services agreement which, if required, will be on the same terms as the heads of terms relating to the Transitional Services Agreement in the Agreed Terms (with any necessary amendments) until such time as the full form Transitional Services Agreement is agreed, in which case, the terms that will apply will be that full form agreement (with any necessary amendments);  (b)a manufacturing, supply and distribution agreement which, if required, will be on the same terms as the heads of terms relating to the Manufacturing, Supply and Distribution Agreement in the Agreed Terms (with any necessary amendments) until such time as the full form Manufacturing, Supply and Distribution Agreement is agreed, in which case, the terms that will apply will be that full form agreement (with any necessary amendments); and  (c)a manufacturing and supply agreement which, if required, will be on the same terms as the heads of terms relating to the Influenza Business Manufacturing and Supply Agreement in the Agreed Terms (with any necessary amendments) until such time as the full form Influenza Business Manufacturing and Supply Agreement is agreed, in which case, the terms that will apply will be that full form agreement (with any necessary amendments).  (ii)Each party shall take all reasonable steps to cooperate with the other party to ensure that each relevant technology transfer takes place as soon as practicable.  (iii)The Purchaser acknowledges that the Seller shall, at its option, be entitled to:  (a)assign or novate the burden and benefit of the Influenza Business Manufacturing and Supply Agreement and any of the arrangements referred to in Clause 8.12.1(i) to any purchaser(s) of the Influenza Business (or parts thereof) without the consent of the Purchaser; or  (b)require the Purchaser to enter into separate agreements with any purchaser(s) of the Influenza Business (or parts thereof) on the same terms as the Influenza Business Manufacturing and Supply  58


Agreement and any of the arrangements referred to in Clause 8.12.1(i).  8.12.2Influenza Business Manufacturing and Supply Agreement  If the Influenza Business Manufacturing and Supply Agreement has not been entered into on the earlier of: (i) Closing; or (ii) the closing of any sale to the purchaser(s) of the Influenza Business (or parts thereof), the provisions of the heads of terms in relation to the Influenza Business Manufacturing and Supply Agreement in the Agreed Terms shall be binding on the Seller and Purchaser until the earlier of: (i) the date on which the Manufacturing and Supply Agreement is entered into; and (ii) the date specified in the heads of terms.  8.12.3Confidential information  In connection with the services to be provided pursuant to this Clause 8.12, where required by Applicable Law, the Seller and the Purchaser shall establish appropriate safe guards to maintain, and protect from improper disclosure, confidential information arising from the provision of such services.  8.13Diagnostics TSA Liabilities  The Seller hereby undertakes to the Purchaser (for itself and as trustee for each other member of the Purchasers Group) that, with effect from Closing, the Seller will indemnify on demand and hold harmless each member of the Purchasers Group, and any of their respective directors, officers and employees, against and in respect of any and all Diagnostics TSA Liabilities (but excluding any Diagnostics TSA Liabilities which arise from the fraud, wilful default or negligence of the Purchaser, any member of the Purchasers Group, and any of their respective directors, officers and employees, or where the Purchaser has not used commercially reasonable endeavours to procure that the Vaccines Group complies with its obligations under the Diagnostics TSA).  8.14Sellers Licence under the Out-Licensing Programme  The Seller grants (and shall procure the grant) to the Purchaser of a non-exclusive, irrevocable, royalty-free, non-assignable, sub-licensable licence of the Out-Licensing Programme Intellectual Property Rights solely for use in relation to the Business which shall be sub-licensable by the Purchaser solely (i) to members of the Purchasers Group and (ii) to third parties working with it on the development of the Products.  9Warranties  9.1The Sellers Warranties  9.1.1Subject to Clause 9.2, the Seller warrants (on behalf of the relevant Business Sellers or Share Sellers as applicable) to the Purchaser and each member of the Purchasers Group to which Shares or other assets are transferred pursuant to this Agreement or any Local Transfer Document, that the statements set out in Schedule 18 are true and accurate as of the date of this Agreement.  9.1.2Each of the Sellers Warranties shall be separate and independent and shall not be limited by reference to any other paragraph of Schedule 18 or by anything in this Agreement or any Local Transfer Document or in the Tax Indemnity.  59


9.1.3The Seller does not give or make any warranty as to the accuracy of the forecasts, estimates, projections, statements of intent or statements of opinion provided to the Purchaser or any of its directors, officers, employees, agents or advisers on or prior to the date of this Agreement.  9.1.4Any Sellers Warranty qualified by the expression so far as the Seller is aware or to the Sellers Knowledge or any similar expression shall, unless otherwise stated, be deemed to refer to the knowledge of the following persons: [***], such persons having made due and reasonable enquiry.  9.1.5The Sellers Warranties shall be deemed to be repeated immediately before Closing by reference to the facts, circumstances and knowledge then existing as if references in the Sellers Warranties to the date of this Agreement were references to the Closing Date. Without prejudice to the provisions of Clause 10, the Seller shall have no liability for any breach of any Sellers Warranty where such Sellers Warranty was true as at the date of this Agreement unless the fact, event or circumstances giving rise to the breach constitutes a Material Adverse Effect. The Seller shall have no liability under this Clause 9.1.5 if the Purchaser has exercised its termination right in accordance with Clause 4.4.1(iv).  9.1.6Save insofar as they are specifically referred to in paragraphs 4.4 and 4.5 of Schedule 18, none of the Sellers Warranties shall apply to any of the Beta Interferon Patent Rights.  9.2Sellers Disclosures  9.2.1The Sellers Warranties are subject to all matters which are fairly disclosed in this Agreement or in the Disclosure Letter.  9.2.2References in the Disclosure Letter to paragraph numbers shall be to the paragraphs in Schedule 18 to which the disclosure is most likely to relate. Such references are given for convenience only and, shall not limit the effect of any of the disclosures, all of which are made against the Sellers Warranties as a whole.  9.3The Purchasers Warranties  The Purchaser warrants to the Seller that the statements set out in Schedule 19 are true and accurate as of the date of this Agreement.  10Limitation of Liability  10.1Application  10.1.1In respect of the Tax Indemnity, the provisions of this Clause 10 shall operate to limit the liability of the Seller only in so far as any provision in this Clause 10 is expressed to be applicable to the Tax Indemnity, and the provisions of the Tax Indemnity shall further operate to limit the liability of the Seller in respect of any claims thereunder.  10.1.2References to the Sellers Warranties in Clauses 10.2 to 10.5 and 10.7 to 10.9 shall not include the Tax Warranties and the provisions of clause 3 of the Tax Indemnity shall operate to limit the liability of the Seller and to govern the claims procedure in respect of any claim under the Tax Warranties in respect of a liability for Tax as if such claim had been a claim in respect of a Tax Liability (as defined in the Tax Indemnity) under the Tax Indemnity.  60


10.2Time Limitation for Claims  The Seller shall not be liable under this Agreement or any Local Transfer Document for breach of any Sellers Warranty or under the Tax Indemnity in respect of any claim unless a notice of the claim is given by the Purchaser to the Seller specifying the matters set out in Clause 11.2:  10.2.1in the case of a claim under paragraph 1, 2.1, 2.2.1, 2.2.3 or 2.3 of Schedule 18, within the applicable statutory limitation period;  10.2.2in the case of any claim under paragraphs 4.1 to 4.10 of Schedule 18, within 6 years of Closing;  10.2.3in respect of claims under the Tax Warranties or the Tax Indemnity, before the date falling six months after the expiry of the period specified by statute during which an assessment of the relevant liability to Tax may be issued by the relevant Tax Authority; and  10.2.4in the case of any other claim, within two years of Closing.  10.3Minimum Claims  10.3.1The Seller shall not be liable under:  (i)this Agreement or any Local Transfer Document for breach of any Sellers Warranty in respect of any individual claim (or a series of claims arising from similar or identical facts or circumstances) where the liability agreed or determined (disregarding the provisions of this Clause 10.3) in respect of any such claim or series of claims does not exceed 0.1 per cent. of the Headline Price; or  (ii)this Agreement for breach of any Tax Warranty or under the Tax Indemnity in respect of any individual claim (or series of claims arising from similar or identical facts or circumstances) where the liability agreed or determined (disregarding the provisions of this Clause 10.3) in respect of any such claim or series of claims does not exceed US$1 million;  10.3.2Where the liability agreed or determined in respect of any such claim or series of claims exceeds (in the case of claims falling within Clause 10.3.1(i)) 0.1 per cent. of the Headline Price or, in the case of claims falling within Clause 10.3.1(ii))) US$1 million, the liability of the Seller shall be for the whole amount of such claim(s) and not just the excess.  10.4Aggregate Minimum Claims  10.4.1The Seller shall not be liable under this Agreement or any Local Transfer Document for breach of any Sellers Warranty in respect of any claim unless the aggregate amount of all claims for which the Seller would otherwise be liable under this Agreement or any Local Transfer Document for breach of any Sellers Warranty (disregarding the provisions of this Clause 10.4) exceeds one per cent. of the Headline Price.  10.4.2Where the liability agreed or determined in respect of all claims exceeds one per cent. of the Headline Price, the Seller shall be liable for the aggregate amount of all claims as agreed or determined and not just the excess.  61


10.4.3For the avoidance of doubt, the Purchaser may give notice of any single claim in accordance with and for the purposes of Clause 10.2, irrespective of whether, at the time the notice is given, the amount set out in Clause 10.4.2 has been exceeded.  10.5Maximum Liability  The aggregate liability of the Seller in respect of:  10.5.1any breaches of the Sellers Warranties (other than the Sellers Warranties contained in paragraphs 1, 2.1, 2.2.1, 2.2.3, 2.3 or 4.1 to 4.10 of Schedule 18) shall not exceed an amount equal to 30 per cent. of the Headline Price;  10.5.2any breaches of the Sellers Warranties contained in paragraphs 4.1 to 4.10 of Schedule 18 shall not exceed an amount equal to 60 per cent. of the Headline Price; and  10.5.3any breaches of the Sellers Warranties contained in paragraphs 1, 2.1, 2.2.1, 2.2.3, or 2.3 of Schedule 18 shall not exceed the Headline Price.  10.6Contingent Liabilities  The Seller shall not be liable under this Agreement or any Local Transfer Document for breach of any Sellers Warranties in respect of which the liability is contingent, unless and until such contingent liability becomes an actual liability and is due and payable (but the Purchaser has the right under Clause 11.1 to give notice of such claim before such time).  For the avoidance of doubt, the fact that the liability may not have become an actual liability by the relevant date provided in Clause 10.2 shall not exonerate the Seller in respect of any claim properly notified before that date.  10.7Provisions  The Seller shall not be liable under this Agreement or any Local Transfer Document, in either case, in respect of any claim for breach of any Sellers Warranty, if and to the extent that any allowance, provision or reserve has been properly made in the Closing Statement or Statement of Net Assets for the matter giving rise to the claim and the Seller can demonstrate that the allowance, provision or reserve so made was in respect of such matter.  10.8Matters Arising Subsequent to this Agreement  Subject to Clause 8.1.2, the Seller shall not be liable under this Agreement or any Local Transfer Document in either case in respect of any claim for breach of any Sellers Warranty in respect of any matter, act, omission or circumstance (or any combination thereof), to the extent that the same would not have occurred but for:  10.8.1Agreed matters  any matter or thing done or omitted to be done by the Seller or any member of the Sellers Group before Closing pursuant to and in compliance with this Agreement or any Local Transfer Document or otherwise at the request in writing of the Purchaser; or  62


10.8.2Changes in legislation  the passing of, or any change in, after the Closing Date, any Applicable Law or administrative practice of any government, governmental department, agency or regulatory body having the force of the law including (without prejudice to the generality of the foregoing) any increase in the rates of Taxation or any imposition of Taxation or any withdrawal of relief from Taxation not in force at the Closing Date.  10.9Insurance  Without prejudice to Clause 14, the Sellers Liability under this Agreement for breach of any Sellers Warranty shall be reduced by an amount equal to any loss or damage to which such claim related which has actually been recovered under a policy of insurance held by the Purchaser or a Vaccines Group Company (after deducting any reasonable costs incurred in making such recovery including the amount of any excess or deductible).  10.10Purchasers Right to Recover  If the Seller has paid an amount in discharge of any claim under this Agreement for breach of any Sellers Warranty and subsequently the Purchaser recovers (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates the Purchaser (in whole or in part) in respect of the loss or liability which is the subject matter of the claim, the Purchaser shall pay to the Seller as soon as practicable after receipt an amount equal to (i) the sum recovered from the third party less any costs and expenses incurred in obtaining such recovery and any Tax on any amounts recovered (or Tax that would have been payable on such amounts but for the availability of any Tax relief), or if less (ii) the amount previously paid by the Seller to the Purchaser. Any payment made by the Purchaser to the Seller under this Clause shall be made or procured by way of further adjustment of the consideration paid by the Purchaser and the provisions of Clause 3.3 shall apply mutatis mutandis.  10.11No Double Recovery and no Double Counting  A party shall be entitled to make more than one claim under this Agreement arising out of the same subject matter, fact, event or circumstance but shall not be entitled to recover under this Agreement or any Local Transfer Document or the Tax Indemnity or otherwise more than once in respect of the same Losses suffered or amount for which the party is otherwise entitled to claim (or part of such Losses or amount), regardless of whether more than one claim arises in respect of it. No amount (including any relief) (or part of any amount) shall be taken into account, set off or credited more than once under this Agreement or any Local Transfer Document or the Tax Indemnity or otherwise, with the intent that there will be no double counting under this Agreement or any Local Transfer Document and the Tax Indemnity or otherwise.  10.12Fraud  None of the limitations contained in this Clause 10 shall apply to any claim to the extent that such claim which arises or is increased, or to the extent to which it arises or is increased, as the consequence of, or which is delayed as a result of, fraud by any director or officer of any member of the Sellers Group.  63


11Claims  11.1Notification of Potential Claims  Without prejudice to the obligations of the Purchaser under Clause 11.2, if the Purchaser becomes aware of any fact, matter or circumstance that may give rise to a claim against the Seller under this Agreement or any Local Transfer Document for breach of any Sellers Warranty other than a Tax Warranty (ignoring for these purposes the application of Clause 11.2 or 11.3), the Purchaser shall as soon as reasonably practicable give a notice in writing to the Seller of such facts, matters or circumstances as are then available regarding the potential claim. Failure to give notice within such period shall not affect the rights of the Purchaser to make a relevant claim under this Agreement or any Local Transfer Document for breach of any Sellers Warranty, except that the failure shall be taken into account in determining the liability of the Seller for such claim to the extent the Seller establishes that the amount of it is increased, or is not reduced, as a result of such failure.  11.2Notification of Claims under this Agreement  Notices of claims under this Agreement or any Local Transfer Document for breach of any Sellers Warranty (other than a Tax Warranty) shall be given by the Purchaser to the Seller within the time limits specified in Clause 10.2 and shall specify information (giving reasonable detail) in relation to the basis of the claim and setting out the Purchasers estimate of the amount of Losses which are, or are to be, the subject of the claim.  11.3Commencement of Proceedings  Any claim notified pursuant to Clause 11.2 shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn 9 months after the relevant time limit set out in Clause 10.2 unless, at the relevant time, legal proceedings in respect of the relevant claim have been commenced by being both issued and served except:  11.3.1where the claim relates to a contingent liability, in which case it shall be deemed to have been withdrawn unless legal proceedings in respect of it have been commenced by being both issued and served with 9 months of it having become an actual liability; or  11.3.2where the claim is a claim for breach of a Sellers Warranty of which notice is given for the purposes of Clause 10.2 at a time when the amount set out in Clause 10.4.2 has not been exceeded, in which case it shall be deemed to have been withdrawn unless legal proceedings in respect of it have been commenced by being both issued and served within 9 months of the date of any subsequent notification to the Seller pursuant to Clause 11.1 of one or more claims which result(s) in the total amount claimed in all claims notified to the Seller pursuant to Clause 10.2 exceeding the amount set out in Clause 10.4.2 for the first time.  11.4Conduct of Third Party Claims  If the matter or circumstance that may give rise to a claim against the Seller under this Agreement or any Local Transfer Document for breach of any Sellers Warranty (other than a Tax Warranty) is a result of or in connection with a claim by a third party (a Third Party Claim) then:  11.4.1the Purchaser shall as soon as reasonably practicable give written notice thereof to the Seller and thereafter shall provide the Seller with periodic updates upon  64


reasonable request and shall consult with the Seller so far as reasonably practicable in relation to the conduct of the Third Party Claim and shall take reasonable account of the views of the Seller in relation to the Third Party Claim;  11.4.2the Third Party Claim shall not be admitted, compromised, disposed of or settled without the written consent of the Seller (such consent not to be unreasonably withheld or delayed); and  11.4.3subject to the Seller indemnifying the Purchaser or other member of the Purchasers Group concerned against all reasonable costs and expenses (including legal and professional costs and expenses) that may be incurred thereby, the Purchaser shall, or the Purchaser shall procure that any other members of the Purchasers Group shall, take such action as the Seller may reasonably request to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third Party Claim, provided that this Clause 11.4.3 shall not apply where the claim by the third party relates to matters or circumstances referred to in paragraph 4 or 9 of Schedule 18 and the Purchaser shall then have the right to conduct the claim at its discretion (subject to Clauses 11.4.1 and 11.4.2),  provided that failure to give notice in accordance with Clause 11.4.1 shall not affect the rights of the Purchaser to make a relevant claim under this Agreement for breach of any Sellers Warranty, except that the failure shall be taken into account in determining the liability of the Seller for such claim to the extent the Seller establishes that the amount of it is increased, or is not reduced, as a result of such failure.  12Restrictive Covenants  12.1Non-compete  The Seller will not, and undertakes to procure that each member of the Sellers Group will not, for the period from Closing until three years after the Closing Date:  12.1.1be engaged (directly or indirectly) in any business which competes with the Business as it is carried on at the Closing Date (the Restricted Business), provided that commercial transactions outside the Restricted Business with a client, customer, supplier, licensor or distributor that is not a member of the Sellers Group shall not be deemed to indirectly violate this Clause 12.1.1 by reason of such person being engaged in the Restricted Business or taking any other action prohibited hereunder; or  12.1.2solicit the custom of any person to whom goods or services have been sold by any member of the Vaccines Group in the course of its business during the two years before the Closing Date, in each case only to the extent that such solicitation is in competition with the Business of the Vaccines Group as it is carried on at the Closing Date.  12.2Exceptions to the non-compete  12.2.1The restrictions in Clause 12.1 shall not apply to:  (i)the Specified Excluded Businesses;  (ii)the Influenza Business;  65


(iii)any activities of any nature undertaken or developed by the Sellers Group (other than the Vaccines Group) in relation to oncology;  (iv)any activities of any nature (or any assets related thereto) contributed by the Sellers Group pursuant to the Consumer Contribution Agreement;  (v)any supply agreements between the Sellers Group (other than the Vaccines Group) and the Business, the Influenza Business or Leo Constellation Limited (or its Affiliates);  (vi)any person at such time as it is no longer a member of the Sellers Group, and any person that purchases assets, operations, subsidiaries or businesses from the Sellers Group if such Person is not a member of the Sellers Group after such transaction is consummated;  (vii)any Affiliate of Seller in which a person who is not a member of the Sellers Group holds equity interests and with respect to whom a member of the Sellers Group has existing contractual or legal obligations limiting its discretion to impose non-competition obligations;  (viii)the holding of shares in a company or other entity for investment purposes provided the Seller does not exercise, directly or indirectly, Control over that company or entity;  (ix)any business activity that would otherwise violate Clause 12.1 that is acquired in connection with an acquisition so long as the relevant member of the Sellers Group divests all or substantially all of the business activity that would otherwise violate Clause 12.1 or otherwise terminates or disposes of such business activity, product line or assets of such acquired business that would otherwise violate Clause 12.1 within nine months after the consummation of the relevant acquisition, or such longer period as may reasonably be necessary to comply with Applicable Law (provided that in those circumstances the Seller shall procure that the Restricted Business is disposed of as soon as reasonably practicable);  (x)passive investments by a pension or employee benefit plan or trust for present or former employees;  (xi)financial investments by the Novartis Venture Funds;  (xii)investments by the Novartis Foundation for Sustainable Development, or a similar non-profit-based organization;  (xiii)performance of any obligation of the Sellers Group under the Transaction Documents, as amended from time to time in accordance with its their terms; or  (xiv)provision of data or other content to or in connection with business conducted by any person, in each case as required by Applicable Law.  12.3Non-solicit  The Seller will not, and undertakes to procure that each member of the Sellers Group will not, for a period of two years after the Closing Date, solicit or induce any Restricted Vaccines Group Employee to become employed or engaged whether as employee, consultant or otherwise by any member of the Sellers Group.  66


12.4Exceptions to the non-solicit  The restrictions in Clause 12.3 shall not apply to the solicitation, inducement or recruitment of any person:  12.4.1through the placing of advertisements of posts available to the public generally;  12.4.2through an employment agency, provided that no member of the Sellers Group encourages or advises such agency to approach any such person; or  12.4.3who is no longer employed by the Purchasers Group.  12.5Reasonableness of Restrictions  Each undertaking contained in this Clause 12 shall be construed as a separate undertaking and if one or more of the undertakings is held to be against the public interest or unlawful or in any way an unreasonable restraint of trade, the remaining undertakings shall continue to bind the Seller.  12.6Definitions  For the purposes of this Clause:  Restricted Vaccines Group Employee means any Transferred Employee who has access to trade secrets or other confidential information of the Vaccines Group with an annual basic salary in excess of US$150,000; and  Specified Excluded Businesses means the businesses and activities of: (i) Roche Holding AG and (ii) Novartis Institutes for BioMedical Research (and other activities of a similar type to those currently conducted by Novartis Institutes for BioMedical Research).  13Confidentiality  13.1Announcements  No announcement, communication or circular concerning the existence or the subject matter of this Agreement shall be made or issued by or on behalf of any member of the Sellers Group or the Purchasers Group without the prior written approval of the Seller and the Purchaser (such consent not to be unreasonably withheld or delayed). This shall not affect any announcement, communication or circular required by law or any governmental or regulatory body or the rules of any stock exchange on which the shares of any party (or its holding company) are listed but the party with an obligation to make an announcement or communication or issue a circular (or whose holding company has such an obligation) shall consult with the other parties (or shall procure that its holding company consults with the other parties) insofar as is reasonably practicable before complying with such an obligation.  13.2Confidentiality  13.2.1Subject to Clause 13.1 and Clause 13.2.2, each of the parties shall treat as strictly confidential and not disclose or use any information received or obtained as a result of entering into this Agreement, the Ancillary Agreements or any agreement entered into pursuant to this Agreement which relates to:  (i)the existence and provisions of this Agreement, the Ancillary Agreements and of any other agreement entered into pursuant to this Agreement; or  67


(ii)the negotiations relating to this Agreement, the Ancillary Agreements and any such other agreement.  (iii)(in the case of the Seller) any information relating to the Vaccines Group Companies and Vaccines Group Businesses following Closing and any other information relating to the business, financial or other affairs (including future plans and targets) of the Purchasers Group.  (iv)(in the case of the Purchaser) any information relating to the business, financial or other affairs (including future plans and targets) of the Sellers Group including, prior to Closing, the Vaccines Group Companies and Vaccines Group Businesses.  13.2.2Clause 13.2.1 shall not prohibit disclosure or use of any information if and to the extent:  (i)the disclosure or use is required by law, any governmental or regulatory body or any stock exchange on which the shares of any party (or its holding company) are listed;  (ii)the disclosure or use is required to vest the full benefit of this Agreement or the Ancillary Agreements in any party;  (iii)the disclosure or use is required for the purpose of any arbitral or judicial proceedings arising out of this Agreement, the Ancillary Agreements or any other agreement entered into under or pursuant to this Agreement or to enable a determination to be made by the Reporting Accountants under this Agreement;  (iv)the disclosure is made to a Tax Authority in connection with the Tax affairs of the disclosing party;  (v)the disclosure is made to a ratings agency on a confidential basis in connection with the affairs of the disclosing party;  (vi)the disclosure is made to professional advisers of any party on a need to know basis and on terms that such professional advisers undertake to comply with the provisions of Clause 13.2.1 in respect of such information as if they were a party to this Agreement;  (vii)the information was lawfully in the possession of that party without any obligation of secrecy prior to its being received or held, in either case as evidenced by written records;  (viii)the information is or becomes publicly available (other than by breach of this Agreement);  (ix)the other party has given prior written approval to the disclosure or use; or  (x)the information is independently developed,  provided that prior to disclosure or use of any information pursuant to Clause 13.2.2(i), (ii) or (iii), the party concerned shall, where not prohibited by law, promptly notify the other parties of such requirement with a view to providing the other parties with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use.  68


14Insurance  14.1No cover under Sellers Group Insurance Policies from Closing  The Purchaser acknowledges and agrees that following Closing:  14.1.1neither the Purchaser nor any Vaccines Group Company shall have or be entitled to the benefit of any Sellers Group Insurance Policy in respect of any event, act or omission that takes place after Closing and it shall be the sole responsibility of the Purchaser to ensure that adequate insurances are put in place for those Vaccines Group Companies and Vaccines Group Businesses with effect from Closing;  14.1.2neither the Seller nor any member of the Sellers Group shall be required to maintain any Sellers Group Insurance Policy for the benefit of the Vaccines Group;  14.1.3no Vaccines Group Company shall make or shall be entitled to make or notify a claim under any Sellers Group Insurance Policy in respect of any event, act or omission that occurred prior to the Closing Date.  14.2Existing claims under Sellers Group Insurance Policies  With respect to any claim made before the Closing Date under any Sellers Group Insurance Policy by or on behalf of any Vaccines Group Company or in relation to any Vaccines Group Business, to the extent that:  14.2.1neither the Purchaser nor the Vaccines Group Companies have been indemnified by the Seller prior to the Closing Date in respect of the matter in respect of which the claim was made; or  14.2.2the Liability in respect of which the claim was made has not been properly provided for in the Closing Statement and reduced the Working Capital accordingly,  the Seller shall use reasonable endeavours after Closing to recover all monies due from insurers and shall pay any monies received (after taking into account any deductible under the Sellers Group Insurance Policies and less any Taxation suffered on the proceeds and any reasonable out of pocket expenses suffered or incurred by the Seller or any member of the Sellers Group in connection with the claim) to the Purchaser or, at the Purchasers written direction, the relevant Vaccines Group Company as soon as practicable after receipt.  15France Business and Netherlands Business  15.1France Business  Notwithstanding any other provision of this Agreement, this Agreement shall not constitute a binding agreement to sell or purchase the France Business, provided that:  15.1.1in the event that the France Put Option Exercise occurs before Closing, this Clause 15.1 (other than this Clause 15.1.1) shall terminate and shall cease to have effect, and the sale of the France Business shall be subject to the provisions of this Agreement as if it were part of the Business to be sold as and from the date of this Agreement;  15.1.2in the event that the France Put Option Exercise does not occur before Closing:  69


(i)the provisions of Clauses 2 and 6 (the Disapplied Provisions) shall not apply to the France Business;  (ii)prior to the France Closing, the provisions of Clause 12 and Schedules 11 and 12 (the Suspended Provisions) shall not apply to the France Business; and  (iii)in respect of the Disapplied Provisions and, prior to the France Closing, the Suspended Provisions only:  (a)the term Business shall be deemed to exclude the France Business;  (b)the term Companies shall be deemed to exclude Novartis Vaccines and Diagnostics S.A.S.;  (c)the term Assumed Liabilities shall be deemed to exclude the France Assumed Liabilities; and  (d)the term Employees shall be deemed to exclude the France Employees;  15.1.3with effect from the France Closing, the Suspended Provisions shall apply to the France Business mutatis mutandis save that in respect of the Suspended Provisions only (A) the term Closing shall be deemed to refer to the France Closing and (B) the term Closing Date shall be deemed to refer to the date of the France Closing; and  15.1.4the parties shall negotiate in good faith to agree any amendments to this Agreement and any of the Ancillary Agreements as are required in order to give effect to the principles set forth in this Clause 15.1 for the purposes of complying with the information and consultation requirements in respect of the Comité denterprise de Novartis Vaccines and Diagnostics SAS (being the relevant works council in respect of the France Business); and  15.1.5the provisions of Clause 10 shall apply to the France Business as if the remaining provisions of this Clause 15.1 did not have any force or effect.  15.2Netherlands Business  Notwithstanding any other provision of this Agreement, this Agreement shall not constitute a binding agreement to sell or purchase the Netherlands Business, provided that:  15.2.1in the event that the Netherlands Put Option Exercise occurs before Closing, this Clause 15.2 (other than this Clause 15.2.1) shall terminate and shall cease to have effect, and the sale of the Netherlands Business shall be subject to the provisions of this Agreement as if it were part of the Business to be sold as and from the date of this Agreement;  15.2.2in the event that the Netherlands Put Option Exercise does not occur before Closing:  (i)the Disapplied Provisions shall not apply to the Netherlands Business;  (ii)prior to the Netherlands Closing, the Suspended Provisions shall not apply to the Netherlands Business; and  70


(iii)in respect of the Disapplied Provisions and, prior to the Netherlands Closing, the Suspended Provisions only:  (a)the term Business shall be deemed to exclude the Netherlands Business;  (b)the term Vaccines Group Businesses shall be deemed to exclude the Netherlands Business;  (c)the term Assumed Liabilities shall be deemed to exclude the Netherlands Assumed Liabilities; and  (d)the term Employees shall be deemed to exclude the Netherlands Employees;  15.2.3with effect from the Netherlands Closing, the Suspended Provisions shall apply to the Netherlands Business mutatis mutandis save that in respect of the Suspended Provisions only (A) the term Closing shall be deemed to refer to the Netherlands Closing and (B) the term Closing Date shall be deemed to refer to the date of the Netherlands Closing; and  15.2.4the parties shall negotiate in good faith to agree any amendments to the Transaction Documents as are required in order to give effect to the principles set forth in this Clause 15.2 for the purposes of complying with the information and consultation requirements in respect of Onderdeelcommissie NV (being the relevant works council in respect of the Netherlands Business); and  15.2.5the provisions of Clause 10 shall apply to the Netherlands Business as if the remaining provisions of this Clause 15.2 did not have any force or effect.  16Other Provisions  16.1Further Assurances  16.1.1Without prejudice to any restriction or limitation on the extent of any partys obligations under this Agreement, each of the parties shall from time to time, so far as each is reasonably able, do or procure the doing of all such acts and/or execute or procure the execution of all such documents in a form reasonably satisfactory to the party concerned as they may reasonably consider necessary to transfer the Vaccines Group to the Purchaser or otherwise to give the other party the full benefit of this Agreement.  16.1.2The parties shall negotiate in good faith to agree definitive and legally binding documentation in respect of each of the Ancillary Agreements for which heads of terms are in the Agreed Terms on the date of this Agreement, and shall duly execute and deliver such definitive and legally binding documentation in respect of the Ancillary Agreements at Closing.  16.2Whole Agreement  16.2.1This Agreement and the Ancillary Agreements contain the whole agreement between the parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract and supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in this Agreement.  71


16.2.2The Purchaser acknowledges that, in entering into this Agreement, it is not relying on any representation, warranty or undertaking not expressly incorporated into it.  16.2.3Each of the parties agrees and acknowledges that its only right and remedy in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement and each of the parties waives all other rights and remedies (including those in tort or arising under statute) in relation to any such representation, warranty or undertaking.  16.2.4In Clauses 16.2.1 to 16.2.3, this Agreement includes the Ancillary Agreements and all other documents entered into pursuant to this Agreement.  16.2.5Nothing in this Clause 16.2 excludes or limits any liability for fraud.  16.3No Assignment  No party may without the prior written consent of the other parties, assign, grant any security interest over, hold on trust or otherwise transfer the benefit of the whole or any part of this Agreement.  16.4Third Party Rights  16.4.1Subject to Clause 16.4.2, the parties to this Agreement do not intend that any term of this Agreement should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Agreement.  16.4.2Certain provisions of this Agreement confer benefits on the Affiliates of the Purchaser and the Affiliates of the Seller (each such Affiliate being, for the purposes of this Clause 16.4, a Third Party) and, subject to Clause 16.4.3, are intended to be enforceable by each Third Party by virtue of the Contracts (Rights of Third Parties) Act 1999.  16.4.3Notwithstanding Clause 16.4.2, this Agreement may be varied in any way and at any time without the consent of any Third Party.  16.5Variation or waiver  16.5.1No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the parties.  16.5.2No failure or delay by a party in exercising any right or remedy provided by Applicable Law or under this Agreement or any Ancillary Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.  16.6Method of Payment and set off  16.6.1Except as set out in Clause 16.6.2, payments (including payments pursuant to an indemnity, compensation or reimbursement provision) made or expressed to be made by the Purchaser and the Seller pursuant to this Agreement or any claim for breach of this Agreement shall, insofar as the payment or claim relates to or affects any Shares (including the underlying Vaccines Group Companies transferred (directly or indirectly) by reason of the transfer of those Shares), assets or  72


liabilities, transferred pursuant to this Agreement and the Local Transfer Documents, be made or received (as the case may be) by:  (i)the Seller, for itself or as agent on behalf of the relevant Share Seller or the Business Seller (each in respect of the Shares and/or assets and liabilities to be transferred by it pursuant to this Agreement and the Local Transfer Documents); and  (ii)the Purchaser, for itself or as agent on behalf of the relevant members of the Purchasers Group (each in respect of Shares and/or the assets and liabilities to be transferred by it pursuant to this Agreement and the Local Transfer Documents).  16.6.2The repayment of the Estimated Intra-Group Non-Trade Receivables and the Estimated Intra-Group Non-Trade Payables pursuant to Clause 6.4.3 and any adjustments to such repayment pursuant to Clause 7.4 shall be settled by payments between the Seller, on behalf of the relevant members of the Sellers Group, and the Purchaser, on behalf of the relevant Group Companies.  16.6.3Any payments pursuant to this Agreement shall be made in full, without any set-off, counterclaim, restriction or condition and without any deduction or withholding (save as may be required by law or as otherwise agreed), except that payments due between the Seller and the Purchaser:  (i)in relation to repayments of the Estimated Intra-Group Non-Trade Payables and Estimated Intra-Group Non-Trade Receivables pursuant to Clause 6.4.3; or  (ii)in relation to adjustments to those repayments pursuant to Clause 7.4,  respectively, shall be discharged to the fullest extent possible by way of set-off against each other.  16.6.4Any payments pursuant to this Agreement shall be effected by crediting for same day value the account specified by the Seller or the Purchaser (as the case may be) on behalf of the party entitled to the payment (reasonably in advance and in sufficient detail to enable payment by telegraphic or other electronic means to be effected) on or before the due date for payment.  16.6.5Payment of a sum in accordance with this Clause 16.6 shall constitute a payment in full of the sum payable and shall be a good discharge to the payer (and those on whose behalf such payment is made) of the payers obligation to make such payment and the payer (and those on whose behalf such payment is made) shall not be obliged to see to the application of the payment as between those on whose behalf the payment is received.  16.7Costs  16.7.1Subject to Clause 16.8, the Seller shall bear all costs incurred by it and its Affiliates in connection with the preparation and negotiation of, and the entry into, this Agreement, the Local Transfer Documents, the Tax Indemnity and the sale of the Vaccines Group.  16.7.2The Purchaser shall bear all such costs incurred by it and its Affiliates in connection with the preparation and negotiation of, and the entry into, this Agreement, the  73


Local Transfer Documents, the Tax Indemnity and the purchase of the Vaccines Group.  16.8Notarial Fees, Registration, Stamp and Transfer Taxes and Duties  16.8.1Subject to Clauses 2.3.5, 2.3.6 and 16.8.2, the Purchaser or the relevant member of the Purchasers Group:  (i)shall bear the cost half of all notarial fees and all registration, stamp and transfer taxes and duties or their equivalents in all jurisdictions where such fees, taxes and duties are payable as a result of the transactions contemplated by this Agreement the other half of such cost to be borne by the Seller;  (ii)shall be responsible for arranging the payment of all such fees, taxes and duties, including fulfilling any administrative or reporting obligation imposed by the jurisdiction in question in connection with such payment; and  (iii)shall indemnify the Sellers or any other member of the Sellers Group against any Losses suffered by that Seller or member of the Sellers Group as a result of the Purchaser failing to comply with its obligations under this Clause 16.8.  16.8.2The Purchaser and the Seller shall make or procure the making of such payments to each other (and to each others Affiliates) as are necessary to ensure the sharing of cost provided for under Clause 16.8.1.  16.9Interest  If any party defaults in the payment when due of any sum payable under this Agreement, the Local Transfer Documents or the Tax Indemnity the liability of that party shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (as well after as before judgment) at a rate per annum of two per cent. above LIBOR. Such interest shall accrue from day to day.  16.10Grossing-up  16.10.1All sums payable under this Agreement, the Local Transfer Documents and the Tax Indemnity shall be paid free and clear of all deductions, withholdings, set-offs or counterclaims whatsoever save only as may be permitted by Clause 16.6.3 or required by law. Subject to Clauses 16.10.3 to 16.10.7 if any deductions or withholdings are required by law the party making the payment shall (except in the case of (i) any interest payable under Clause 7.5 or 16.9 (ii) or any amount payable under Schedule 17 which would not have been the subject of a deduction or withholding had it been paid to a company resident in Switzerland for the purposes of the double taxation treaty between Belgium and Switzerland which was beneficially entitled to the payments and was not party to a conduit arrangement in respect of them) be obliged to pay to the other party such sum as will after such deduction or withholding has been made leave the other party with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding, provided that if either party to this Agreement shall have assigned or novated the benefit in whole or in part of this Agreement or shall, after the date of this Agreement, have changed its tax residence or the permanent establishment to which the rights under this Agreement  74


are allocated then the liability of the other party under this Clause 16.10.1 shall be limited to that (if any) which it would have been had no such assignment, novation or change taken place.  16.10.2If either party is or becomes aware of any facts making it reasonably likely that the Purchaser, or any relevant member of the Purchasers Group, will be required to deduct or withhold any amount in respect of the Purchase Price (excluding any amount payable under Schedule 17) (a Relevant Tax Deduction), then that party shall, as soon as reasonably practicable, give notice to the other party (including details of the relevant facts and, so far as possible, details of the rate and basis of such withholding) provided that for purposes of this Clause 16.10.2, the Seller may assume that the Purchase Price will be paid by (and for) a company resident for Tax purposes only in Belgium.  16.10.3The Seller and the Purchaser shall, and shall procure that the members of their respective groups shall (at the Sellers cost), co-operate with each other in good faith and use all reasonable efforts to reduce or mitigate any Relevant Tax Deduction (or its amount) and/or to enable the Seller or the relevant Share Seller or Business Seller to obtain any available credit or refund in respect of such Relevant Tax Deduction, including, without limitation, making any available claim under an applicable double taxation treaty.  16.10.4Without prejudice to the generality of Clause 16.10.3, the Seller and the Purchaser shall co-operate in good faith to establish or agree the amount or basis of calculation of any Relevant Tax Deduction prior to Closing (and in this regard the Purchaser shall consider reasonably any relevant information or evidence provided or obtained by the Seller) including, if requested by the Seller and at the Sellers expense, by seeking to obtain a ruling or confirmation from a relevant Tax Authority, or obtaining an opinion from reputable local tax counsel or a firm of accountants of international standing satisfactory to the Purchaser (acting reasonably) and instructed jointly by the Seller and the Purchaser.  16.10.5The Purchaser shall, or shall procure that the relevant member of the Purchasers Group shall, make any Relevant Tax Deduction in the minimum amount required by Applicable Law, provided that:  (i)if a double taxation treaty between the jurisdiction under the laws of which the Relevant Tax Deduction is required and the jurisdiction of residence of the Seller or the relevant Share Seller or Business Seller is in force, the Purchaser shall (and shall procure that any relevant member of the Purchasers Group shall) make any Relevant Tax Deduction in an amount not exceeding the rate specified in such double taxation treaty (which may be nil), provided that the Seller has provided the Purchaser with such evidence as is required under Applicable Law to establish the entitlement of the Seller (or relevant Share Seller or Business Seller) to the benefit of the applicable treaty; and  (ii)if an opinion from reputable local counsel or a firm of accountants of international standing has been obtained at the request of the Seller as envisaged by Clause 16.10.4, the Purchaser shall (and shall procure that any relevant member of the Purchaser Group shall) make such Relevant Tax Deduction in an amount or on a basis which is consistent with that  75


opinion (which may result in no withholding or deduction), provided that the Seller has indemnified the Purchaser and any relevant member of the Purchasers Group, to the Purchasers reasonable satisfaction, against any Liabilities arising (including any interest and penalties) should such opinion be wholly or partly incorrect.  16.10.6The Purchaser shall promptly provide the Seller with evidence reasonably satisfactory to the Seller that a Relevant Tax Deduction has been made and an appropriate amount paid to the relevant Tax Authority.  16.10.7If any Relevant Tax Deduction is required an additional sum shall be payable in accordance with Clause 16.10.1 only if and to the extent that such deduction or withholding would not have been required had the Purchaser and each member of the Purchasers Group making such payment or to which such payment relates been resident for Tax purposes only in Belgium.  16.11Notices  16.11.1Any notice or other communication in connection with this Agreement (each, a Notice) shall be:  (i)in writing in English; and  (ii)delivered by hand, fax, or by courier using an internationally recognised courier company.  16.11.2A Notice to the Seller shall be sent to such party at the following address, or such other person or address as the Seller may notify to the Purchaser from time to time:  Novartis AG  Postfach CH-4002 Basel Switzerland  Fax: +41 613244300  Attention: Head of M&A Legal  with a copy to the Sellers Lawyers, marked for the urgent attention of James Inglis (delivery of such copy shall not in itself constitute valid notice).  16.11.3A Notice to the Purchaser shall be sent to such party at the following address, or such other person or address as the Purchaser may notify to the Seller from time to time:  GlaxoSmithKline plc  980 Great West Road Brentford Middlesex TW8 9GS United Kingdom  Fax: +44 (0)208 0476904  Attention: The Company Secretary  76


with a copy to the Purchasers Lawyers, marked for the urgent attention of Simon Nicholls (delivery of such copy shall not in itself constitute valid notice).  16.11.4A Notice shall be effective upon receipt and shall be deemed to have been received:  (i)at the time of delivery, if delivered by hand or courier;  (ii)at the time of transmission in legible form, if delivered by fax.  16.12Invalidity or Conflict  16.12.1If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, the provision shall apply with whatever deletion or modification is necessary so that the provision is legal, valid and enforceable and gives effect to the commercial intention of the parties.  16.12.2To the extent it is not possible to delete or modify the provision, in whole or in part, under Clause 16.12.1, then such provision or part of it shall, to the extent that it is illegal, invalid or unenforceable, be deemed not to form part of this Agreement and the legality, validity and enforceability of the remainder of this Agreement shall, subject to any deletion or modification made under Clause 16.12.1, not be affected.  16.12.3If there is any conflict between the terms of this Agreement and any of the Ancillary Agreements this Agreement shall prevail (as between the parties between this Agreement and as between any member of the Seller Group and any member of the Purchaser Group) unless (i) such Ancillary Agreement expressly states that it overrides this Agreement in the relevant respect and (ii) the Seller and the Purchaser are either also parties to that Ancillary Agreement or otherwise expressly agree in writing that such Ancillary Agreement shall override this Agreement in that respect.  16.13Counterparts  This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any party may enter into this Agreement by executing any such counterpart. Delivery of a counterpart of this Agreement by email attachment shall be an effective mode of delivery.  16.14Governing Law and Submission to Jurisdiction  16.14.1This Agreement and the documents to be entered into pursuant to it, save as expressly referred to therein, and any non-contractual obligations arising out of or in connection with the Agreement and such documents shall be governed by and construed in accordance with English law.  16.14.2Each of the parties irrevocably agrees that the courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and the documents to be entered into pursuant to it, save as expressly referred to therein, and that accordingly any proceedings arising out of or in connection with this Agreement and the documents to be entered into pursuant to it shall be brought in such courts. Each of the parties irrevocably submits to the jurisdiction of such courts and waives any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.  77


16.15Appointment of Process Agent  16.15.1The Seller hereby irrevocably appoints Hackwood Secretaries Limited of One Silk Street, London EC2Y 8HQ as its agent to accept service of process in England and Wales in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Seller.  16.15.2The Seller agrees to inform the Purchaser in writing of any change of address of such process agent within 28 days of such change.  16.15.3If such process agent ceases to be able to act as such or to have an address in England and Wales, the Seller irrevocably agrees to appoint a new process agent in England and Wales and to deliver to the Purchaser within 14 days a copy of a written acceptance of appointment by the process agent.  16.15.4Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law.  This Agreement has been entered into on the date stated at the beginning.  78


SIGNED by

ANDfor and on behalf of
NOVARTIS AG:SIGNED by

for and on behalf of
GLAXOSMITHKLINE PLC: 79


Schedule 1 Details of the Share Sellers, Shares etc. (Clause 2.1)  (2)(1)

Name ofName

Company/Minority Interest

(3)of Share Seller

Entity

SharesNovartis Deutschland GmbH

Novartis Vaccines and Diagnostics GmbH

2 shares (100%)Novartis Pharma AG

Novartis Vaccines and Diagnostics S.A.S

93,750 shares (100%)Novartis Farmaceutica S.A

Novartis Vaccines and Diagnostics S.L

150,100 shares (100%)Novartis Pharma AG

Novartis Vaccines and Diagnostics AG

1,600 shares (100%)Novartis Pharma AG

Novartis Vaccines and Diagnostics S.r.l.

1 quota of entire share capital (as defined   under Italian law) (100%)Novartis Pharma AG

Novartis Vaccines and Diagnostics Pty Ltd

1,024,921 shares (100%)(A) Novartis Pharma AG(B) Novartis Vaccines and Diagnostics Inc.

Chiron Behring Vaccines Private Limited

(A) 4,900,000 shares (49%)(B) 5,100,000 shares (51%)
TOTAL: 10,000,000 sharesNovartis Overseas Investments AG

Zhejiang Tianyuan Bio-Pharmaceutical Co., Ltd

85%Novartis Pharma AG

Novartis Vaccines Institute for Global Health   S.r.l.

1 quota of entire share capital (as defined   under Italian law) (100%)(A) Novartis Pharma AG

Valneva SE

(A) 3,788,048 (6.63%)(B) Novartis Vaccines and Diagnostics   Inc.



(B) 1,560,000 (2.73%)   80


Schedule 2Companies, Subsidiaries and Minority Interest Entities  1Particulars of the Companies  Name of Company:

Novartis Vaccines and Diagnostics GmbHRegistered Number:

HRB 5629Registered Office:

Emil-von-Behring-Str. 76, 35041   Marburg, GermanyDate and place of incorporation:Issued share capital:

EUR 5,000,000.00 divided into 2 shares of 1   EUR and EUR 4,999,999 eachShareholders and shares held:

Novartis Deutschland GmbH
2 (100%)Name of Company:

Novartis Vaccines and   Diagnostics SASRegistered Number:

423 697 168Registered Office:

10, rue Chevreul, 92150 Suresnes, FranceDate and place of incorporation:

22 July 1999, NanterreIssued share capital:

EUR 1,500,000 divided into 93,750 shares of   EUR 16 eachShareholders and shares held:

Novartis Pharma AG
93,750 (100%)Name of Company:

Novartis Vaccines and   Diagnostics S.L.Registered Number:

B58564808Registered Office:

Gran Vía de les   Corts Catalanes, 764. 08013 Barcelona, SpainDate and place of   incorporation:

19   September 1988, BarcelonaIssued share   capital:

EUR 675,450 divided   into 150,100 shares of EUR 4.50 eachShareholders and shares held:

Novartis Farmaceutica S.A
150,100 (100%)  81


Name of Company:

Novartis Vaccines and   Diagnostics AGRegistered Number:

CHE-103.264.079Registered Office:

Basel, SwitzerlandDate and place of   incorporation:

28   September 1953, AvenchesIssued share   capital:

CHF 800,000.00   divided into 1,600
shares of CHF 500   eachShareholders and   shares held:

Novartis Pharma AG
1,600 shares (100%)Name of Company:

Novartis Vaccines and   Diagnostics S.r.l.Registered Number:

01392770465Registered Office:

Via Fiorentina 1, 53100, Siena, ItalyDate and place of incorporation:

18 September 1990, Barga (LU)Issued share capital:

EUR 41,610,809.00 comprising 1 quota of   entire share capitalShareholders and shares held:

Novartis Pharma AG
1 (100%)Name of Company:

Novartis Vaccines and   Diagnostics Pty LimitedABN / ACN:

ABN 60 089 509 544; ACN 089 509 544Registered Office:

54 Waterloo Road, North Ryde NSW 2113,   AustraliaDate and place of incorporation:

10 September 1999, VictoriaIssued share capital:

ASD 1,024,921 divided into 1,024,921 shares   of ASD 1 eachShareholders and shares held:

Novartis Pharma AG
1,024,921 (100%)Name of Company:

Chiron Behring Vaccines Private   LimitedRegistered Number:

U24230MH1997PTC111122Registered Office:

501 Shree Amba Shanti Chambers, Kurla Road,   Andheri, Mumbai 400059, IndiaDate and place of incorporation:

7 October 1997, Mumbai  82


Name of Company:

Chiron Behring Vaccines Private   LimitedIssued share capital:

INR 100,000,000 divided into 10,000,000   shares of INR 10 eachShareholders and shares held:

Novartis Pharma AG
4,900,000 (49%)Novartis Vaccines and
Diagnostics Inc.
5,100,000 (51%)Name of Company:

Zhejiang Tianyuan   Bio-Pharmaceutical Co., Ltd. (浙江天元生物药业有限公司)Registered Number:

330000000015616Registered/Principal Office:

No.56 Tian He Road, Yuhang Economic   Development Zone, Hangzhou, Zhejiang Province, PRC.Date and place of incorporation:Registered capital:

RMB 46,800,000Paid-in capital:

RMB 46,800,000Total investment amount:

RMB 117,000,000Shareholder and shares held:

Novartis Overseas Investments AG
85%Name of Company:

Novartis Vaccines Institute for   Global Health S.r.l.Registered Number:

01204770521Registered/Principal Office:

Via Fiorentina 1, 53100, Siena, ItalyDate and place of incorporation:

2 February 2007, Siena, ItalyIssued share capital:

EUR 500,000.00 comprising 1 quota of entire   share capitalShareholder and shares held:

Novartis Pharma AG
1 (100%)  2Particulars of the Subsidiaries  Name of Subsidiary:

Novartis Vaccines Vertriebs   GmbHRegistered Number:

HRB 193621  83


Name of Subsidiary:

Novartis Vaccines Vertriebs   GmbHRegistered Office:

Rudolf-Diesel-Ring 27, 83607 Holzkirchen,   GermanyDate and place of incorporation:Issued share capital:

EUR 26,000.00 divided into 2 shares of EUR   25,600 and EUR 400 eachShareholders and shares held:

Novartis Vaccines and Diagnostics GmbH2 (100%)  3Particulars of the Minority Interest Entities Name of Company:

Valneva SERegistered Number:

422 497 560 RCS LyonRegistered Office:

70 Rue Saint Jean de Dieu, 69007 Lyon, FranceDate and place of incorporation:

Initially incorporated on 26 January 2011,   Commercial Court (greffe du Tribunal de   Commerce) of Roussay, France
Incorporated with the Commercial Court (greffe du Tribunal de Commerce) of Lyon,   France since change of registered office on 28 May 2013.Issued share capital:

8,390,317.14, divided into 54,746,333   ordinary shares of 0.15 each and 17,836,719 preferred shares with a nominal   value of 0.01 eachShareholders and shares held:

Novartis Vaccines & Diagostics Inc.
1,560,000Novartis Pharma AG
3,788,048  Name of Company:

Chiron Panacea Vaccines Private   LimitedRegistered Number:

U24230MH2004PTC147790Registered Office:

7th Floor, A Wing, Sagar Tech PlazaSakinaka, Mumbai 400072, Maharashtra, IndiaDate and place of incorporation:

13 July 2004, Mumbai, India  84


Name of Company:

Chiron Panacea Vaccines Private   LimitedIssued share capital:

INR 45,918,200 (4,591,820 shares of INR 10   each)Shareholders and shares held:

Novartis Vaccines & Diagostic S.r.l.
2,295,910 (50%)   85


Schedule 3 The Properties Part 1 (Company Real Property)  [***]  86


Schedule 3 The Properties Part 2 (Transferred Real Property)  [***]  87


Schedule 3 The Properties Part 3 Terms relating to the Company Real Property  1General Provisions relating to the Company Real Property  1.1Interpretation  The following further definitions apply in this Part 3 of Schedule 3:  Company Landlord means the person for the time being entitled to the reversion immediately expectant on the termination of the term granted by a Company Lease;  Company Leased Real Properties means the leasehold properties identified in Part B of Part 1 of this Schedule 3, and Company Leased Real Property means any one of them;  Company Leases means the leases, licence documents or tenancy agreements under which the Company Leased Real Properties are held, including all documents supplemental to them, and Company Lease means any one of them;  Company Owned Real Properties means the owned properties as identified in Part A of Part 1 of this Schedule 3 together with all buildings, structures, fixed plant, fixed machinery and fixed equipment thereon (except as excluded in Clause 2.3.2), and Company Owned Real Property means any one of them;  Company Real Property Longstop Date means the date on which a court of competent jurisdiction finally determines that a Company Third Party Consent has been lawfully refused  or cannot be obtained and/or that the Purchaser may not acquire (directly or indirectly, acting through a subsidiary) the relevant Company Real Property;  Company Third Party Consents means all consents, licences, approvals, permits, authorisations or waivers required from any Company Landlord, superior landlord and/or other third party, including any consents, licences, approvals, permits, authorisations or waivers required by any legislation or regulation or by any statutory, governmental, state, provincial or municipal bodies or authorities which are required under a Company Lease or otherwise in relation to any change of control, shareholders or directors of the Vaccines Group Companies, and Company Third Party Consent means any one of them;  German Carve-out Leases means the leases of the Company Leased Real Properties referred to at paragraphs 3.2 and 3.3 of Part B of Part 1 of Schedule 3 and any other lease(s) of the Company Leased Real Properties at the Marburg Site where the premises demised by such lease(s) are occupied by both the Business and the German Flu Operations;  German Flu Lease(s) has the meaning set out in paragraph 2.1 of this Part 3 of Schedule 3; and  German Vaccines Lease(s) has the meaning set out in paragraph 2.1 of this Part 3 of Schedule 3.  88


1.2Company Third Party Consents  1.2.1This paragraph 1.2.1 of Part 3 of Schedule 3 applies to those Company Real Properties in relation to which a Company Third Party Consent is required and if such Company Third Party Consent remains to be obtained as at the Closing Date this paragraph 1.2.1 of Part 3 of Schedule 3 shall continue to apply until the relevant Company Third Party Consent shall have been obtained or until the Company Real Property Longstop Date.  If any Company Third Party Consents are required:  (i)the Seller shall make an application for, and shall use all reasonable endeavours to obtain each Company Third Party Consent as soon as reasonably practicable following the date of this Agreement and shall at all times keep the Purchaser informed of progress in obtaining such Company Third Party Consents;  (ii)the Purchaser shall supply such information and references as may reasonably be required by a Company Landlord, any superior landlord or other relevant third party in connection with a Company Third Party Consent;  (iii)the Purchaser shall be responsible for and undertake to pay, or procure the giving of undertakings to pay the professional and other fees of any Company Landlord, any superior landlord or other relevant person (including any Tax or disbursements in respect of such fees but excluding any Tax on the actual net income, profit or gains of the Company Landlord, any superior landlord or any other relevant person) properly incurred in connection with any application for Company Third Party Consents, whether or not such Company Third Party Consents are given; and  (iv)in respect of the period after Closing only, the Purchaser shall enter into such covenants for the payment of the rent under the Company Lease and for the observance and performance of the covenants and conditions contained in the Company Lease as may reasonably be required by the Company Landlord, any superior landlord or other relevant third party.  1.2.2Each party shall give written notice to the other party as soon as reasonably practicable after obtaining any Company Third Party Consents which shall be accompanied by a copy of such consent.  1.2.3Save as set out in paragraph 1.2.1(iii) of this Part 3 of Schedule 3, the Seller shall pay any moneys or provide or procure the giving of any guarantees or other security, in each case as may be lawfully required by a Company Landlord, superior landlord or other relevant third party in connection with the obtaining of the Company Third Party Consents, provided that the Purchaser shall indemnify and keep indemnified the Seller in an amount equal to:  (i)any moneys required to be paid by the Seller pursuant to this paragraph; and  (ii)any Liabilities under any guarantees or other security given or procured by the Seller pursuant to this paragraph and arising out of, or in connection with, an act or omission on the part of the Purchaser or (following Closing) the relevant Vaccines Group Company,  89


and where the Company Landlord, superior landlord or other relevant third party lawfully requires any guarantees or other security to be given by the person who is acquiring a membership interest in respect of the relevant Vaccines Group Company, the Purchaser shall provide or procure the giving of any such guarantees or security.  Company Third Party Consent not obtained  1.2.4If a Company Third Party Consent has been refused or otherwise not obtained within twelve months following the Closing Date, the Seller and the Purchaser may (acting reasonably) agree that an application is to be made to a court of competent jurisdiction that the relevant Company Third Party Consent has been unreasonably withheld or delayed.  1.2.5If an application is to be made to a court of competent jurisdiction pursuant to paragraph 1.2.4 of this Part 3 of Schedule 3:  (i)the proceedings shall be brought by, and prosecuted at the expense of, the Purchaser;  (ii)the Seller shall provide all such assistance in connection with such proceedings as the Purchaser (acting reasonably) may require in the interests of obtaining the Company Third Party Consent; and  (iii)provided that the Seller has complied with its obligation under paragraph 1.2.1(i) of this Part 3 of Schedule 3, the Purchaser shall indemnify and keep indemnified the Seller for any costs and expenses properly incurred in connection with any such assistance provided by the Seller.  1.2.6If a Company Third Party Consent has not been obtained by the Company Real Property Longstop Date then the Seller and the Purchaser shall each bear fifty per cent. of any Losses of the Seller and the Purchaser arising out of or in connection with the failure to obtain such Company Third Party Consent.  2Specific provisions relating to the Marburg Site  2.1The Seller agrees to procure that Novartis Vaccines and Diagnostics GmbH shall use reasonable efforts to procure the contemporaneous surrender of the German Carve-out Leases and the grant of replacement leases, certain of which shall relate to those parts of the premises demised by the German Carve-out Leases which are used by the Business (the German Vaccines Lease(s)), and certain other of which shall relate to the balance of the premises demised by the German Carve-out Leases (the German Flu Lease(s)).  2.2If Novartis Vaccines and Diagnostics GmbH is able to procure the surrender of the German Carve-out Leases and the grant of the German Vaccines Lease(s) and the German Flu Lease(s) prior to Closing, it is acknowledged that:  2.2.1the German Flu Lease(s) shall be entered into by, or assigned prior to Closing to, an entity in the Sellers Group Retained Business;  2.2.2the German Flu Lease(s) shall not constitute lease(s) of Company Leased Real Property; and  2.2.3the demise of the relevant Company Leased Real Property set out in Part B of Part 1 of this Schedule 3 shall be deemed amended to exclude the premises demised  90


by the German Carve-out Leases and the German Flu Lease(s) and to include reference to the premises demised by the German Vaccines Lease(s).  2.3If Novartis Vaccines and Diagnostics GmbH is not able to procure the surrender of the German Carve-out Leases and the grant of the German Vaccines Lease(s) and the German Flu Lease(s) prior to Closing, the Seller and the Purchaser shall use reasonable efforts to give practical effect to the above-described separation following Closing, and shall consider (without limitation):  2.3.1continued negotiations with the relevant Company Landlords to achieve a separation of each German Carve-out Lease into a German Vaccines Lease and a German Flu Lease, the latter of which shall be entered into by, or immediately assigned to, an entity in the Sellers Group Retained Business; or  2.3.2if a separation pursuant to paragraph 2.3.1 of this Part 3 of Schedule 3 is not achievable, a sub-lease of those parts of the premises demised by the German Carve-out Leases which are used by the German Flu Operations to an entity in the Sellers Group Retained Business.  2.4The Seller agrees to procure that Novartis Vaccines and Diagnostics GmbH shall not agree to any terms of any German Vaccines Lease(s) which are not substantially similar to the equivalent terms of the relevant underlying German Carve-out Lease without the consent of the Purchaser (not to be unreasonably withheld or delayed), and shall not agree to any terms of any German Flu Lease(s) which are not substantially similar to the equivalent terms of the relevant underlying German Carve-out Lease without the consent of the Seller (not to be unreasonably withheld or delayed).  2.5In connection with the implementation of the arrangements set out in this paragraph 2 of Part 3 of Schedule 3, the parties agree to work together prior to Closing (or, where paragraph 2.3 of this Part 3 of Schedule 3 applies, after Closing) to agree the provision of any site engineering services reasonably required by the other in order to operate those premises demised by the German Vaccines Lease(s) or the German Flu Lease(s), as applicable, in substantially the same manner as operated immediately prior to Closing. Such services may include, but are not limited to, supply of water, gas and electricity, the operation of clean utility systems (water for injection, clean steam, clean gases, etc.), facility services contract management and administration, preventive and corrective maintenance, and shutdown coordination.  91


Schedule 3 The Properties Part 4 Terms relating to the Transferred Real Property  1General Provisions Relating to the Transferred Real Property  1.1Interpretation  The following further definitions apply in this Part 4 of Schedule3:  Landlord means the person for the time being entitled to the reversion immediately expectant on the termination of the term granted by a Lease;  Leases means the leases, licences or tenancy agreements under which the Transferred Leased Real Properties are held by the relevant member of the Sellers Group, including all documents supplemental to them, and Lease means any one of them;  Letting Document means any lease, licence or tenancy agreement to which a Transferred Real Property is subject;  Licence means a right in favour of the Purchaser and all persons authorised by it to occupy the Licensed Premises during the Licence Period pursuant to this Part 4 of Schedule 3;  Licence Fee means the payments to be made by the Purchaser to the Sellers Group pursuant to paragraph 1.4.4 of this Part 4 of Schedule 3;  Licence Period means a period, which may be different for each of the Licensed Premises, commencing on the Closing Date and ending on the earliest of the following dates:  (i)the date on which this Agreement is terminated by whatever means whether in whole or in relation to the relevant Licensed Premises;  (ii)the date immediately preceding the date on which the term of the relevant Lease ends by whatever means;  (iii)the date of Property Transfer Completion in relation to the relevant Transferred Real Property; and  (iv)the Property Longstop Date;  Licensed Premises means any of theTransferred Real Propertiesfor which all relevant Property Third Party Consents have not been obtained prior to, or at, the Closing Date;  Property Agreed Terms means a transfer in the terms agreed between the relevant Business Seller, the Purchaser and any relevant third party or determined pursuant to paragraph 1.3.2 of this Part 4 of Schedule 3 and signed for identification by or on behalf of the Business Sellers and by or on behalf of the Purchaser from time to time before or after the date of this Agreement, with such alterations as may be agreed from time to time in writing between the relevant Business Seller, the Purchaser and any relevant third party;  Property Longstop Date means the date on which a court of competent jurisdiction finally determines that a Property Third Party Consent has been lawfully refused;  92


Property Third Party Consents means all consents, licences, approvals, permits, authorisations or waivers required from any Landlord, superior landlord and/or other third party, including any consents, licences, approvals, permits, authorisations or waivers required by any legislation or regulation or by any statutory, governmental, state, provincial or municipal bodies or authorities for or in connection with the transfer of a Transferred Real Property by the Business Sellers to the Purchaser and includes (where the context so admits) Sublease Consents;  Property Transfer Completion means the completion of the transfer of aTransferred Real Property under this Agreement,where such completion does not take place on the Closing Date because any relevant Property Third Party Consents have not been obtained on or prior to such date;  Property Transfer Completion Date means the date of Property Transfer Completion in accordance with paragraph 1.7 of this Part 4 of Schedule 3;  Registered Title means the registered title relating to a Transferred Real Property;  Sublease Consent has the meaning given to it in paragraph 1.11.2 of this Part 4 of Schedule 3;  transfer, for the purposes of this Part 4 of Schedule3only, means in respectof a Transferred Leased Real Property,the transfer or assignment of the relevant Lease or Leases, and in the case of a Transferred Owned Real Property the transfer thereof,anda transfer means and includes any instruments, deeds or agreements effecting such transfer;  Transferred Leased Real Propertiesmeans the leasehold properties held by a Business Seller and identified in Part B of Part 2 of this Schedule 3 and Transferred Leased Real Property means any one of them; and  Transferred Owned Real Properties means the owned properties identified in Part A of Part 2 of this Schedule 3 together with all buildings, structures, fixed plant, fixed machinery and fixed equipment thereon (except as excluded in Clause 2.3.2), and Transferred Owned Real Property means any one of them.  1.2Each of theTransferred Real Propertiesand/or the Leases thereof shall be transferred subject to the terms set out in this Part 4 of Schedule 3 and all other applicable terms of this Agreement.  1.3Pre-Closing  1.3.1Prior to Closing, the Business Sellers and the Purchaser shall agree (acting reasonably) the form of all documents on Property Agreed Terms necessary for the transfer of each of the Transferred Real Properties pursuant to the terms set out in this Part 4 of Schedule 3 and all other applicable terms of this Agreement.  1.3.2Any dispute arising out of or connected with paragraph 1.3.1 of this Part 4 of Schedule 3 which is not resolved by agreement between the parties within nine months of such dispute arising shall be referred for and resolved by expert determination as follows:  (i)either the relevant Business Seller or the Purchaser may initiate an expert reference under this provision by proposing to the other party the appointment of an expert (the Expert);  93


(ii)the Expert shall either be the nearest equivalent to a chartered surveyor in the relevant jurisdiction or (in relation to legal issues) a single QC (or equivalent), in each case with no less than 15 years post-qualification experience in commercial real estate in the relevant jurisdiction chosen by agreement between the relevant Business Seller and the Purchaser or, failing agreement within 14 days of the initiation of the reference, by the President for the time being of the relevant professional body to which the Expert belongs (the President) on the application of either the relevant Business Seller or the Purchaser;  (iii)the relevant Business Seller and the Purchaser shall request that the Expert determines the referred dispute within 10 days of receiving the reference;  (iv)if the Expert has been appointed but is unable or unwilling to complete the reference, another Expert shall be appointed by agreement between the relevant Business Seller and the Purchaser or, failing agreement within 7 days of the parties being notified that the Expert is unable or unwilling to complete the reference, by the President on the application of either party;  (v)the Expert shall act as an expert and not as an arbitrator;  (vi)the relevant Business Seller and the Purchaser shall have the right to make representations and submissions to the Expert, but there will be no formal hearing;  (vii)the relevant Business Seller and the Purchaser shall make all relevant documents and information within their control available to the Expert;  (viii)the costs of the Expert shall be borne equally by the relevant Business Seller and the Purchaser; and  (ix)the decision of the Expert shall, in the absence of fraud or manifest error, be final and binding on the parties.  1.3.3This paragraph 1.3.3 of Part 4 of Schedule 3 applies to those Transferred Real Properties in relation to which a Property Third Party Consent is required and if such Property Third Party Consent remains to be obtained as at the Closing Date this paragraph 1.3.3 of Part 4 of Schedule 3 shall continue to apply until the relevant Property Third Party Consent shall have been obtained or until the Property Longstop Date. If any Property Third Party Consents are required:  (i)the Seller or relevant Business Seller shall make an application for, and shall use all reasonable endeavours to obtain each Property Third Party Consent as soon as reasonably practicable following the date of this Agreement for the transfer of the Transferred Real Property and shall, at all times, keep the Purchaser informed of progress in obtaining such Property Third Party Consents;  (ii)the Purchaser shall:  (a)supply such information and references as may reasonably be required by a Landlord, any superior landlord or other relevant third party in connection with a Property Third Party Consent;  94


(b)in respect of the period after Closing only, enter into such covenants for the payment of the rent in respect of the Transferred Leased Real Properties and for the observance and performance of the covenants and conditions on the part of the lessee contained in any Lease as may reasonably be required by the Landlord, any superior landlord or other relevant third party;  (c)if reasonably required by the Landlord, any superior landlord or other relevant third party, provide a rent deposit or procure that a surety acceptable to such person guarantees the Purchasers obligations under the Lease following the transfer of the relevantTransferred Leased Real Property; and  (d)be responsible for and undertake to pay, or procure the giving of undertakings to pay the professional and other fees of any Landlord, any superior landlord or other relevant person (including any Tax or disbursements in respect of such fees but excluding any Tax on the actual net income, profit or gains of the Landlord, any superior landlord or any other relevant person) properly in connection with any application for Property Third Party Consents, whether or not such Property Third Party Consents are given.  1.3.4Each party shall give written notice to the other party as soon as reasonably practicable after obtaining any Property Third Party Consents which shall be accompanied by a copy of such consent.  1.3.5Subject to the Purchaser complying with its obligations under paragraphs 1.3.3(ii)(b) to (d) of this Part 4 of Schedule 3, the Seller shall pay, or shall procure that a member of the Sellers Group pays, any moneys or provide or procure the giving of any guarantees or other security, in each case as may be lawfully required by a Landlord, superior landlord or other relevant third party in connection with the obtaining of the Property Third Party Consents, provided that the Purchaser shall indemnify and keep indemnified the Seller in an amount equal to:  (i)any moneys required to be paid or procured to be paid by the Seller pursuant to this paragraph; and  (ii)any Liabilities under any guarantees or other security given or procured by the Seller pursuant to this paragraph and arising out of, or in connection with, an act or omission on the part of the Purchaser.  1.4Licence  1.4.1In the event that any Property Third Party Consents are not obtained on or before the Closing Date, notwithstanding the terms of the Leases, the Seller shall procure that the relevant Business Seller allows the Purchaser to occupy the Licensed Premises for the Licence Period relating to the relevant Licensed Premises on the terms set out in this paragraph 1.4 of Part 4 of Schedule 3.  1.4.2The Purchaser acknowledges that the grant of each Licence may amount to a breach of the terms of the relevant Lease.  1.4.3The Licence of each Licensed Premises is granted:  95


(i)subject to all of the matters to which the relevant Leases relating to the Transferred Leased Real Property are subject;  (ii)subject to the matters referred to in the Registered Title and the Letting Documents;  (iii)out of whatever right, title and interest that the relevant Business Seller has in the Licensed Premises and/or under the Leases;  (iv)in such state of repair and condition as the Licensed Premises may be in as at the date on which the relevant Licence is granted; and  (v)without making any statement or representation that the relevant Business Seller is entitled to grant it.  1.4.4From Closing and pending Property Transfer Completion, the Purchaser shall pay to the relevant Business Seller a Licence Fee equivalent to:  (i)all rents and other charges (including VAT due thereon under the relevant Lease where payable at the date of this Agreement by the relevant Business Seller) payable in respect of the Licensed Premises; and  (ii)all outgoings (including VAT due thereon under the relevant Lease) (including, but not limited to, rates, service charges, management charges, levies, air-conditioning charges, insurance, heating, electricity, gas, telecommunications and other services and the cost of complying with fire and other statutory regulations) payable by the relevant Business Seller in respect of the Licensed Premises or charged upon the owner or occupier of the Licensed Premises,  such payments to be made not less than 10 Business Days before any such sum falls due subject to the relevant Business Seller giving the Purchaser not less than 10 Business Days prior written notice to that effect. To the extent that there has been a prepayment at the Closing Date of the amounts in paragraphs 1.4.4(i) and  (ii) of this Part 4 of Schedule 3 by the Sellers Group which is not otherwise accounted for in the Closing Statement, the Purchaser shall pay to the relevant member of the Sellers Group within 10 Business Days of written demand an amount equal to the amount of such prepayment in respect of any period after the Closing Date.  1.4.5Throughout the Licence Period, the Purchaser shall, in respect of the Licensed Premises only:  (i)keep the Licensed Premises in no worse a state of repair than they are in at the Closing Date, fair wear and tear excepted;  (ii)observe and perform the covenants and conditions on the part of the lessee in the relevant Lease under which the relevant Business Seller holds the Licensed Premises (other than in relation to the payment of rent and other charges paid to the relevant Business Seller as part of the Licence Fee and subject to paragraph 1.4.5(i) of this Part 4 of Schedule 3); and  (iii)use the Licensed Premises only in accordance with the terms of the Lease of the relevant Licensed Premises and in compliance with the law and  96


regulationswhere the relevant Licensed Premises is located (save for any  such law or regulation that prohibits the use of the Licensed Premises without a Property Third Party Consent having been obtained).  1.4.6The Purchaser and each Business Seller agree that:  (i)the Licence is personal to the Purchaser and may only be exercised by the Purchaser and those authorised by it;  (ii)(subject to paragraph 1.4.5 of this Part 4 of Schedule 3) the Purchaser and all persons authorised by it are permitted to have the unrestricted use and occupation of the Licensed Premises; and  (iii)no relationship of landlord and tenant is created as a result of the Licence.  1.4.7If a Landlord or any other relevant third party commences proceedings, raises any lawful objection or takes any other action in connection with the Purchasers occupation or use of any of the Licensed Premises pending the obtaining of the relevant Property Third Party Consents, the Purchaser and the relevant Business Seller shall meet and negotiate in good faith in order to determine which steps should be taken in respect of the relevant Transferred Real Property.  1.4.8Throughout the Licence Period, the Purchaser shall, in respect of the Licensed Premises only, indemnify and keep indemnified each member of the Sellers Group from and against any Licence Fee and any Losses arising from the Licence and/or as a result of the occupation of the Licensed Premises by the Purchaser.  1.4.9The Purchaser and the Business Sellers shall each inform the other forthwith of any notice received by it in relation to any of the Licensed Premises from the Landlord or any other third party.  1.5Determination of Licence  1.5.1The Licence in relation to any one or more of the Licensed Premises shall determine:  (i)immediately if the Property Longstop Date occurs; or  (ii)by the relevant Business Seller giving at least three months prior written notice to the Purchaser if the Purchaser fails to make the payment of the Licence Fee for a period of one month or is otherwise in material breach of the provisions of the Licence for a continuous period of one month following written notification by the relevant Business Seller to the Purchaser of the same, and in either case the Purchaser has failed to remedy the relevant failure to pay or to remedy the breach prior to the expiry of the three month notice period (or, if the breach is not capable of remedy within such three month period, the Purchaser has failed to commence to remedy the breach within that period and thereafter failed diligently to continue with such remedy); or  (iii)if the relevant Landlord in relation to a Transferred Leased Real Property prosecutes forfeiture proceedings (or the nearest local law equivalent) as a result of the occupation by the Purchaser of the Licensed Premises then the parties shall either:  97


(a)agree that the Licence shall determine on a date to be agreed between the parties (acting reasonably); or  (b)in the absence of such agreement, either party may require a QC (or equivalent) with no less than 15 years post-qualification experience in commercial real estate in the relevant jurisdiction to be appointed (such appointment to be by agreement between the Seller and the Purchaser or, failing agreement, within 14 days, by the President (as defined in paragraph 1.3.2(ii) of this Part 4 of Schedule 3)). Should the QC determine that there is more than a 50% chance of the proceedings in question resulting in the Lease in question being forfeited (or equivalent), then the Licence shall determine on a date to be agreed between the parties (acting reasonably) in order to afford the Seller the opportunity to apply for relief from forfeiture or otherwise challenge the proceedings in question on the basis that any breach resulting from the grant of the Licence has been cured,  provided that this paragraph 1.5.1(iii) shall at all times operate without prejudice to paragraphs 1.4.7, 1.5.1(i) and 1.12.  1.5.2If, for whatever reason, the Licence Period comes to an end in relation to any of the Licensed Premises then:  (i)the Licence insofar as it relates to the relevant Licensed Premises shall be severable from the remainder of this Agreement and this Agreement shall otherwise remain in full force and effect;  (ii)the Purchaser shall not be entitled to any refund, abatement or reduction of the Purchase Price but shall be entitled to a refund in respect of any Licence Fee prior to the termination of the Licence for the Licensed Premises and which relates to the period following termination of the Licence;  (iii)it shall not prejudice or affect any claim by any relevant Business Seller in respect of any prior breach of this Agreement by the Purchaser in respect of that Licensed Premises; and  (iv)unless the Licence Period comes to an end due to Property Transfer Completion in respect of the relevant Licensed Premises taking place, the Purchaser shall:  (a)vacate the Licensed Premises forthwith;  (b)remove from the Licensed Premises all items belonging to it;  (c)leave the Licensed Premises in a clean and tidy condition; and  (d)at the request of the relevant Business Seller, reinstate the Licensed Premises or any part or parts thereof to at least as good a state of repair or condition as at Closing, fair wear and tear excepted.  1.6Closing  1.6.1The transfer of the Transferred Real Property shall only take place on Closing to the extent that all necessary Property Third Party Consents in respect of the relevant transfer have been obtained prior to the Closing Date.  98


1.6.2Without prejudice to Clause 4.1.8, the Purchase Price shall be paid on the Closing Date in accordance with this Agreement even if any necessary Property Third Party Consents have not then been obtained and not all the Transferred Real Property is transferred on the Closing Date.  1.6.3Completion of the transfer of the Transferred Real Property shall take place at such place (or places) as the parties may agree.  1.7Property Transfer Completion  Property Transfer Completion in respect of a Transferred Real Property shall take place on the date falling 15 Business Days following the grant of all relevant Property Third Party Consents for such Transferred Real Property or on such other date as the parties shall agree acting reasonably (but not before the Closing Date).  1.8General Transfer Provisions  1.8.1The Seller shall procure that the relevant members of the Sellers Group shall transfer the Transferred Real Property to the Purchaser subject to the terms set out in this Part 4 of Schedule 3 and all other applicable terms of this Agreement on the Closing Date or (if later) Property Transfer Completion.  1.8.2The Transferred Real Property is sold subject to the Letting Documents (if any) but otherwise with vacant possession together with all buildings, structures, fixed plant, fixed machinery and fixed equipment thereon except as excluded in Clause 2.3.2.  1.8.3The transfer of each Transferred Real Property shall contain covenants with the relevant Business Seller by the Purchaser to comply with:  (i)the obligations arising from the matters mentioned in the Registered Title; and  (ii)obligations on the part of the landlord arising under the Letting Documents (if any),  insofar as the relevant Business Seller may remain liable directly or indirectly for them after the Closing Date or Property Transfer Completion (as the case may be) and to indemnify the relevant member of the Sellers Group against any non-compliance and a further covenant by the Purchaser to indemnify the relevant Business Seller against any liability arising under an authorised guarantee agreement (or equivalent) entered into by the relevant member of the Sellers Group.  1.8.4The transfer of each Transferred Real Property shall be on the nearest equivalent terms that exist under local (national) law to a transfer of real property in England and Wales made with full title guarantee save that where it is a Transferred Leased Real Property the covenant set out in Section 4(2)(b) of the Law of Property (Miscellaneous Provisions) Act 1994 shall not extend to the imposition on the transferor of liability for any subsisting breach of obligation relating to the physical state of the Transferred Leased Real Property.  1.8.5On the Closing Date or Property Transfer Completion (as the case may be) in respect of each of the Transferred Real Properties:  99


(i)the Seller shall procure that the relevant Business Seller delivers to the Purchaser a duly executed transfer in respectofthe relevant Transferred Real Property on Property Agreed Terms; and  (ii)the Purchaser shall deliver to the Seller a duly executed transfer in respect of the relevant Transferred Real Property on Property Agreed Terms.  1.8.6The Purchaser shall, at its own cost and expense, procure that all transfers are duly stamped, filed or registered at the relevant registries on a timely basis and within the statutory period (if any) and the relevant Business Seller shall promptly assist the Purchaser with any requisitions or enquiries raised in relation thereto.  1.9Subjections  Notwithstanding anything contained in this Agreement:  1.9.1Each of the Transferred Real Properties is transferred subject to and (where appropriate) with the benefit of the following matters (to the extent applicable under the laws of the relevant jurisdiction):  (i)any unregistered interest which overrides first registration under Schedule 1 of the Land Registration Act 2002 (the 2002 Act) and any interest which fall within Section 11(4)(c) of the 2002 Act and any unregistered interests which override registered dispositions under Schedule 3 of the 2002 Act or their local jurisdiction equivalent (if any);  (ii)such unregistered interests as may affect that Transferred Real Property to the extent and for so long as they are preserved by the transitional provisions of Schedule 12 of the 2002 Act or its local jurisdiction equivalent (if any);  (iii)all matters contained or referred to in the Letting Documents;  (iv)all matters contained or referred to in the Property, Proprietorship and Charges registers (or equivalent entries and registers) of the Registered Title relating to that Transferred Real Property (except fixed and floating charges securing money or liabilities);  (v)all exceptions, reservations, rights, easements, quasi-easements, wayleaves, rent charges, covenants, conditions, declarations, leases, tenancies (including statutory tenancies), licences and agreements affecting the same;  (vi)(in the case of a leasehold property) the rents, covenants and conditions reserved by or contained in the Lease under which the same is respectively held;  (vii)all local land charges (whether or not registered before the date of this Agreement) and all matters capable of registration as local land charges (whether or not actually registered) or their local jurisdiction equivalent (if any);  (viii)all notices served and orders, demands, proposals, or requirements made by any local or other public or competent authority;  100


(ix)all actual or proposed orders, directions, plans, notices, instruments, charges, restrictions, conditions, agreements or other matters arising under any statute relating to town and country planning and any laws and regulations intended to control or regulate the construction, demolition, alteration or change of use of land or buildings or to preserve or protect the environment; and  (x)matters which are fairly disclosed by the Disclosure Letter.  1.9.2The Purchaser is deemed to acquire with full knowledge of the matters referred to in paragraph 1.9.1 of this Part 4 of Schedule 3.  1.9.3The Business Sellers shall procure that any and all financial charges affecting the Transferred Real Properties will be discharged on or before the date on which such Transferred Real Property is to be transferred to the Purchaser, and shall provide to the Purchaser such evidence as the Purchaser may reasonably require in order to satisfy itself that such discharge has been effected and to remove any notices or entries in respect of such charges from any relevant register.  1.9.4The Business Sellers do not give any warranty as to the use or area of any of the Transferred Real Properties and shall not be required to define the boundaries of any of the Transferred Real Properties. The transfer of the Transferred Real Properties shall not be annulled, nor shall any compensation be allowed or payable, in respect of any error in respect of any such matters.  1.9.5On the date on which the transfer of each Transferred Real Property is completed, the Seller shall deliver, to the Purchaser (or such other third party as the Purchaser may reasonably direct) all of the original documents in the possession of the Business Sellers or relevant member of the Sellers Group in respect of each of the Transferred Real Properties.  1.9.6The Purchaser shall not raise any requisition on matters arising after the date of this Agreement, except where the subject matter of the requisition is registered at the Land Registry (or equivalent local registry) after the date of this Agreement and does not relate to any matter referred to in paragraph 1.9.1 of this Part 4 of Schedule 3.  1.9.7To the extent that deposit guarantees have been given by the Sellers Group in respect of any Transferred Real Property and/or insofar as the Sellers Group retains any residual or ongoing liabilities or obligations (including performance guarantees) in connection with the Transferred Real Property, the Purchaser shall use all reasonable endeavours procure that the Sellers Group is released from all deposit guarantees and all other residual or ongoing liabilities or obligations and, insofar as the counterparties thereto shall properly and lawfully refuse to give any such release, the Purchaser shall indemnify and keep indemnified the Seller (or the relevant member of the Sellers Group) in an amount equal to any Liabilities under any such residual or ongoing liabilities or obligations arising out of, or in connection with, an act or omission on the part of the Purchaser.  1.10Insurance  The Business Sellers shall maintaintheir existing insurance (if any) on the Transferred Real Properties and shall cancel such insurance with effect from the Closing Date or, if  101


later, the date of Property Transfer Completion (as the case may be) unless agreed otherwise with the Purchaser.  1.11Grant of Sublease  If a Business Seller is unable to obtain a Property Third Party Consent from a Landlord for the transfer of a Transferred Leased Real Property the provisions of this paragraph 1.11 of Part 4 of Schedule 3 shall apply:  1.11.1where a Lease permits a sublease to be granted without the requirement for any Property Third Party Consent from the Landlord, the relevant Business Seller shall grant to the Purchaser a sublease of the Transferred Leased Real Property on the same rent and other terms and conditions as the Lease of the Transferred Leased Real Property with such changes as are appropriate and agreed between the relevant Business Seller and the Purchaser acting reasonably and the term of the sublease shall be the term of such Lease less one day; and  1.11.2where the Transferred Leased Real Property is held by the relevant Business Seller from a Landlord on terms which require the consent of the Landlord to:  (i)the grant of a sublease; or  (ii)the terms on which a sublease is granted,  the Seller or the relevant Business Seller shall use all reasonable endeavours to obtain such consent (Sublease Consent) from such Landlord. Where the relevant Business Seller is able to obtain the appropriate Sublease Consent (or, where applicable, the court of competent jurisdiction referred to in paragraph 1.12.1 of this Part 4 of Schedule 3 declares that the Sublease Consent has been unreasonably withheld or delayed), the relevant Business Seller shall grant to the Purchaser a sublease of the Transferred Leased Real Property on the same rent and other terms and conditions as the Lease of the Transferred Leased Real Property with such changes as are appropriate and agreed between the relevant Business Seller and the Purchaser acting reasonably and the term of the sublease shall be the term of such Lease less one day.  1.12Property Third Party Consent not obtained  1.12.1If a Property Third Party Consent (and, where applicable, a Sublease Consent) has been refused or otherwise not obtained within twelve months following the Closing Date, the Seller and the Purchaser may (acting reasonably) agree that an application is to be made to a court of competent jurisdiction that the relevant Property Third Party Consent has been unreasonably withheld or delayed.  1.12.2If an application is to be made to a court of competent jurisdiction pursuant to paragraph 1.12.1 of this Part 4 of Schedule 3:  (i)the proceedings shall be brought and prosecuted by the Seller; and  (ii)the Purchaser shall provide all such assistance in connection with such proceedings as the Seller (acting reasonably) may require in the interests of obtaining the Property Third Party Consent; and  (iii)provided that the Seller has complied with its obligations under paragraphs 1.3.3(i) and 1.11.2 of this Part 4 of Schedule 3, the Purchaser shall indemnify and keep indemnified the Seller for any costs and expenses  102


properly incurred by the Seller in bringing and prosecuting proceedings under this paragraph.  1.12.3If a Property Third Party Consent has not been obtained by the Property Longstop Date then the Seller and the Purchaser shall each bear fifty per cent. of any Losses of the Seller and the Purchaser arising out of or in connection with the failure to obtain such Property Third Party Consent.  1.13Obligations on the Business Sellers  In this Part 4 of Schedule 3, any reference to an obligation on the part of the Business Sellers (or any of them, as the case may be) shall be read as if it were an obligation on the part of the Seller to procure performance of such obligation by the Business Seller or Business Sellers in question.  1.14Amsterdam Lease  1.14.1The Seller shall keep the Purchaser fully informed of any discussions or negotiations with the Landlord in respect of the lease of premises at Hullenbergweg 81-135 (1011 CL), Amsterdam, The Netherlands (the Amsterdam Lease), or any notices received by the Seller (or any member of the Sellers Group) from the Landlord in respect of the Amsterdam Lease relating to the determination thereof or the yielding up of the premises demised thereunder.  1.14.2The Seller shall not, and shall procure that no member of the Sellers Group shall, act independently of the Purchaser in relation to any discussions or negotiations relating to the extension or renewal of the Amsterdam Lease, and shall not enter into any document or deed extending or renewing the term of the Amsterdam Lease without the prior written approval of the Purchaser (not to be unreasonably delayed).  1.14.3The Seller shall, and shall procure that any relevant member of the Sellers Group shall, take such action as the Purchaser may reasonably request in connection with the Amsterdam Lease, including taking steps to extend or renew the same.  1.14.4The Purchaser shall indemnify and keep indemnified the Seller against all costs properly incurred by the Seller (or any member of the Sellers Group) arising out of or in connection with paragraph 1.14.3 of this Part 4 of Schedule 3.  1.14.5If the Amsterdam Lease is extended or renewed, the leasehold property as extended or renewed shall be a Transferred Real Property for the purposes of this Agreement and the provisions of this Part 4 of Schedule 3 shall apply to such lease as extended or renewed.  103


Schedule 4 Vaccines Group Intellectual Property Rights and Vaccines Group Intellectual Property Contracts (Clause 2.3)  Part 1  Vaccines Group Intellectual Property Rights  Part 2  Vaccines Group Intellectual Property Contracts  Part 3  Beta Interferon Patents  104


Schedule 5 Excluded Employees (Clause 1.1)  [***]  105


Schedule 6 International Assignees (Clause 1.1)  [***]  106


Schedule 7 Permitted Encumbrances  (Clause 1.1)  1.Co-owned Vaccines Group Intellectual Property Rights.  107


Schedule 8 Product Approvals and Product Applications Part 1 Terms relating to the Product Approvals and Product Applications  1General Provisions  1.1The Purchaser shall do all things necessary to effect the transfer of each Product Approval and Product Application, including complying with requirements and requests of Governmental Entities with respect to the transfer of each Product Approval and Product Application.  1.2The Marketing Authorisations shall be transferred in accordance with Part 2 of this Schedule 8.  2Product Applications  2.1The Purchaser shall file or cause to be filed applications for the transfer of each Product Application in each country or territory in which such transfer is required to be submitted as soon as possible after the Closing Date.  2.2Pending the transfer of each Product Application each Seller shall, and shall cause the relevant members of its Group to:  2.2.1upon reasonable request from the Purchaser and at the Purchasers expense, reasonably cooperate and coordinate with the Purchaser in relation to the transfer of the Product Applications, including by providing the Purchaser with regulatory documentation concerning the Products owned or controlled by that Seller or any of its Affiliates;  2.2.2perform such acts and services as may be requested by the Purchaser that are reasonably necessary or required by any Governmental Entity to maintain or renew any Product Application or are reasonably necessary for the Purchaser to pursue the regulatory approval for any Product Application, including conducting any studies, including clinical and stability studies, concerning the Products; and  2.2.3notify the Purchaser as soon as is reasonably practicable of any written communication received by such Seller or any member of its Group with respect to any Product Application and shall consult with the Purchaser with respect to such communication and take into account the Purchasers views as to the form and content of any communication with any Governmental Entity concerning such Product Application.  3Fees and expenses  From and after the Closing Date, the Purchaser shall promptly reimburse the relevant members of the Sellers Group for all maintenance and renewal fees and similar fees paid, and all out of pocket expenses reasonably incurred in connection with the satisfaction of any commitments or obligations by such member of the Sellers Group with respect to each Product Approval and each Product Application.  4Notification  As soon as a Seller or the Purchaser or any of their respective Affiliates receives notification, if any, of impending approval or approval of the transfer of a Product  108


Application from a Governmental Entity, the notified party or the party whose Affiliate was notified shall inform the other party of the expected date of appointment or transfer and actual date of appointment or transfer of that Product Application.  5Responsibility for transfer  Notwithstanding any other provision of this Agreement, no Seller nor any of its Affiliates shall have any Liability to the Purchaser in the event that the transfer of any Product Application alone results in any further obligations, commitments or Liabilities in relation to such Product Application.  109


Schedule 8 Product Approvals and Product Applications Part 2 Transfer of Marketing Authorisations  1Marketing Authorisation Transfer and Marketing Authorisation Re-registration  1.1The Seller and the Purchaser hereby agree they will each use, and will procure that their respective Affiliates will use, all reasonable endeavours to ensure that, as soon as reasonably practicable after the Closing Date:  1.1.1subject to paragraph 1.1.2, each Marketing Authorisation shall be transferred in accordance with Applicable Law by the Marketing Authorisation Holder to the Marketing Authorisation Transferee (Marketing Authorisation Transfer); and  1.1.2where Applicable Law does not permit Marketing Authorisation Transfer, a new marketing authorisation shall be registered in the name of the Marketing Authorisation Transferee to replace the existing Marketing Authorisation (Marketing Authorisation Re-registration) and the Seller shall procure that the relevant Marketing Authorisation Holder takes all necessary steps to withdraw, abandon, cancel or allow to lapse the superseded Marketing Authorisation as soon as practicable after the Marketing Authorisation Re-registration Date.  1.2Any Marketing Authorisation Transfer or Marketing Authorisation Re-registration (as applicable) shall each be effected on a Market-by-Market basis (such that there shall not be any staggered Marketing Authorisation Transfer or Marketing Authorisation Re-registration (as the case may be) on a Product-by-Product basis in any Market), unless otherwise agreed between the Seller and the Purchaser.  1.3With effect from the Closing Date until the Marketing Authorisation Transfer Date or the Marketing Authorisation Re-registration Date (as applicable), the Seller shall procure that each Marketing Authorisation Holder shall hold the Marketing Authorisation(s) in its name but for the account, risk and benefit of the relevant Marketing Authorisation Transferee.  Submission of MA Documentation  1.4Without prejudice to paragraph 1.5, the Purchaser shall be responsible for preparing and submitting, or for procuring that there is prepared and submitted (in any such case at the Purchasers cost and expense), all notices, applications, submissions, reports and any other instruments, documents, correspondence or filings necessary to complete Marketing Authorisation Transfer or Marketing Authorisation Re-registration (as applicable) (the MA Documentation). The MA Documentation shall be prepared in accordance with Applicable Law as soon as reasonably practicable.  1.5At the Sellers election, the Purchaser shall procure that advanced drafts of the MA Documentation are submitted to the Seller so as to allow the Seller and/or the Marketing Authorisation Holder a reasonable opportunity to provide comments on such MA Documentation before it is submitted to the relevant Governmental Entity. The Purchaser shall incorporate all comments on such drafts as may reasonably be made by the Seller and/or the Marketing Authorisation Holder PROVIDED THAT the Purchaser shall not be obliged to incorporate any comments if the Purchaser considers, acting reasonably that to do so would materially delay Marketing Authorisation Transfer or Marketing Authorisation Re-registration (as applicable).  110


1.6Where under Applicable Law the MA Documentation is required to be submitted to the relevant Governmental Entity:  1.6.1by the Marketing Authorisation Holder, the Purchaser shall procure that the finalised MA Documentation is provided to the Seller after such MA Documentation is finalised in accordance with paragraph 1.5 above and the Seller shall, in turn, procure that the Marketing Authorisation Holder submits such MA Documentation to the relevant Governmental Entity (the timing and date of such submission to be agreed with the Purchaser) and the Seller shall promptly thereafter advise the Purchaser of such submission and provide a copy of the relevant MA Documentation (in the form submitted) to the Purchaser; and  1.6.2by the Marketing Authorisation Transferee, the Purchaser shall procure that the relevant Marketing Authorisation Transferee submits the finalised MA Documentation to the relevant Governmental Entity as soon as reasonably after such MA Documentation is finalised in accordance with paragraph 1.5 above and the Purchaser shall promptly thereafter advise the Seller of such submission and provide a copy of the relevant MA Documentation (in the form submitted) to the Seller.  1.7From the Closing Date, the Seller shall procure that the relevant Marketing Authorisation Holder shall, as soon as reasonably practicable, sign any notices, applications, submissions, reports and other instruments, documents, correspondence or filings presented to it by the Purchaser or the relevant Marketing Authorisation Transferee that are necessary to effect Marketing Authorisation Transfer or Marketing Authorisation Re-registration (as applicable). The Marketing Authorisation Holder shall:  1.7.1provide notice of its consent to a Marketing Authorisation Transfer or Marketing Authorisation Re-registration if required by any Governmental Entity; and  1.7.2provide to the Purchaser or the relevant Marketing Authorisation Transferee any information or other data or technical or other information in its possession that relates to the relevant Marketing Authorisation and that is required by a relevant Governmental Entity or otherwise reasonably required by the Purchaser or the relevant Marketing Authorisation Transferee to assist the Purchaser or the relevant Marketing Authorisation Transferee to effect the relevant Marketing Authorisation Transfer or Marketing Authorisation Re-registration;  1.7.3in the event of any request for information or any query from any relevant Governmental Entity in respect of Marketing Authorisation Transfer or the Marketing Authorisation Re-registration (as applicable), the relevant party receiving such request or query shall provide copies of any such request or query to the Seller or, as the case may be, to the Purchaser. The Purchaser shall be responsible for preparing, or shall be responsible for procuring that there is prepared, (at the Purchasers cost and expense) any response to such a request or query with the intention that such request or query shall be dealt with as promptly and efficiently as possible. In advance of finalising any such response, the Purchaser shall procure that the relevant response is submitted to the Seller so as to allow the Seller and/or the relevant Marketing Authorisation Holder a reasonable opportunity to provide comments on such response before it is submitted to the Governmental Entity. The Purchaser shall procure that relevant Marketing Authorisation Transferee (i) shall submit the response to the relevant  111


Governmental Entity as soon as reasonably practicable after the same has been finalised in accordance with this paragraph 1.7.3 and (ii) shall provide a copy of the relevant response (in the form submitted) to the Seller.  2Obligations Pending Marketing Authorisation Transfer or Marketing Authorisation Re-Registration  2.1Unless otherwise required by Applicable Law or a relevant Governmental Entity (or unless otherwise agreed in writing by the Seller and the Purchaser), from the Closing Date until the applicable Marketing Authorisation Transfer Date or Marketing Authorisation Re-registration Date:  2.1.1the Seller shall:  (i)maintain in force (or procure that there is maintained in force) each Marketing Authorisation, and shall not voluntarily amend, cancel or surrender any Marketing Authorisation unless requested to do so in writing by the Purchaser or required to do so by any Applicable Law or any Governmental Entity;  (ii)with the Purchasers consent (not to be unreasonably withheld or delayed) progress (or procure that there is progressed) any registrations, variations or renewals to Marketing Authorisations initiated by the Seller (or any other member of the Sellers Group) prior to the Closing Date or withdraw them upon the request of the Purchaser;  (iii)procure that each Marketing Authorisation Holder shall comply with the terms of any Marketing Authorisation and shall notify the Purchaser as soon as reasonably practicable of the details of any variations or renewals initiated following the Closing Date;  (iv)inform the Purchaser of any impending renewals of Marketing Authorisations as at the Closing Date and the parties shall discuss in good faith to what extent any such renewal will be pursued or withdrawn (it being agreed that the Purchaser shall have the final decision in any such matter);  (v)not without the consent of the Purchaser, initiate any additional variations or amendments to the Marketing Authorisations, except to the extent required by any Governmental Entity or where failure to do so would breach Applicable Law; and  (vi)consider in good faith any request by the Purchaser to apply for a new marketing authorisation in respect of a Product PROVIDED THAT if the Seller agrees to submit such application, any costs or expenses incurred by the Seller in making such application shall be for the Purchasers account and shall constitute MA Costs;  2.1.2without prejudice to the generality of the foregoing paragraph 2.1.1(iii), the Purchaser acknowledges and agrees that each Marketing Authorisation Holder shall be entitled to do (or to procure that there is done) any or all of the following (and the Purchaser acknowledges that, where the relevant Marketing Authorisation Holder so chooses and unless otherwise agreed, responsibility for each of the following activities shall rest with the relevant Marketing Authorisation Holder):  112


(i)pharmacovigilance activities related to the Marketing Authorisations, which activities shall be conducted in accordance with Applicable Law, the Pharmacovigilance Agreement, and the standards, policies and procedures of the Sellers Group from time to time in force; and  (ii)conducting any and all communications with a Governmental Entity in respect of a Marketing Authorisation (including, without limitation to the generality of the foregoing, attending any meetings with relevant Governmental Entities and filing and submitting all reports and other documents which it reasonably considers necessary to be submitted in order to comply with Applicable Law or its obligations under this Agreement), PROVIDED THAT responsibility for (a) the costs of preparation of any such documents, reports and/or filings shall be borne by the Purchaser (or the relevant Marketing Authorisation Transferee) to the extent such costs are reasonably necessary, and (b) the submission of MA Documentation shall be the responsibility of the Purchaser in accordance with paragraph 1.4 above, PROVIDED THAT the Seller shall ensure that the Purchaser is kept fully and promptly informed of any such communications or submissions in advance, to the extent reasonably practicable; and  2.1.3the Seller shall procure that each Marketing Authorisation Holder shall act in accordance with the reasonable instructions of the Purchaser or the Marketing Authorisation Transferee in respect of each Marketing Authorisation in respect of which such Marketing Authorisation Holder is the holder, PROVIDED THAT no Marketing Authorisation Holder shall be obliged to comply with such instructions to the extent the same: (i) infringe the terms of the relevant Marketing Authorisation(s); or (iii) are otherwise inconsistent with the provisions of the Pharmacovigilance Agreement relating to the Seller;  2.1.4the Purchaser shall only request artwork changes to the extent such changes are required in order to comply with Applicable Law;  2.1.5the Purchaser shall submit to the Seller (or shall procure that there is submitted) written details (in such form and with such supporting materials as the Seller may reasonably request) of any new, amended or proposed advertising and promotional activity or training materials in respect of any Product Commercialised pursuant to any Marketing Authorisation (including (without limitation) any material reasonably requested by the Seller in order to validate new and/or amended promotional or training materials), and the Purchaser acknowledges and agrees that no such advertising, promotional or training activity shall be implemented, undertaken or otherwise commenced without the prior written consent of the Seller (for itself and on behalf of the relevant Marketing Authorisation Holder), such consent not to be unreasonably withheld. The Purchaser further agrees and acknowledges that, if it so chooses, the Seller shall be entitled to assume responsibility for obtaining (or procuring that there is obtained) the consent(s) and approval(s) of any relevant Governmental Entity required for such new, amended or proposed advertising and promotional activity or training activity; and  2.1.6to the extent permitted by the terms of the relevant Marketing Authorisation, the Purchaser or any other member of the Purchasers Group shall Commercialise the Product(s) which are the subject of such Marketing Authorisation (notwithstanding  113


that such Marketing Authorisation is held in the name of the relevant Marketing Authorisation Holder and, for the avoidance of doubt, the proceeds of any such Commercialisation shall be for the benefit of the Purchasers Group) and the Purchaser shall:  (i)indemnify each member of the Sellers Group against any and all actions, claims, demands, investigations, judgments, proceedings, liabilities, loss, damages, payments, costs and expenses arising in relation to the Commercialisation of the Products by the Purchaser or any other member of the Purchasers Group under this paragraph (i); and  (ii)procure that such Product(s) are Commercialised in compliance with the terms of the relevant Marketing Authorisation and/or the requirements of the relevant Governmental Entity.  3New and Pending Marketing Authorisations in Respect of the Products  3.1If, at any time prior to Closing, any member of the Sellers Group is granted or otherwise comes to hold any marketing authorisation which relates exclusively to one or more Products (a New Marketing Authorisation) then:  3.1.1the Seller undertakes to the Purchaser to notify the Purchaser as soon as reasonably practicable following the date on which the relevant member of the Sellers Group is granted, or becomes entitled to, the New Marketing Authorisation; and  3.1.2the provisions of paragraphs 1 and 2 above shall apply to that new Marketing Authorisation.  3.2Where a member of the Sellers Group has submitted to any Governmental Entity any application relating to the grant of a new marketing authorisation in respect of the Vaccines Group which is pending or in process as at the date of this Agreement (a Pending Marketing Authorisation):  3.2.1the Seller shall continue to be responsible for preparation and submission of all documents required to register such Pending Marketing Authorisation but, following Closing, it shall do so at the Purchasers cost and shall pass responsibility for such Pending Marketing Authorisation to the Purchaser (or such member of the Purchasers Group as the Purchaser may nominate) as soon reasonably possible after Closing, subject to Applicable Law;  3.2.2from the Closing Date, the provisions of paragraph 1 shall apply mutatis mutandis to any registration process for any Pending Marketing Approval.  4MA Costs  From the Closing Date, the Purchaser shall be responsible for all necessary costs of preparation and submission of MA Documentation and, save as expressly provided in this Agreement, any other necessary costs incurred by the Seller or a member of the Sellers Group in connection with the maintenance and any variations, amendments and renewals of the Marketing Authorisations relating to the Products or for any matter requested by the Purchaser pursuant to this Part 2 of Schedule 8 and for all fees and costs reasonably incurred by the relevant member of the Sellers Group in complying with its obligations in respect of a Marketing Authorisation Transfer or Marketing Authorisation Re-registration (MA Costs).  114


5Obligations following Marketing Authorisation Transfer or Marketing Authorisation Re-Registration  5.1On and from the relevant Marketing Authorisation Transfer Date or Marketing Authorisation Re-registration Date (as applicable), the Purchaser shall procure that each Marketing Authorisation Transferee shall assume and be solely responsible for:  5.1.1all obligations as the holder of such Marketing Authorisation including (subject to the terms of the Pharmacovigilance Agreement) pharmacovigilance activities related to such Marketing Authorisation;  5.1.2all activities and actions required by Applicable Law in connection with such Marketing Authorisation; and  5.1.3any and all outstanding commitments and obligations to the relevant Governmental Entities with respect to the relevant Marketing Authorisation, save for any such commitments or obligations arising from a breach of this Agreement by the Seller.  5.2In the event that, following Marketing Authorisation Transfer or Marketing Authorisation Re-registration in respect of any Product, the Seller wishes to apply for a marketing authorisation in respect of a retained product, the Purchaser shall (and shall procure that the relevant Marketing Authorisation Transferee shall) co-operate with and provide all reasonable assistance to the Seller (or the relevant member of the Sellers Group) at the Sellers costs as may be reasonably required for the purposes of applying for such new marketing authorisation, including (without limitation) providing the Seller (or the relevant member of the Sellers Group) and/or any Governmental Entity with such access to Marketing Authorisation Data or such other data or technical or other information as is reasonably requested by the relevant Governmental Entity or is otherwise reasonably required by the Seller or the relevant member of the Sellers Group.  115


Schedule 8 Product Approvals and Product Applications Part 3 List of Products, Products Under Registration and Pipeline Products  [***]  116


Schedule 8 Product Approvals and Product Applications Part 4 Tenders  From Closing until the Marketing Authorisation Transfer Date in any Market, the Seller shall, and shall procure that each member of the Sellers Group and the relevant Marketing Authorisation Holder shall, to the extent permitted by Applicable Law:  (a)inform the Purchaser in writing of any Call for New Tender as soon as reasonably practicable following receipt; and  (b)co-operate with and provide reasonable assistance to the Purchaser (or the relevant member of the Purchasers Group) for the purposes of responding to the Call for New Tender or otherwise applying for a new tender; and  (c)where Applicable Law requires such responses or applications to be made by the Marketing Authorisation Holder, the Seller shall procure that the Marketing Authorisation Holder submits such responses or applications on behalf of the Purchaser PROVIDED THAT the Purchaser shall indemnify the Seller and/or the relevant Marketing Authorisation Holder (as the case may be) for any and all costs, expenses and liabilities suffered or reasonably incurred by the Seller and/or the Marketing Authorisation Holder in complying with or as a result of the provisions of this paragraph.  117


Schedule 9  Certificate (Clause 1.1)  To: GlaxoSmithKline plc  [Date]  Certificate  This Certificate is issued in accordance with clause 4.4.1(iii)(b) and paragraph 1.1.4 of Schedule 15 of the sale and purchase agreement between Novartis AG and GlaxoSmithKline plc dated 22 April 2014 (the Agreement). Unless otherwise defined, capitalised words used in this Certificate shall have the meanings given to them in the Agreement.  We confirm that:  1. no Material Adverse Effect has occurred between the date of the Agreement and the date of this Certificate;  2. having made due and careful enquiry, we are not aware of any breach or breaches of Clause 9.1 which alone or together give rise to a Material Adverse Effect; and  [either]  3. having made due and careful enquiry, we are not aware of any breach or breaches of the Sellers Warranties that would have occurred and that would, alone or together, have given rise to a Material Adverse Effect had the Sellers Warranties been repeated immediately before Closing by reference to the facts, circumstances and knowledge then existing as if references in the Sellers Warranties to the date of this Agreement were references to the Closing Date.  [or]  3. having made due and careful enquiry, we are aware of the following material breaches of the Sellers Warranties that would, alone or together, be material and have occurred had the Sellers Warranties been repeated immediately before Closing by reference to the facts, circumstances and knowledge then existing as if references in the Sellers Warranties to the date of this Agreement were references to the Closing Date.  [description of material breaches.]  For an on behalf of Novartis AG  118


Schedule 10 Transferred Contracts (Clause 2.3)  1Separation of Shared Business Contracts  1.1Prior to Closing, the Seller and the Purchaser shall discuss and agree in good faith a process to identify all material Shared Business Contracts  1.2The Seller shall use all reasonable efforts to maintain relationships under the Shared Business Contracts and continue to operate the Shared Business Contracts, including without limitation fulfilling all its obligations under the Shared Business Contracts, in the same manner as it has for the twelve months prior to this Agreement.  1.3The Purchaser may, by notice to the Seller at any time prior to the Marketing Authorisation Transfer Date in respect of the relevant Product in the relevant territory, elect to take the rights and obligation of the Relevant Part of any Shared Business Contract.  1.4If the Purchaser makes an election under paragraph 1.3 above, the Seller and the Purchaser shall use all reasonable endeavours to procure that an arrangement is entered into with the relevant counterparty to each Shared Business Contract, the effect of which shall be that, with effect from whichever is the later of Marketing Authorisation Transfer Date and the date of the relevant arrangement, the benefit and burden of the Relevant Part is severed from such Shared Business Contract and an agreement or arrangement equivalent to such Shared Business Contract is entered into between the relevant counterparty and a member of the Purchasers Group (or the Relevant Part of the Shared Business Contract is sub-licensed to such Purchaser) (a Separation). For the avoidance of doubt, no part of any such Shared Business Contract shall be severed and transferred to any Purchaser in so far as it relates to the Sellers Retained Business, any product other than the Products or any Excluded Asset.  2Obligation to obtain Third Party Consents  2.1In relation to any Transferred Contract (excluding, for the purposes of this Schedule 10, any Product Approval or Product Application) or Transferred Intellectual Property Contract or Co-Owned Vaccines Group Intellectual Property Right or Transferred Plant and Equipment which is not assignable or sub-licensable without a Third Party Consent or a Separation of a Shared Business Contract which is not separable without a Third Party Consent, this Agreement shall not be construed as an assignment, an attempted assignment, a sub-licensing or an attempted sub-licensing and the Seller and the Purchaser shall each use reasonable endeavours both before and after Closing to obtain all necessary Third Party Consents as soon as possible and shall keep the other informed of progress in obtaining such Third Party Consents. The Seller shall deliver to the Purchaser, on Closing or, if later, as soon as possible after receipt, any Third Party Consent.  2.2In connection with the obtaining of any Third Party Consent referred to in paragraph 2.1, the Purchaser shall supply to the Seller such information as may be reasonably requested by the Seller or any relevant third party.  2.3Save as otherwise provided in this Agreement, the cost of any fee demanded by the third party as consideration for giving the Third Party Consent shall be borne by the Purchaser, provided that:  119


2.3.1the cost is agreed in advance by the Purchaser (such agreement not to be unreasonably withheld or delayed); and  2.3.2no party shall be required to bear any internal or administrative costs of the other party in relation to any Third Party Consent.  3Obligations until Third Party Consents are obtained/where Third Party Consents are refused  3.1Subject to paragraph 3.2, the Purchaser shall assume, carry out, perform and discharge the Sellers and the Business Sellers obligations arising under the Transferred Contracts, Transferred Intellectual Property Contracts, Co-Owned Vaccines Group Intellectual Property Rights, Transferred Plant and Equipment, and the Relevant Part of the Shared Business Contracts as from Closing.  3.2In respect of any Transferred Contract, Transferred Intellectual Property Contract, Transferred Plant and Equipment, Relevant Part of Shared Business Contract or Co-Owned Vaccines Group Intellectual Property Right, from Closing until the relevant Third Party Consent has been obtained as contemplated by paragraph 2.1 or where the Third Party Consent has been refused:  3.2.1the relevant Business Seller shall hold on trust to the extent it is lawfully able to do so or, where it is not lawfully able to do so or where holding on trust is not possible under local law or otherwise impracticable, the relevant Business Seller and the Purchaser shall make such other arrangements between themselves to provide to the Purchaser the benefits of the Contract (other than amounts corresponding to any Tax Liability by the relevant Business Seller in respect of amounts due under or in respect of the Transferred Contract, Transferred Intellectual Property Contract, Relevant Part of Shared Business Contract, Transferred Plant and Equipment or Co-Owned Vaccines Group Intellectual Property Right including the enforcement at the cost and for the account of the Purchaser of all rights of the relevant Business Seller against any other party thereto;  3.2.2to the extent that the relevant Business Purchaser is lawfully able to do so, the Purchaser shall perform the relevant Business Sellers obligations under the Contract as agent or sub-contractor and shall indemnify the Seller and the relevant Business Seller if the Purchaser fails to do so. To the extent that the Purchaser is not lawfully able to perform such obligations, the Seller shall procure that relevant Business Seller shall, (subject to being indemnified by the Purchaser for any Losses the Seller or the relevant Business Seller may incur in connection therewith) do all such things as the Purchaser may reasonably require to enable due performance of the Transferred Contract, Transferred Intellectual Property Contract, Transferred Plant and Equipment or Relevant Part of the Shared Business Contract and the Purchaser shall indemnify the relevant Business Seller in respect thereof.  4Failure to Obtain Third Party Consents  4.1If a Third Party Consent is refused or otherwise not obtained on terms reasonably acceptable to the Purchaser within 18 months of Closing, or in the case of a Separation, 18 months of the Marketing Authorisation Transfer Date:  120


4.1.1the Seller shall be entitled to procure the termination of the Transferred Contract, Transferred Plant and Equipment, Transferred Intellectual Property Contract or Relevant Part of the Shared Business Contract and the obligations of the parties under this Agreement in relation to such Transferred Contract, Transferred Intellectual Property Contract or Relevant Part of the Shared Business Contract shall cease forthwith;  4.1.2references in this Agreement to the Transferred Contracts, Transferred Intellectual Property Contracts, Transferred Plant and Equipment or Relevant Part of the Shared Business Contract and the Vaccines Group Businesses (other than in this paragraph 4) shall be construed as excluding such Transferred Contract, Transferred Intellectual Property Contract, Transferred Plant and Equipment or Relevant Part of the Shared Business Contract; and  4.1.3the Seller and the Purchaser shall use all reasonable efforts to put in place alternative arrangements so as to give the Purchaser equivalent benefits or rights as would have been enjoyed under the terminated Transferred Contract, Transferred Intellectual Property Contract, Relevant Part of the Shared Business Contract or Co-Owned Vaccines Group Intellectual Property Right.  121


Schedule 11 Employees (Clause 2.4.1)  1Information and consultation  1.1At such time as the parties agree to be appropriate following the public announcement of the matters contemplated by this Agreement, the Seller and the Purchaser or the relevant member of the Purchasers Group shall jointly communicate to the Employees an agreed notice which shall, other than to the extent the parties agree otherwise:  1.1.1inform the Employees that following Closing those Employees who continue to be employed in the Business (as carried on by the Vaccines Group) would be employed by the Purchaser or relevant member of the Purchasers Group; and  1.1.2comply with the requirements of any applicable national law.  For the avoidance of doubt the parties may agree to issue such notice to different Employees or categories of Employees at different times and in different forms.  1.2Notwithstanding the operation of paragraph 1.1 above, the Seller and the Purchaser agree to comply with any more onerous notice requirements imposed by local laws.  1.3The Purchaser (on its own behalf and on behalf of any relevant member of the Purchasers Group) shall provide the Seller (for itself and any relevant member of the Sellers Group) with such information and assistance at such times as the Seller may reasonably request or as may be reasonably necessary for the Seller or any other member of the Sellers Group to comply with any formal or informal requirement to inform or consult with the Employees, a relevant trade union, a relevant works council, or any other employee representatives in connection with the matters contemplated by this Agreement (which formal or informal requirements the Seller hereby undertakes to comply or procure compliance with). Where reasonably necessary to ensure compliance with any formal or informal requirements or obligations to inform or consult with Employees, a relevant trade union, a relevant works council or any other employee representatives in connection with the matters contemplated by this Agreement, the Seller (for itself and for each member of the Sellers Group) and the Purchaser (for itself and for each member of the Purchasers Group) agree that the Purchaser or relevant member of the Purchasers Group shall cooperate with and participate in any information, negotiation and/or consultation process as reasonably required by the Seller.  1.4As soon as practicable following the date of this Agreement, the Purchaser agrees to provide on a timely basis such information, in writing, in respect of its existing terms and conditions of employment as may reasonably be required by the Seller so as to facilitate the Sellers information and consultation exercise with its Employees in respect of the matters set out in this Agreement.  2Vaccines Business Employees  2.1General  2.1.1The Purchaser shall (or shall procure that the relevant member of the Purchasers Group shall) fulfil all its duties and obligations under Applicable Law in relation to the Vaccines Business Employees.  Where the provisions of local law do not provide for an automatic transfer of the employment of the Vaccines Business  122


Employees to the Purchaser or a relevant member of the Purchasers Group with effect from (and including) the Closing Date, then paragraph 2.2 below shall apply. Where the provisions of local law do provide for an automatic transfer of employment of the Relevant Vaccines Business Employees to the Purchaser or the relevant member of the Purchasers Group with effect from (and including) the Closing Date, then paragraph 2.3 below shall apply.  2.1.2The parties acknowledge and agree that:  (i)any Deferred Employee shall be treated for all purposes under this Agreement as if such Deferred Employee were a Vaccines Business Employee or a Vaccines Group Company Employee (as appropriate); and  (ii)the Purchasers obligations under this Schedule 11 shall apply in respect of each Deferred Employee in the same way as they do to each Vaccines Business Employee or Vaccines Group Company Employee (as appropriate); and  (iii)if any Deferred Employee accepts an offer of employment made by the Purchaser under paragraph 2.2.1 below or becomes an employee of a Vaccines Group Company after the Closing Date, such Deferred Employee shall further be treated for all purposes under this Agreement as a Transferred Employee.  2.1.3For the avoidance of doubt, this paragraph 2 shall not apply to any Excluded Employee, who will remain employed by the Seller or the relevant member of the Sellers Group.  2.2Where no automatic transfer of employment  2.2.1In such timescale as the parties may agree, but in any event at least 30 Business Days prior to the Closing Date, the Purchaser or relevant member of the Purchasers Group shall make an offer to each Vaccines Business Employee employed by the Seller or a member of the Sellers Group to employ him or her under a new contract of employment to commence with effect from (and including) the Closing Date provided that such employee continues to be a Vaccines Business Employee until the Closing Date. Save as otherwise agreed with the Seller (such agreement not to be unreasonably withheld), the offer to be made will be on the same terms and conditions (including as to period of continuous employment) as were provided to that Vaccines Business Employee immediately prior to the Closing Date. The Purchaser shall keep the Seller updated throughout the offer process on when offers are made and accepted or rejected.  2.2.2If the Vaccines Business Employee wishes to accept the offer of employment from the Purchaser or the relevant member of the Purchasers Group, then the Seller shall (or shall procure that the relevant member of Sellers Group shall), insofar as it is permitted by Applicable Law, waive the requirement on the Vaccines Business Employee concerned to give any period of notice of termination of his or her employment under the terms of his or her employment so as to allow the Vaccines Business Employee to commence employment with the Purchaser or relevant member of the Purchasers Group with effect from (and including) the Closing Date.  123


2.3Where automatic transfer of employment  If the Transfer Regulations do not or are found not to or are alleged not to apply to any person who is a Relevant Vaccines Business Employee and to whom paragraph 2.2 does not apply, the Purchaser agrees that following Closing:  2.3.1in consultation with the Seller, the Purchaser or relevant member of the Purchasers Group shall within 10 Business Days of being so requested by the Seller (as long as the request is made no later than 3 months after Closing) (or if the Purchaser so chooses), make such Relevant Vaccines Business Employee an offer in writing to employ him or her under a new contract of employment subject to, and to take effect upon, a date agreed between the parties and such employee; and  2.3.2save as otherwise agreed with the Seller (such agreement not to be unreasonably withheld) the offer to be made will be on the same terms and conditions (including as to period of continuous employment) as were provided to that Relevant Vaccines Business Employee immediately prior to the Closing Date.  3Wrong-pocket arrangements for persons other than Relevant Employees  3.1If the contract of employment of any person other than a Relevant Employee is found or alleged to have effect upon Closing as if originally made with the Purchaser or another member of the Purchasers Group (including any Vaccines Group Company) as a consequence of this Agreement, or if any Vaccines Group Company employs any person who does not work wholly or substantially in the Business (as carried on by the Vaccines Group), the Seller agrees that following Closing:  3.1.1in consultation with the Purchaser, the Seller or relevant member of the Sellers Group may within 10 Business Days of being so requested by the Purchaser (as long as the request is made no later than 3 months after Closing) (or if the Seller so chooses), make to that person an offer in writing to employ him or her under a new contract of employment subject to, and to take effect upon, the termination referred to below; and  3.1.2the offer to be made will be on the same terms and conditions (including as to period of continuous employment) as were provided to that person immediately prior to the Closing Date.  3.2After the expiry of the 10 Business Days referred to at paragraph 3.1 above, and provided that the relevant member of the Purchasers Group takes such steps as are legally possible to terminate the employment of the person concerned as soon as reasonably practicable after becoming aware of the finding or allegation referred to at paragraph 3.1 above (either by giving notice or transferring the person by agreement to be concluded between the relevant member of the Purchasers Group, the person concerned and the relevant member of the Sellers Group), the Seller shall be responsible for and shall indemnify and keep indemnified the Purchaser (for itself and as trustee for any relevant member of the Purchasers Group) against all Losses from time to time made, suffered or incurred by the Purchaser (or any other member of the Purchasers Group) as a result of:  3.2.1the actual or alleged transfer to a member of the Purchasers Group and (regardless of whether there has been such a transfer) any employment liabilities relating to such person;  3.2.2employing such person on and from the Closing Date until such termination (up to the time reasonably expected to have achieved such termination in accordance  124


with the terms of the contract of employment and Applicable Law) but subject to a maximum period of 6 months unless prevented by the terms of the contract of employment or Applicable Law; and  3.2.3such termination.  3.3The parties agree to co-operate in good faith to minimise the Losses which are subject to the indemnity referred to in paragraph 3.2 above.  4Employment liabilities  4.1All wages, salaries, employers liabilities in respect of associated Taxes and other periodic outgoings in respect of the Transferred Employees which relate to a period:  4.1.1after the Closing Date shall be borne or discharged by the Purchaser or relevant member of the Purchasers Group; and  4.1.2on or before the Closing Date shall be borne or discharged by the Seller or relevant member of the Sellers Group.  4.2The Seller shall (for itself and for each member of the Sellers Group) indemnify and keep indemnified the Purchaser (for itself and as trustee for each other member of the Purchasers Group) against all Losses (ignoring any amount in respect of Employee Benefits, as to which see Schedule 12) in respect of:  4.2.1the employment of any Employee at any time prior to the Closing Date (excluding any Transferred Employee Benefit Liabilities (as defined in Schedule 12) which the Purchaser agrees to assume in accordance with Schedule 12);  4.2.2any termination of the employment of any Employees prior to the Closing Date including, but not limited to, all claims relating to severance, termination pay, pay in lieu of notice of termination and similar obligations (excluding any liability arising directly as a result of any breach of the commitments set out in paragraph 5 or 6 below by the Purchaser or a member of the Purchasers Group and any act or omission by the Purchaser or any member of the Purchasers Group in relation to any Employee before Closing as a result of which that Employee treats his employment as having been terminated prior to the Closing Date);  4.2.3any amount which becomes payable to any Employee or benefit to which any Employee becomes entitled by reason of this Agreement or the matters it contemplates, including any change of control or other payment or benefit (and including any enhancement of severance terms on a subsequent termination of employment but excluding any Losses relating to any share-based incentive schemes, as to which see paragraph 11 below);  4.2.4any failure by the Seller or any other member of the Sellers Group to comply with any obligation to inform or consult with employee representatives in connection with the matters contemplated by this Agreement (other than as a result of any failure set out in paragraph 4.3.3 below); and  4.2.5any breach by the Seller or any other member of the Sellers Group of paragraph 4.1.2 above or paragraph 4.4, 4.5 or 10 below.  4.3The Purchaser shall (for itself and for each member of the Purchasers Group) indemnify and keep indemnified the Seller (for itself and as trustee for each other member of the  125


Sellers Group) against all Losses (ignoring any amount in respect of Employee Benefits, as to which see Schedule 12) in respect of:  4.3.1the employment of any of the Transferred Employees on and after the Closing Date (including, without limitation, any changes to terms and conditions of employment by the Purchaser or any other member of the Purchasers Group);  4.3.2any termination of the employment of any Transferred Employees on and after the Closing Date including, but not limited to, all claims relating to severance, termination pay, pay in lieu of notice of termination and similar obligations except as contemplated under paragraph 3.2 above;  4.3.3any failure by the Purchaser or any other member of the Purchasers Group to provide information and reasonable assistance to the Seller to enable the Seller or any other member of the Sellers Group to comply with any obligation to inform or consult with employee representatives in connection with the matters contemplated by this Agreement;  4.3.4any breach by the Purchaser or any other member of the Purchasers Group of paragraph 4.1.1 above or paragraph 4.4 or 4.5 below; and  4.3.5any act or omission by the Purchaser or any member of the Purchasers Group in relation to any Employee before Closing as a result of which that Employee treats his employment as having been terminated prior to the Closing Date.  4.4Any amount payable to or in respect of any Transferred Employee after Closing (including without limitation amounts paid under paragraph 4.5 below) which (ignoring vesting conditions and any amount payable in respect of Employee Benefits or otherwise in accordance with Schedule 12) is referable to the period prior to Closing is payable by the Seller (for itself or on behalf of the relevant Share Seller or Business Seller). Responsibility for amounts payable which are only partly referable to the period prior to Closing (again ignoring vesting conditions) is to be shared between the Seller (for itself or on behalf of the relevant Share Seller or Business Seller) and the Purchaser (for itself or on behalf of the relevant member of the Purchasers Group) such that the Seller bears S per cent. of the cost and the Purchaser bears P per cent., where S is the percentage of the period by reference to which the amount was earned which fell on or before the Closing Date and P is the percentage of that period which falls after the Closing Date. The Purchaser shall, or shall procure that such other member of the Purchasers Group shall, pay such amounts when due to the relevant Transferred Employees on or after Closing and shall deduct and/or pay and account for any Tax payable or accountable for by the employer in respect of such amounts. The Seller covenants to reimburse the Purchaser in respect of any such amount (or S per cent. of it where relevant), including any Tax payable or accountable for by the employer in respect of such amount, within 30 days of receiving notification that it has been paid to the extent such amounts are not reflected in the Closing Statement. The Seller will provide the Purchaser with all information and documentation reasonably necessary to allow such payments to be made.  4.5Following the Closing Date:  4.5.1the Purchaser shall, or shall procure that a member of the Purchasers Group shall, pay a pro-rated cash bonus of an amount advised by the Seller to the Purchaser to each Transferred Employee who participated in an annual cash bonus plan immediately before the Closing Date in their first payroll payment after the Closing Date; and  126


4.5.2where the Seller is able to determine performance, any such bonus payment made to such eligible employees by the Purchaser or a member of the Purchasers Group will be based on the Sellers determination of performance to the Closing Date and pro-rated to the Closing Date; or  4.5.3where the Seller is unable to determine performance (either business or individual), for example, because the Closing Date occurs near the start of the bonus year, the Seller shall calculate any such bonus payment based on a deemed achievement of performance conditions at target level pro-rated to the Closing Date; and  4.5.4as soon as reasonably practicable after the Closing Date, the Purchaser shall, or shall procure that such other member of the Purchasers Group shall, provide such information as the Seller requires in order for the Seller to calculate the Tax payable or accountable for by the employer in respect of such bonus payments; and  4.5.5the Purchaser shall, or shall procure that such other member of the Purchasers Group shall, deduct and/or account for any Tax payable or accountable for by the employer in respect of such bonus payments; and  4.5.6the Seller shall reimburse the Purchaser for the aggregate bonuses advised by the Seller to the Purchaser which are paid pursuant to this paragraph 4.5 along with the employers social security contributions due in respect of such payments to the extent such amounts are not reflected in the Closing Statement.  5Protection of terms and conditions and termination rights post-Closing  5.1Without prejudice to paragraph 5.4 below, the Purchaser shall procure that for a period of 24 months following the Closing Date:  5.1.1each Transferred Employee will (for so long as such Transferred Employee continues in the same role with any member of the Purchasers Group save that the Purchaser shall not seek to demote any Transferred Employee to avoid the application of this provision) continue to receive at least the same basic salary; and  5.1.2each Transferred Employee will continue to receive contractual benefits (but excluding Employee Benefits and any share-based incentive schemes or other long-term incentive plans) which the Purchaser reasonably considers to be substantially comparable, taken as a whole, to the contractual benefits (but excluding Employee Benefits and any share-based incentive schemes or other long-term incentive plans) of such Transferred Employee immediately prior to the Closing Date; and  5.1.3no Transferred Employee will suffer a change to his overall employment terms (whether contractual or otherwise) and including, without limitation, any related to length of service (but excluding Employee Benefits and any share-based incentive schemes or other long-term incentive plans), which, when taken as a whole viewed in the round (including to the extent relevant alongside any other changes being made at the same time to that Transferred Employees employment terms), would in the Purchasers reasonable opinion acting in good faith, be regarded as materially detrimental.  5.2The Purchaser confirms that, following the Closing Date and for so long as the Transferred Employees continue in the employment of any member of the Purchasers Group, the  127


Transferred Employees will be eligible to participate in those share-based incentive schemes or other long-term incentive plans that are operated by the Purchaser or relevant members of the Purchasers Group from time to time for employees of equivalent status, subject always to the rules of such share-based incentive schemes or long-term incentive plans and any qualifying conditions.  5.3The Seller shall provide or shall cause to be provided to any member of the Purchasers Group such information reasonably requested in writing by any member of the Purchasers Group to enable the Purchaser to comply with its obligations in paragraph 5.1 above.  5.4If the employment of any Transferred Employee is terminated by reason of redundancy within 24 months following the Closing Date, the Purchaser shall procure that there shall be provided to such Transferred Employee benefits which are equivalent to those provided under such redundancy and severance policies and benefits (whether contractual or otherwise and giving due credit to the Transferred Employees for any additional service or earnings from the Closing Date onwards) (but excluding Employee Benefits) as were applicable in respect of the particular Transferred Employee immediately prior to the Closing Date, to the extent that such policies and benefits are notified in writing to the Purchaser prior to the Closing Date.  If, at any time during the 24 month period immediately following the Closing Date, the Purchaser places any Transferred Employee into a redundancy selection process, the Purchaser undertakes that, in determining such selection, it will or will procure that the relevant member of the Purchasers Group will take no account of the costs of dismissal of any person within the relevant selection pool (including such Transferred Employee).  5.5For the avoidance of doubt, the provisions of this paragraph 5 are without prejudice to the operation of any rule of law in relation to the terms and conditions of employment of the Transferred Employees.  6Benefits arrangements/service continuity  6.1Each Transferred Employee shall have their service with the Sellers Group and their respective predecessors recognised under any employee benefit plans or arrangements of the Purchasers Group for all purposes of eligibility, vesting and accrual of benefits to the extent past service was recognised for such Transferred Employee under a comparable plan or arrangement immediately prior to the Closing Date. Notwithstanding the foregoing, nothing in this paragraph 6.1 shall be construed to require recognition of service for the purposes of calculation of Employee Benefits or that would result in:  6.1.1any additional liability being assumed by the Purchasers Group in respect of Employee Benefits other than subject to and in accordance with the provisions of Schedule 12;  6.1.2duplication of benefit;  6.1.3recognition of service for any purposes under any plan or arrangement for which participation, service and/or benefits accrual is frozen or any post-retirement medical plan; or  6.1.4recognition of service under a newly established plan or arrangement for which prior service is not taken into account for employees of the Purchasers Group generally.  128


6.2Without limiting the foregoing, with respect to the Transferred Employees, the Purchaser shall, or shall cause such other member of the Purchasers Group to, be responsible for all paid time off benefits, including vacation pay, sick pay, banked leave, flexitime and other payments for time off of normal work hours accrued by the Transferred Employees up to the Closing Date, provided that, if the value of such matters (excluding normal accrued but untaken annual leave for the year current as at Closing) would exceed US$7.5 million if accrued for in a balance sheet in accordance with IFRS, then the Seller shall compensate the Purchaser for such matters (again excluding normal accrued but untaken annual leave for the year current as at Closing) by paying the Purchaser an amount equal to that value, less any amount actually accrued and transferred to the Purchaser for such matters.  6.3With respect to any welfare plan maintained by the Purchaser or any other member of the Purchasers Group in which Transferred Employees are eligible to participate after the Closing Date, the Purchaser shall:  6.3.1waive all limitations as to pre-existing conditions, exclusions, evidence of insurability provisions, waiting periods with respect to such participation and coverage requirements or similar provisions under a Purchasers benefit plans that are welfare plans (as defined in section 3(1) of ERISA or any equivalent Applicable Law) applicable to such employees to the extent such conditions, exclusions and waiting periods or other provisions were satisfied or did not apply to such employees under welfare plans maintained by the Seller or other members of the Sellers Group prior to the Closing Date; and  6.3.2provide each Transferred Employee with credit for any co-payments and deductibles paid prior to the Closing Date in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under any such plan in the year in which Closing occurs, to the extent credited under the welfare plans maintained by the Seller or other members of the Sellers Group prior to the Closing Date.  7US Transferred Employees  7.1To the extent the Purchaser or any other member of the Purchasers Group maintains a health care and dependent care flexible spending account arrangement pursuant to section 125 or 129 of the Code (collectively, FSAs), the Purchaser will use commercially reasonable efforts to honour the elections of all Transferred Employees who are employed in the United States and/or covered by US Benefit Plans (US Transferred Employees) under the FSAs of any relevant member of the Sellers Group (Relevant Employers FSAs), as in effect immediately prior to the Closing Date, and the Purchaser will use commercially reasonable efforts to assume responsibility for administering all reimbursement claims of US Transferred Employees with respect to the calendar year in which the Closing Date occurs that are submitted for payment on or after the Closing Date, whether arising before, on or after the Closing Date, under the Purchasers FSAs. As soon as practicable but no more than 45 days following the Closing Date, the Seller will cause to be transferred to the Purchaser an amount in cash equal to (i) the sum of all contributions to the Relevant Employers FSAs with respect to the calendar year in which the Closing Date occurs by or on behalf of the US Transferred Employees prior to the Closing Date, reduced by (ii) the sum of all claims incurred in the calendar year in which the Closing Date occurs that are submitted to the Relevant Employer for payment prior to the Closing Date and paid by the Relevant Employers FSAs with respect to such US Transferred Employees prior to the date of such cash transfer to the Purchaser; provided, however, if  129


this calculation results in a negative number, then the Purchaser will pay to the Seller (on behalf of the Relevant Employer) as soon as practicable following the end of the calendar year in which the Closing Date occurs, the amount by which (ii) exceeds (i).  7.2With effect on and from the Closing Date, the Purchaser shall, or shall procure that such other members of the Purchasers Group shall, assume the responsibility and obligation to provide COBRA continuation coverage to all US Transferred Employees whose employment is terminated after the Closing Date and their eligible dependents.  8Shared Employees  After the date of this Agreement, the Seller shall identify any Shared Employees who work wholly or substantially in the Business (as carried on by the Vaccines Group) but who are not Vaccines Group Company Employees or Vaccines Business Employees. In consultation with the Purchaser, the Seller will procure that a Vaccines Group Company will offer employment to any such employee before the Closing Date, to take effect from immediately before the Closing Date (provided that such employee continues to work wholly or substantially in the Business (as carried on by the Vaccines Group) until the Closing Date) or, where that is not reasonably practicable or there is no Vaccines Group Company in the country in which the employee works, the Purchaser shall treat such employee as if he or she were a Vaccines Business Employee (provided that such employee continues to work wholly or substantially in the Business (as carried on by the Vaccines Group) until the Closing Date) and the provisions of this Schedule 11 will apply to him or her and further provided, however, that these arrangements will apply to no more than 10 full time equivalent employees.  9International Assignees  Where Applicable Law does not provide for the automatic transfer of employment of any International Assignee and/or the other terms governing their international assignment, the Purchaser shall assume and agree to be bound by the individual contract of employment and such other terms governing their international assignment including any tax equalisation agreement entered into between an International Assignee and a member of the Sellers Group provided that such employee becomes a Transferred Employee and the Seller has disclosed to the Purchaser the template international assignment terms of the Sellers Group prior to the Closing Date.  10Liability for retention arrangements  The Seller or any other member of the Sellers Group has or will put in place certain retention arrangements (in the form of cash) to retain key employees in connection with the matters contemplated by this Agreement. To the extent that details of such retention arrangements are disclosed to the Purchaser prior to the Closing Date, and in respect of arrangements put in place after the date of this Agreement, with the agreement of the Purchaser, the Purchaser shall, or shall procure that such other member of the Purchasers Group shall, make the cash retention payments when due to the relevant Transferred Employees on or after Closing and shall deduct and/or pay and account for any Tax payable or accountable for by the employer in respect of such cash payments. The Seller covenants to reimburse the Purchaser in respect of any cash retention payments, whether or not disclosed (including any Tax payable or accountable for by the employer in respect of such payments), which are put in place prior to the Closing Date.  130


The Seller acknowledges that the Purchaser may ask the Seller to put in place more generous retention arrangements than those proposed by the Seller (including, where practicable, putting in place retention arrangements which last for a period of at least six months following Closing) and will not unreasonably withhold consent to such arrangements provided that any incremental cost of such arrangements over and above the cost of the Sellers own proposals will be for the Purchasers account. The Seller will provide the Purchaser with all information and documentation reasonably necessary to allow such payments to be made.  11Share-based incentive schemes  11.1This paragraph 11 applies notwithstanding any other provision of this Agreement.  11.2Subject to paragraph 11.11, the Seller undertakes to use its best endeavours to ensure that share-based awards held by Transferred Employees pursuant to a share-based incentive scheme operated by the Seller or another member of the Sellers Group (Relevant Awards) shall be treated in a manner consistent with the good leaver treatment in the share-based incentive schemes operated by the Purchaser, to the extent possible under the relevant plan rules and any Applicable Law.  Where Relevant Awards are subject to performance (or other) conditions and it is not possible to determine whether or not such conditions have been met at the applicable early vesting date (or within a reasonable period thereafter), the Seller and Purchaser agree that performance shall be deemed on target.  For the avoidance of doubt:  (a)where necessary and subject to (b), the Seller shall rely on the exercise of existing discretions in the relevant plan rules and (provided the approval of the Sellers shareholders is not required) shall be expected to amend the relevant plan rules to achieve the good leaver treatment;  (b)the Seller (or relevant member of the Sellers Group) shall not take any action which would require shareholder approval or which could trigger any significant legal, Tax or operational issues for the relevant Transferred Employee (including the loss of any Tax-favourable treatment), the Sellers Group or the Purchasers Group.  For the purposes of this paragraph 11.2, the good leaver treatment shall be that:  (c)Relevant Awards shall not lapse or be forfeited as a result of Closing except to the extent that they do not vest in accordance with (D) and/or (E) below;  (d)Relevant Awards shall vest early as a result of Closing and shall be time pro-rated to take account of the reduced period of time, as a proportion of the original vesting period, that the relevant Transferred Employee worked within the Sellers Group (calculated on the basis of the number of years of service as at the Closing Date, where part years of service are rounded up); and  (e)Relevant Awards that vest after the Closing Date shall remain subject to any relevant performance (or other) conditions, adjusted as necessary to take account of Closing and measured up to the applicable early vesting date.  For the purposes of this paragraph 11.2, on target performance shall not be construed as permitting share-based awards to vest in full.  131


11.3The Seller agrees to indemnify the Purchaser (or relevant member of the Purchasers Group) for any Liabilities borne by the Purchasers Group in connection with the Relevant Awards, including any Tax.  The Purchaser agrees to use its best endeavours to seek any applicable Tax relief in respect of the Relevant Awards and to indemnify the Seller in respect of any Tax relief obtained, provided always that the Seller provides the Purchaser with any information that the Purchaser may reasonably request in this respect in a timely manner.  11.4Subject to paragraph 11.5, the Seller undertakes to inform the Purchaser of the vesting or exercise (as applicable) of the Relevant Awards and to provide, in a timely manner, details of the Relevant Awards that so vest or are exercised so that the Purchasers Group can make any applicable withholdings for Tax and pay any Tax for which the Purchasers Group is liable in respect of the Relevant Awards to the relevant Tax Authority within any applicable timescale.  11.5To the extent permitted under the relevant plan rules and any Applicable Law, the Seller undertakes to sell such number of the shares underlying the Relevant Awards as may be necessary for the sale proceeds to satisfy any applicable Tax withholdings and to pay such amounts to the Purchaser in sufficient time for the Purchaser to pay such Tax to the relevant Tax Authority within any applicable timescale, provided always that the Purchaser provides the Seller with any information that the Seller may reasonably request in this respect in a timely manner.  11.6The Seller undertakes to procure that each relevant member of the Sellers Group will pay any Tax for which such member is liable in respect of the Relevant Awards to the relevant Tax Authority within any applicable timescale.  11.7The Seller undertakes to procure the completion of any relevant Tax Return in respect of the Relevant Awards and to procure the submission of any such Tax Return to the relevant Tax Authority within any applicable timescale.  11.8This paragraph shall apply where Relevant Awards lapse or are forfeited (or will lapse or be forfeited) either in whole or in part as a result of Closing.  As soon as practicable following Closing (and, in any event, by the later of 30 days from the Closing Date and 30 days from the first date after the Closing Date when the granting of share-based awards is not prevented by dealing restrictions, subject in both cases to the relevant plan rules and any Applicable Law), the Purchaser (or member of the Purchasers Group) shall grant each relevant Transferred Employee a share-based award over shares in the capital of the Purchaser substantially equal in value (valued as at the date of grant) to the value of the portion of their Relevant Awards which lapsed or was forfeited (or will lapse or be forfeited) as a result of Closing (valued as at the Closing Date), where relevant, disregarding any loss (or expected loss) of Tax-favourable treatment (each a Compensation Award).  To the extent that (i) it could reasonably have been expected that any related matching share award and/or free share award would have been granted to a Transferred Employee following Closing in connection with any Relevant Award which lapsed or was forfeited (or will lapse or be forfeited) as a result of Closing (each a Relevant Matching Award), and (ii) such Relevant Matching Award has not been granted (or will not be granted) as a result of Closing, on or around the date on which such Relevant Matching Award would, in the ordinary course of business, have been made by the Seller (or member of the Sellers Group), the Purchaser (or member of the Purchasers Group) shall grant each relevant Transferred Employee a share-based award over shares in the capital of the Purchaser substantially equal in value (valued as at the date of grant) to the value of such Relevant  132


Matching Award (valued as at the date of grant of the related Matching Award, defined below), where relevant, disregarding any loss (or expected loss) of Tax-favourable treatment (each a Matching Award), subject to the relevant plan rules and any Applicable Law.  Such Compensation Awards and Matching Awards shall be granted pursuant to the rules of whichever share-based incentive plan operated by the Purchasers Group at the time of grant the Purchaser considers most closely aligned to the share-based incentive plan operated by the Sellers Group pursuant to which the related Relevant Award had been granted (or related Relevant Matching Award would have been granted) but will vest according to a vesting schedule substantially similar to the vesting schedule that would have otherwise applied to the related Relevant Award or related Relevant Matching Award if Closing had not occurred.  In such cases:  (a)the Purchaser undertakes to seek any applicable Tax relief in respect of the Compensation Awards and Matching Awards and to indemnify the Seller in respect of 50 per cent of any Tax relief obtained, provided always that the Seller provides the Purchaser with any information that the Purchaser may reasonably request in this respect in a timely manner;  (b)where a Compensation Award or Matching Award is granted in the form of a restricted share award, the Purchaser undertakes to obtain a valid election pursuant to section 431 of the Income Tax (Earnings and Pensions) Act 2003 (or, as applicable, any similar Tax election that is available pursuant to any Applicable Law in another jurisdiction), provided that, if either party makes representations to the other party to waive this obligation in respect of certain Compensation Awards or certain Matching Awards and the other party consents to such waiver (such consent not to be unreasonably withheld), this paragraph (B) shall not apply in respect of such Compensation Awards or Matching Awards; and  (c)the Seller agrees to indemnify the Purchaser (or relevant member of the Purchasers Group) for any Liabilities borne by the Purchasers Group in connection with such Compensation Awards and Matching Awards, including any Tax, provided that:  (i)the Seller shall not indemnify the Purchaser (or relevant member of the Purchasers Group) to the extent that the Purchaser (or member of the Purchasers Group) compensates Transferred Employees for any loss (or expected loss) of Tax-favourable treatment in respect of Relevant Awards or for any Liabilities to Tax as contemplated in paragraph 11.9 below;  (ii)the Seller only agrees to indemnify the Purchaser (or member of the Purchasers Group) to a maximum of 50 per cent of the total of (i) the value of the portion of such Relevant Awards that lapsed or was forfeited (or will lapse or be forfeited) as a result of Closing, (ii) the value of the Relevant Matching Awards, and (iii) any related Liabilities, including any Tax; and  (iii)for the avoidance of doubt, the Seller shall not indemnify the Purchaser (or member of the Purchasers Group) for any lapse or forfeiture (or expected lapse or forfeiture) due to a failure to meet any applicable performance (or other) conditions.  133


For these purposes, the compensation in respect of the portion of a Relevant Award which lapsed or was forfeited (or will lapse or be forfeited) as a result of Closing shall not exceed the difference between (i) the value of the Relevant Award which could reasonably have been expected to vest on the normal vesting date but for Closing (subject, where applicable, to performance (or other) conditions), and (ii) the value of the Relevant Award which actually vested (or will vest) as a result of Closing.  For the purposes of this paragraph 11.8:  (a)the portion of a Relevant Award which lapsed or was forfeited (or will lapse or be forfeited) as a result of Closing shall be valued on the basis of the average price of an ordinary share in the capital of the Seller over the five trading days immediately prior to Closing;  (b)the value of a Compensation Award to be granted shall be valued on the basis of the average price of an ordinary share in the capital of the Purchaser over the five trading days immediately prior to the date of grant;  (c)the value of a Relevant Matching Award shall be valued on the basis of the average price of an ordinary share in the capital of the Seller over the five trading days immediately prior to the date of grant of the related Matching Award;  (d)the value of a Matching Award to be granted shall be valued on the basis of the average price of an ordinary share in the capital of the Purchaser over the five trading days immediately prior to the date of grant; and  (e)any currency conversion shall be made in accordance with Clause 1.13.1 of this Agreement.  11.9To the extent that any payment to a Transferred Employee (whether by the Sellers Group or by the Purchasers Group) would trigger Liabilities to Tax under section 280G of the United States Internal Revenue Code (Section 280G), the relevant Transferred Employee shall be allowed to choose whether to accept the full payment (and pay any relevant Section 280G Tax) or to receive such lower payment as may be necessary in order to fall below the Section 280G threshold for Tax.  To the extent that any similar Tax would arise pursuant to any Applicable Law in another jurisdiction, this paragraph 11.9 shall apply mutatis mutandis.  11.10This paragraph shall apply where: (i) a Transferred Employee would, in the ordinary course of business, have been granted a share-based award pursuant to a share-based incentive scheme operated by the Seller or another member of the Sellers Group on the basis of performance criteria linked to the Sellers Groups 2014 financial year (which may, for the avoidance of doubt, be business and/or individual performance criteria and assessment) (each a 2014 Performance Award), and (ii) Closing occurs prior to the grant of such 2014 Performance Award.  As soon as practicable following Closing (and, in any event, by the later of 30 days from the Closing Date and 30 days from the date when the value of each 2014 Performance Award has been determined), the Seller shall notify the Purchaser in writing of the value of each 2014 Performance Award and under which share-based incentive plan operated by the Sellers Group the related 2014 Performance Award would have been granted.  As soon as practicable following the receipt of such notice (and, in any event, by the later of 30 days from the receipt of such notice and 30 days from the first date following the receipt of such notice when the granting of share-based awards is not prevented by dealing restrictions, subject in both cases to the relevant plan rules and any  134


Applicable Law), the Purchaser (or member of the Purchasers Group) shall grant each relevant Transferred Employee a share-based award over shares in the capital of the Purchaser substantially equal in value (valued as at the date of grant) to the value of the 2014 Performance Award which would have been granted but for the occurrence of Closing. Such 2014 Performance Awards shall be granted pursuant to the rules of whichever share-based incentive plan operated by the Purchasers Group at the time of grant the Purchaser considers most closely aligned to the share-based incentive plan operated by the Sellers Group pursuant to which the related 2014 Performance Award would have been granted. In such cases:  (a)the Purchaser undertakes to seek any applicable Tax relief in respect of the 2014 Performance Awards and to indemnify the Seller in respect of any Tax relief obtained, provided always that the Seller provides the Purchaser with any information that the Purchaser may reasonably request in this respect in a timely manner;  (b)where a 2014 Performance Award is granted in the form of a restricted share award, the Purchaser undertakes to obtain a valid election pursuant to section 431 of the Income Tax (Earnings and Pensions) Act 2003 (or, as applicable, any similar Tax election that is available pursuant to any Applicable Law in another jurisdiction), provided that, if either party makes representations to the other party to waive this obligation in respect of certain 2014 Performance Awards and the other party consents to such waiver (such consent not to be unreasonably withheld), this paragraph (b) shall not apply in respect of such 2014 Performance Awards; and  (c)the Seller agrees to indemnify the Purchaser (or relevant member of the Purchasers Group) for any Liabilities borne by the Purchasers Group in connection with such 2014 Performance Awards, including any Tax.  The grant of a 2014 Performance Award to a Transferred Employee shall be taken into account by the Purchaser when determining the extent to which that Transferred Employee shall participate in incentive arrangements (other than any Compensation Award or Matching Award) operated by the Purchasers Group following Closing.  For the purposes of this paragraph 11.10:  (d)the value of a 2014 Performance Award to be granted shall: (i) be determined by the Seller acting reasonably and in good faith, (ii) be consistent with past practice and with the level of similar awards granted to employees remaining in service within the Sellers Group, (iii) take into account the relevant business and/or individual performance criteria linked to the Sellers Groups 2014 financial year, and (iv) if Closing occurs before 31 December 2014, be time pro-rated to take account of the reduced period of time, as a proportion of the Sellers Groups 2014 financial year, that the relevant Transferred Employee worked within the Sellers Group (calculated on the basis of the number of complete months of service as at the Closing Date);  (e)the number of shares to be placed under a 2014 Performance Award shall be valued on the basis of the average price of an ordinary share in the capital of the Purchaser over the five trading days immediately prior to the date of grant; and  135


(f)any currency conversion shall be made in accordance with Clause 1.13.1 of this Agreement.  11.11This paragraph shall apply if any member of the Sellers Groups corporate executive team (or similar body) is a Transferred Employee (each a CET Member). The treatment of share-based awards held by CET members shall be determined by the remuneration committee of the board of directors of the Seller (acting reasonably and in good faith and following informal consultation with the Purchaser), subject to the rules of any relevant share-based incentive scheme and any Applicable Law, and the provisions of paragraphs 11.8 and 11.10 shall apply.  136


Schedule 12 Employee Benefits  (Clause 2.4.2)  In this Schedule 12:  Employee Benefits means benefits to or in respect of any current or former employee, including without limitation, any pension, early retirement, disability, death benefit, long service awards, termination indemnity (such as Italian TFR) or post-retirement medical benefits or deferred compensation linked to retirement, disability or death benefits orold age part-time benefits (such as German ATZ) and jubilee payments;  Employee Benefit Liabilities means liabilities and obligations (whether funded or unfunded) in respect of any employee benefit promise, scheme, plan, fund, program, policy, practice or other individual or collective arrangement providing Employee Benefits;  Partial Liquidation Longstop Date means, in relation to each of Novartis Pensionskasse 1, Novartis Pensionskasse 2, and Kaderkasse Novartis, the earlier of (i) the date after Closing on which the plan undergoes partial liquidation, and (ii) 12 months after Closing;  Purchaser Funding Assumptions means, in relation to any Transferred Employee Benefits, where a member of the Purchasers Group provides, in the same country, a similar or comparable benefit programme to the programme to which the Transferred Employee Benefits relate (regardless of differences in the terms of entitlement of accrual etc), and there is a local obligation or practice prior to the date of this Agreement to pre-fund or externally fund those similar or comparable benefits to a funding target which is determined by reference to a method and assumptions other than IFRS (such as would, for example, be the case in relation to UK HMRC-registered defined benefit pension obligations), then that method and those assumptions as in force in relation to those similar or comparable benefits immediately prior to the date of this Agreement (so, taking the example of UK defined benefit obligations, this would be the method and assumptions used to determine the relevant plans technical provisions as at the date of this Agreement  regardless of whether the plan is in fact fully funded on that basis at any relevant time);  Purchaser IFRS Assumptions means, in relation to any Transferred Employee Benefits, where a member of the Purchasers Group provides, in the same country, a similar or comparable benefit programme to the programme to which the Transferred Employee Benefits relate (regardless of differences in the terms of entitlement of accrual etc), the method and assumptions used most recently prior to the date of this Agreement to value those similar or comparable benefits by the Purchasers Group (or any relevant member thereof) for IFRS accounting purposes;  Seller Funding Assumptions means, in relation to any Transferred Employee Benefits, if there is a local obligation or practice prior to the date of this Agreement to pre-fund or externally fund those Transferred Employee Benefits to a funding target which is determined by reference to a method and assumptions other than IFRS (such as would, for example, be the case in relation to UK HMRC-registered defined benefit pension obligations), then that method and those assumptions as in force in relation to those Transferred Employee Benefits immediately prior to the date of this Agreement (so, taking the example of UK defined benefit obligations, this would be the method and assumptions used to determine the relevant plans technical provisions as at the date of this Agreement  regardless of whether the plan is in fact fully funded on that basis at any relevant time);  137


Seller IFRS Assumptions means, in relation to any Transferred Employee Benefits, the method and assumptions used by the Sellers Group (or the most relevant member thereof) most recently prior to the date of this Agreement to value those Transferred Employee Benefits for IFRS accounting purposes;  Swiss Actuary means an actuary: (a) who can reasonably be viewed: (i) as independent of both the Purchaser and the Seller; and (ii) as familiar with Swiss pension issues; and (b) whom the Purchaser and Seller have agreed should be jointly appointed by them for the purposes of determining the Swiss Assumptions or who in default of such agreement has been appointed by the Swiss Association of Actuaries or other industry body of actuaries in Switzerland as agreed by the Seller and the Purchaser; and  Swiss Assumptions means, in relation to any Transferred Employee Benefits in Switzerland, the Seller IFRS Assumptions adjusted:  (a)by replacing any assumed cash balance annuity conversion rate in the Seller IFRS Assumptions with a conversion rate which the Swiss Actuary certifies to the Purchaser and the Seller as representing a reasonable estimate of the likely effective overall blended conversion rate which will apply in relation to the Transferred Employee Benefits in question, having regard to the changes to the rate which can (having regard to longevity projections, legal and governance constraints around Swiss pension structures and such other matters as the Swiss Actuary considers relevant) in the Swiss Actuarys opinion reasonably be expected to occur during the expected service lives of the Transferred Employees to whom the Transferred Employee Benefits relate, and weighting the impact of those changes by reference to the ages of the relevant employees (and so the extent to which the changes will in fact operate to reduce the effective liability on the Purchaser); and  (b)by removing any reserve for death or disability benefits to the extent that the Swiss Actuary certifies to the Purchaser and the Seller that it constitutes a reserve for liabilities to and in respect of the relevant Transferred Employees which could reasonably be externally insured by the Purchaser without introducing a new ongoing cost on the Purchaser which was not reflected in the Accounts.  For the purposes of each of the Purchaser Funding Assumptions, the Purchaser IFRS Assumptions, the Seller Funding Assumptions, the Seller IFRS Assumptions and the Swiss Assumptions, any economic and financial assumptions which are based (whether expressly or implicitly) on yields, rates or indices shall be updated for the purposes of such definitions to take account of those yields, rates or indices as at Closing (or the latest practicable time prior to Closing).  1Except to the extent otherwise requested by the Seller and expressly agreed by the Purchaser before Closing (such Purchaser agreement not to be unreasonably withheld to the extent that it is not reasonably possible for the Seller or its Affiliates to retain the relevant Employee Benefit Liabilities  for example, where a Vaccines Group Company operates its own standalone arrangement, liability for which cannot lawfully be assumed by another member of the Sellers Group, or where liability unavoidably transfers by operation of law under European Council Directive 2001/23/EC or its local implementing legislation), any Employee Benefit Liabilities in respect of service in the Vaccines Group or with any member of the Sellers Group (including any Vaccines Group Company) or in any plan or arrangement in which any member of the Sellers Group (including any Vaccines Group Company) participates or has participated:  138


(a)(in the case of a Transferred Employee) prior to Closing; or  (b)(in the case of any other person) at any time,  (together, Pre-Closing EB Liabilities) will stay with or be assumed by the Seller or its Affiliates (excluding any Vaccines Group Company) and the Seller shall fully indemnify the Purchaser and its Affiliates (which for the avoidance of doubt in the period from Closing includes any Vaccines Group Company) against any such Employee Benefit Liabilities and against any liabilities and obligations to or in respect of any plan or arrangement for the provision of Employee Benefits in which any member of the Sellers Group (including any Vaccines Group Company) participates or participated prior to Closing.  For the avoidance of doubt, the Purchasers agreement under this paragraph 1 may, if the Purchaser so determines, relate only to certain specified categories or tranches of Pre-Closing EB Liabilities under a particular benefit programme (in other words, it does not need to be all or nothing), in which case it is only those specified Pre-Closing EB Liabilities which are excluded from the scope of the Purchasers indemnity entitlement hereunder.  2Where and to the extent that the Purchaser agrees under paragraph 1 that any Pre-Closing EB Liabilities may transfer to or remain with the Purchaser and/or its Affiliates (which for the avoidance of doubt in the period from Closing includes any Vaccines Group Company) (such Pre-Closing EB Liabilities being the Transferred Employee Benefit Liabilities and the benefits to which they relate being the Transferred Employee Benefits), the Purchaser will be compensated in respect of such Transferred Employee Benefit Liabilities as set out in the rest of this Schedule 12. Subject to being so compensated but without prejudice to paragraphs 9 and 11, the Purchaser shall, or shall procure that its relevant Affiliate shall, assume, with a full discharge for the Seller and its Affiliates, the Transferred Employee Benefit Liabilities. Without limiting the Purchasers obligation not unreasonably to withhold consent under paragraph 1 above, the parties hereby acknowledge that it would not be reasonably possible for the Seller or its Affiliates to retain those Pre-Closing EB Liabilities which attach to Vaccines Group Companies in Germany or Switzerland.  So subject to appropriate identification during the period before Closing of such liabilities and to the operation of the compensation mechanism set out in this Schedule 12, they will become Transferred Employee Benefit Liabilities. The Purchaser also acknowledges its agreement to the principle that the post-retirement medical healthcare plan to which it admits US Transferred Employees who immediately before Closing were members of such a plan will take account of periods of employment with the Sellers Group to the extent previously recognised under the equivalent Sellers Group plan for the purposes of determining eligibility, contributions, and vesting; again, therefore, subject to appropriate identification during the period before Closing of such liabilities and to the operation of the compensation mechanism set out in this Schedule 12, they will become Transferred Employee Benefit Liabilities.  United Kingdom  For the avoidance of doubt, it is also agreed that no UK defined benefit pension liabilities are to be Transferred Employee Benefit Liabilities.  3The value of the Transferred Employee Benefit Liabilities shall be determined on employee census data and plan provision as at Closing on:  3.1in relation to any Transferred Employee Benefits in Switzerland, the Swiss Assumptions; and  139


3.2in relation to any other Transferred Employee Benefits, the Seller IFRS Assumptions, PROVIDED that if any of the following values is available and is greater than the value derived using the Seller IFRS Assumptions then that value will be used instead (and if more than one of these values is available then the one which would place the greatest value on the relevant Transferred Employee Benefit Liabilities will be used):  3.2.1if a member of the Purchasers Group provides, in the same country, a similar or comparable benefit programme to the programme to which the Transferred Employee Benefits relate (regardless of differences in the terms of entitlement of accrual etc), the value which is midway between the value based on the Seller IFRS Assumptions and the Purchaser IFRS Assumptions;  3.2.2if there is a local obligation or practice prior to the date of this Agreement to pre-fund or externally fund the Transferred Employee Benefits to a funding target which is determined by reference to a method and assumptions other than IFRS, the value derived using the Seller Funding Assumptions; and  3.2.3if there is both: (i) a local obligation or practice prior to the date of this Agreement to pre-fund or externally fund the Transferred Employee Benefits to a funding target which is determined by reference to a method and assumptions other than IFRS; and (ii) a member of the Purchasers Group provides, in the same country, a similar or comparable benefit programme to the programme to which the Transferred Employee Benefits relate (regardless of differences in the terms of entitlement of accrual etc), the value which is midway between the value based on the Seller Funding Assumptions and the Purchaser Funding Assumptions.  The market value as at Closing of any underlying assets related to the Transferred Employee Benefit Liabilities which are or are to be transferred as per paragraph 8 below will be deducted from the value of the Transferred Employee Benefit Liabilities to the extent such assets are or will be available to the Purchaser or its Affiliates to meet such liabilities and the remaining value of the Transferred Employee Benefit Liabilities (if any) is the Employee Benefit Indemnification Amount. Such determination shall be carried out on a country-by-country basis and, where necessary, on a plan-by-plan basis. For the avoidance of doubt, in relation to Switzerland, the calculation shall, if partial liquidation occurs in relation to any of the Transferred Employee Benefit Liabilities by the Partial Liquidation Longstop Date, make allowance for the assets thereby transferred assuming that they will be available to meet such liabilities.  If any Employee Benefit Indemnification Amount is greater than the estimate of such amount determined for the purposes of the Estimated Employee Benefit Adjustment (or, where no such estimate was made, greater than zero), the Seller shall pay or procure payment, by way of a reduction in the Purchase Price attributable to the relevant Shares or the particular part of the Vaccines Group to which the payment relates, an amount equal to the difference (or, where no such estimate was made, such amount) to the Purchaser, or at the request of the Purchaser to an Affiliate of the Purchaser, as compensation for the Transferred Employee Benefit Liabilities. If any Employee Benefit Indemnification Amount is less than the estimate of such amount determined for the purposes of the Estimated Employee Benefit Adjustment (if any), the Purchaser shall pay an amount equal to the difference to the Seller.  4The Seller and its Affiliates shall, within 45 days after Closing (or, in the case of Switzerland, 45 days after the Partial Liquidation Longstop Date), provide its actuary, the Swiss Actuary and the actuary chosen by the Purchaser with all relevant plan, asset, assumptions and employee census information needed to calculate the Employee Benefit  140


Indemnification Amounts in respect of any Transferred Vaccines Business Employees. The actuary chosen by the Seller shall provide the actuary chosen by the Purchaser with its calculation of the Employee Benefit Indemnification Amounts (including, but not limited to, any supporting documentation on which it relied as well as the methodologies it employed in calculating the Employee Benefit Indemnification Amounts), on a plan-by-plan basis, within 90 days following Closing (or, in the case of Switzerland, 90 days after the Partial Liquidation Longstop Date). The actuary chosen by the Purchaser shall review the calculation of the Employee Benefit Indemnification Amounts of the Sellers actuary within 120 days following Closing (or, in the case of Switzerland, 120 days after the Partial Liquidation Longstop Date). The Employee Benefit Indemnification Amounts shall be determined, on a plan-by-plan basis, by mutual agreement between the parties within 180 days following the Closing Date (or, in the case of Switzerland, 180 days after the Partial Liquidation Longstop Date).  5If the parties cannot agree on any Employee Benefit Indemnification Amount within the 180-day period referred to in paragraph 4, the parties shall appoint within 5 days an independent actuary acceptable to both parties, or such actuary shall be selected by the President of the Institute and Faculty of Actuaries in the UK if they cannot agree, and the independent actuary thus appointed shall review their calculations and, within 75 days after appointment, render a final and binding decision on the amount of that Employee Benefit Indemnification Amount, and, in making such decision, shall be limited to adopting the position taken by either one of the parties. The cost of any independent actuary shall be borne jointly by the parties.  6In connection with the procedures referred to in this Schedule 12, the parties shall provide each other and the actuaries referred to in this Schedule 12 with access to the relevant business records and other relevant documents and information as may reasonably be requested. All documents, records and information provided for the purposes of this Schedule 12 must be accurate and complete in all material respects.  7Each Employee Benefit Indemnification Amount shall be paid by the Seller (by way of a reduction in the Purchase Price attributable to the relevant Shares or the particular part of the Vaccines Group to which the payment relates) within 14 days following its final determination. The Seller may make an accelerated or advance payment at its own discretion (which, for the avoidance of doubt, includes in relation to each Employee Benefit Indemnification Amount so much (if any) of the Estimated Employee Benefit Adjustment as the Seller notified pursuant to Clause 6.4 was intended to relate to that Employee Benefit Indemnification Amount). Each Employee Benefit Indemnification Amount shall include interest calculated from (and including) the Closing Date to (and including) the date of payment at a rate per annum of LIBOR (but where amounts are prepaid or paid in stages or treated as paid via inclusion in the Estimated Employee Benefit Adjustment then the interest will cease to accrue on so much of the Employee Benefit Indemnification Amount as has been paid). Such interest shall accrue from day to day. Any such payment shall be made in US dollars (and any underlying values shall be expressed in US dollars) and any currency other than US dollars shall be converted into US dollars at the exchange rates determined in accordance with Clause 1.13 of this Agreement on the Closing Date.  8To the extent (if any) that there are any Transferred Employee Benefit Liabilities which prior to Closing were externally funded by assets held in a trust or other vehicle established for the purposes of meeting such Transferred Employee Benefit Liabilities, the Purchaser will, if requested by the Seller before Closing and unless it is not reasonably practicable to do  141


so, establish or nominate a trust or other vehicle which is capable of receiving a transfer of assets from the pre-Closing trust or other vehicle to the extent that such assets relate to the Transferred Employee Benefit Liabilities.  9If, within one year of Closing, the Seller or the Purchaser notifies the other that the membership or other benefit data (the Data) used for calculating any Employee Benefit Indemnification Amount may be inaccurate, then a Data Dispute has arisen and the following provisions shall apply:  9.1On such notification, the Seller shall procure that its actuary and the Purchaser shall procure that its actuary consult each other with a view to agreeing whether the Data is inaccurate and if so, what the accurate Data should be.  If the Sellers actuary and the Purchasers actuary agree that the Data is inaccurate, they will jointly certify this to be the case and advise on what the accurate Data should be.  The notification is deemed to have occurred on the date of the certification.  9.2If the Sellers actuary and the Purchasers actuary fail to agree whether the Data is inaccurate within 60 days of the notification by one party to the other that the Data may be inaccurate, paragraph 5 shall apply mutatis mutandis.  The notification is deemed to have occurred when the independent actuary advises that the Data is inaccurate and what the accurate Data should be.  9.3On the occurrence of the Data Dispute, the Seller and the Purchaser shall respectively procure that a valuation of the relevant Employee Benefit Indemnification Amount is carried out in accordance with paragraphs 3 and 4 (mutatis mutandis) but on the basis of the accurate Data as agreed under paragraph 9.1 or determined under paragraph 9.2.  9.4If as a consequence of paragraph 9.3, the Seller has paid to the Purchaser an amount which on the basis of the further valuation is not payable, such amount (the Overpayment) shall be repaid within 21 days of the amount of the Overpayment being agreed or determined. Any such payment shall bear interest calculated from (and including) the date the Overpayment was made to (and including) the date the payment is made in full in accordance with this paragraph 9.4 at a rate per annum of LIBOR. Such interest shall accrue from day to day.  9.5If as a consequence of paragraph 9.3, the Seller has not paid to the Purchaser an amount which on the basis of the further valuation is payable, such amount (the Outstanding Amount) shall be paid within 21 days of the amount of the Outstanding Amount being agreed or determined. Any such payment shall bear interest calculated from (and including) the Closing Date to (and including) the date the payment is made in full in accordance with this paragraph 9.5 at a rate per annum of LIBOR. Such interest shall accrue from day to day.  10Except as otherwise agreed by the Seller, the Purchaser shall where a trust or other vehicle has been established under paragraph 8, procure that all of the assets transferred as envisaged by paragraph 8 are paid into such trust or other vehicle. If, after such payment or transfer, or after payment of an Employee Benefit Indemnification Amount or after making an Estimated Employee Benefit Adjustment, the Purchaser and/or its Affiliates achieves a reduction in its liability to any Tax in respect of or in connection with the payment or transfer, the Purchaser shall pay to Seller (for itself or on behalf of the relevant Share Seller or Business Seller as applicable), within 30 days after the Purchaser would otherwise have been liable to pay the saved Tax, a sum equal to the amount of that Tax reduction by way of an increase in the Purchase Price in respect of the relevant Shares or  142


the particular part of the Vaccines Group.  This paragraph 10 applies for a period of four years following the later of the date on which a transfer of assets is made, or payment of any Employee Benefit Indemnification Amount or Estimated Employee Benefit Adjustment is made to the Purchaser.  11The Seller covenants with the Purchaser to pay to the Purchaser an amount equal to any cost, claim or liability incurred by any member of the Purchasers Group which it is or becomes liable to make on or at any time after Closing by reason of any change or purported change made to the terms of any Transferred Employee Benefits prior to Closing proving to be or have been legally ineffective or by reason of such terms and/or benefits failing to comply with any mandatory legal requirements (excluding any obligation to equalise guaranteed minimum pensions in the United Kingdom). The Seller shall not be liable under this paragraph 11 in respect of any individual claim (or a series of claims arising from similar or identical facts or circumstances) unless the liability in respect of such claim or series of claims exceeds US$100,000. If the Purchaser becomes aware of any fact, matter or circumstance that may give rise to a claim against the Seller under this paragraph 11, the Purchaser shall as soon as reasonably practicable give notice in writing to the Seller of such facts, matters or circumstances as are then available regarding the potential claim. Failure to give such notice within such period shall not affect the rights of the Purchaser to make a relevant claim under this paragraph 11, except that the Seller shall not be liable for any increase in the amount of such claim arising from such failure. The latest date on which the Purchaser may give notice of a claim under this paragraph 11 is the fourth anniversary of the Closing Date.  12Notwithstanding any general provision to the contrary in Schedule 11 and subject to being compensated in accordance with this Schedule 12, the Purchaser shall admit Transferred Employees in the United States who participated in a post-retirement medical plan immediately prior to Closing to its own post-retirement medical plan. Subject to being compensated in accordance with this Schedule 12, periods of employment with the Sellers Group (including, without limitation, any current or former Affiliate of the Seller, to the extent previously recognised under the applicable benefit plan arrangement provided by the Sellers Group), shall be taken into account for the purposes of determining, as applicable, the eligibility for participation, contributions, and vesting for any employee under such post-retirement medical plan.  13Notwithstanding any general provision to the contrary in Schedule 11, the US Transferred Employees shall, as of the Closing Date, become eligible to participate in a US tax-qualified defined contribution plan to the extent such plan is sponsored by the Purchaser or a relevant member of the Purchasers Group. The Purchaser agrees that it will use commercially reasonable efforts to cause such plan to accept rollovers of the account balances of the US Transferred Employees (including participant loan promissory notes) from the relevant employers tax-qualified retirement plans; provided that (i) the Purchaser will not be required to accept any such rollovers that might result in material liability to the Purchaser or may otherwise cause the relevant plan to cease to qualify under Section 401(a) of the Code and (ii) the Purchaser will not be required to amend any plan to permit participant loans.  14The parties agree that where any Transferred Employee has accrued defined contribution benefits prior to Closing in a Sellers Group arrangement then:  14.1the Seller shall use commercially reasonable efforts to procure the vesting of those benefits (if they would otherwise lapse as a result of Closing);  143


14.2the parties shall, provided this will not impose unreasonable administrative burdens on the Purchasers Group, co-operate in good faith to procure a transfer of the account balances of such Transferred Employee from the Sellers Group arrangement to a Purchasers Group arrangement; and  14.3for the avoidance of doubt, the Purchaser will comply with the provisions of paragraph 6.1 of Schedule 11.  144


Schedule 13 Allocation of Purchase Price (Clauses 3.3 and 7.6)  1The Seller and the Purchaser agree that the Purchase Price (and any adjustments thereto) and the Assumed Liabilities shall be allocated for Tax purposes among the Shares and the Vaccines Group Businesses in accordance with Applicable Law (the Allocation).  2Prior to the Closing Date and subject always to paragraph 1, the Seller and the Purchaser shall negotiate in good faith to reach an agreement as to the Allocation of the Purchase Price and the Assumed Liabilities including by ascribing a value to that part of the Vaccines Group comprising the Products Encepur and Ixiaro (which, if disposed of by the Sellers Group prior to the Closing Date shall be the amount payable by the Seller to the Purchaser pursuant to Clause 3.6.1) to the Shares, and to any Vaccines Group Businesses that are subject to transfer Taxes or VAT, or where a valuation of a particular Vaccines Group Business prior to Closing is otherwise required by Applicable Law (each a Required Item).  3Failing agreement between the parties on the Allocation in respect of any Required Item in accordance with this Schedule 13, the Allocation shall be determined by the Reporting Accountants on the application of the Seller or the Purchaser. Paragraphs 1.6 to 1.12 of Part 1 of Schedule 16 shall apply mutatis mutandis to the engagement and determination of the Reporting Accountants pursuant to this paragraph 3.  4The Seller and the Purchaser shall negotiate in good faith to further allocate the Purchase Price and Assumed Liabilities among the Vaccines Group Businesses for which an allocation was not agreed prior to Closing within 90 calendar days after the Closing Date. If the Seller and the Purchaser reach written agreement within such 90 day period, the Allocation, as so amended, shall become binding upon the Seller and the Purchaser as the Final Allocation Schedule.  5The Seller and the Purchaser shall, and shall procure that each of their Affiliates will, file all Tax Returns in a manner consistent with the Final Allocation Schedule, unless otherwise required by Applicable Law, and shall take no position inconsistent with the Final Allocation Schedule in any proceedings before any Governmental Entity or otherwise.  6If the Seller and the Purchaser are unable to agree to an Allocation pursuant to paragraph 4, the matter shall be determined by the Reporting Accountants on the application of the Seller or the Purchaser. Paragraphs 1.6 to 1.12 of Part 1 of Schedule 16 shall apply mutatis mutandis to the engagement and determination of the Reporting Accountants pursuant to this paragraph 5.  145


Schedule 14 VAT (Clause 3.4)  1VAT: Records  1.1The Seller may, on or before the date of Closing, obtain a direction from the relevant Tax Authority for the retention and preservation by it of any VAT records relating to its period of ownership of the relevant part of the Vaccines Group and, where any such direction is obtained, the Seller shall:  1.1.1preserve the records to which that direction relates in such a manner and for such period as may be required by the direction or by Applicable Law; and  1.1.2allow the Purchaser, upon the Purchaser giving reasonable notice, reasonable access to and copies of such records where reasonably required by the Purchaser for its Tax purposes.  1.2If no such direction as is referred to in paragraph 1.1 above is obtained or before the date of Closing and any documents in the possession or control of a member of the Sellers Group are required by law to be preserved by the Purchaser, the Seller shall, as soon as reasonably practicable after Closing, deliver such documents to the Purchaser.  2VAT: Going Concern - EU Member States  2.1The Seller and the Purchaser shall use reasonable endeavours (including, for the avoidance of doubt, the making of an election or application in respect of VAT to any Tax Authority or entering into a written agreement) to secure that, to the extent reasonably possible, the sale of all or any part of the Vaccines Group Businesses, so far as carried on in the European Union, is treated as neither a supply of goods nor a supply of services for the purposes of the laws governing VAT in each relevant member state.  2.2Each Business Seller shall have the right to seek a ruling from the relevant Tax Authority as to whether the sale of all or part of the Vaccines Group Businesses, so far as carried on in the relevant member state, should be treated as neither a supply of goods nor a supply of services for the purposes of the laws governing VAT in that member state and to account for VAT (and accordingly to seek an additional payment from the Purchaser under Clause 3.4.2) in accordance with that ruling. The Seller shall not be obliged to challenge (or to procure that any relevant Business Seller challenges) that ruling unless required to do so by the Purchaser. If the Purchaser wishes to challenge, or to require the relevant Business Seller to challenge, any such ruling it may do so, provided that it bears the full cost of, and agrees to indemnify the relevant Business Seller in respect of any loss arising from or in connection with, that challenge and that such challenge shall not affect the date on which VAT must be paid to the Seller under paragraph 4 below.  2.3Insofar as no ruling has been obtained from a relevant Tax Authority prior to Closing, the Seller shall determine in good faith if (or the extent to which) VAT is payable in respect of the sale of the Vaccines Group Businesses and shall be entitled to charge (or not to charge) VAT to the Purchaser in accordance with such determination.  146


3VAT: Going Concern - non-EU Jurisdictions  3.1To the extent that any state outside the European Union provides for relief or exemption from VAT on the transfer of a business or a company or treats such a transaction as being non-taxable for VAT purposes, the Seller and the Purchaser shall, use reasonable endeavours (including, for the avoidance of doubt, the making of an election or application in respect of VAT to any Tax Authority or entering into a written agreement) to secure such relief, exemption or treatment, to the extent reasonably possible, as regards the sale of all or part of the Vaccines Group Businesses (insofar as the business of the Vaccines Group is carried on in the relevant state) under this Agreement.  3.2The relevant Business Seller shall have the right to seek a ruling from the relevant Tax Authority as to whether the sale of all or part of the Vaccines Group Businesses, so far as the business of the Vaccines Group is carried on in the relevant state, is eligible for a relief or exemption or is otherwise eligible to be treated as non-taxable for the purposes of the laws governing VAT in that state and to account for VAT and accordingly seek an additional payment from the Purchaser under Clause 3.4.2) in accordance with that ruling. The Seller shall not be obliged to challenge (or to procure then the relevant Business Seller challenges) that ruling unless required to do so by the Purchaser. If the Purchaser wishes to challenge, or to require the relevant Business Purchaser to challenge, any ruling it may do so, provided that it bears the full cost of, and agrees to indemnify the relevant Business Seller in respect of any loss arising from or in connection with, that challenge and that such challenge shall not affect the date on which VAT must be paid to the Seller under paragraph 4 below. Insofar as no ruling has been obtained from a relevant Tax Authority prior to Closing, the Seller shall determine in good faith if (or the extent to which) VAT is payable in respect of the sale of the Vaccines Group Businesses and shall be entitled to charge (or not to charge) VAT to the Purchaser in accordance with such determination.  4VAT: Time, Manner and Currency of Payment  4.1Any amounts which the Purchaser is obliged to pay to the Seller under this Agreement in respect of VAT shall be paid by the Purchaser, on its own account or on behalf of another member of the Purchasers Group, to the Seller or to such member of the Sellers Group as the Seller may direct. Such amounts shall be paid in the currency in which the VAT in question must be accounted for to the relevant Tax Authority.  4.2Subject to any provision or express agreement to the contrary, any amounts in respect of VAT payable in any jurisdiction in respect of the transfer at Closing of any of the Vaccines Group Businesses or Shares shall be paid in accordance with paragraph 4.2 above at Closing against production of a valid VAT invoice (or equivalent, if any).  4.3Notwithstanding any other provision of this Agreement, the Purchaser shall not be liable to account to the Seller or any member of the Sellers Group for or in respect of penalties or interest arising solely from the failure of the Seller or any other member of the Sellers Group to account promptly for VAT to the relevant Tax Authority following the Seller having been placed in the appropriate amount of funds for that purpose by the Purchaser.  147


Schedule 15 Closing Obligations (Clause 6)  1General Obligations  1.1The Sellers Obligations  On Closing, the Seller shall deliver or make available to the Purchaser the following:  1.1.1the Tax Indemnity duly executed by the Seller;  1.1.2the Ancillary Agreements (other than the France SPA and the Netherlands APA and, if they have not been agreed, the Transitional Services Agreement, the Manufacturing, Supply and Distribution Agreement and the Influenza Business Manufacturing and Supply Agreement) duly executed by the relevant members of the Sellers Group;  1.1.3a valid power of attorney or such other evidence reasonably satisfactory to the Purchaser that the Seller, and each of its relevant Affiliates, are authorised to execute this Agreement, the Tax Indemnity, the Ancillary Agreements and the Local Transfer Documents (including, where relevant, any notarial deeds referred to in this Schedule 15), in each case to the extent that they are parties thereto;  1.1.4the Certificate duly executed by the Seller;  1.1.5the statutory books of the Vaccines Group Companies (which shall be written up to but not including the Closing Date), the certificate of incorporation (and certificate of incorporation on change of name) and common seal (if any) of each Vaccines Group Company and share certificates (or other documents of title) in respect of all the issued share capital of each Vaccines Group Company;  1.1.6In addition, the Seller shall, if requested by the Purchaser by notice in writing not less than five Business Days prior to the Closing Date:  (i)procure any then present directors and officers (if any) of each Vaccines Group Company resign their offices to take effect at the Closing Date as such and to relinquish any rights which they may have under any contract of employment with any Vaccines Group Company or under any statutory provisions (including any right to damages or compensation for breach of contract, loss of office, redundancy or unfair dismissal or on any other account whatsoever) and to confirm that no agreement or arrangement is outstanding under which any Vaccines Group Company has or could have any obligation to any of them including in respect of remuneration or expenses;  (ii)procure the present auditors of each Vaccines Group Company to resign their office as such, such resignations to take effect as at the Closing Date; and  (iii)procure board meetings of the relevant Vaccines Group Companies are held, or written resolutions of the board are passed, at or by which:  (a)it shall be resolved that each of the transfers relating to the Shares shall, so far as possible, be approved for registration and  148


(b)any person nominated by the Purchaser shall be appointed director, such appointments to take effect on the Closing Date.  1.2The Purchasers Obligations  On Closing, the Purchaser shall deliver or make available to the Seller the following:  1.2.1the Tax Indemnity duly executed by the Purchaser;  1.2.2the Ancillary Agreements (other than the France SPA and the Netherlands APA and, if they have not been agreed, the Transitional Services Agreement, the Manufacturing, Supply and Distribution Agreement and the Influenza Business Manufacturing and Supply Agreement) duly executed by the relevant members of the Purchasers Group;  1.2.3evidence reasonably satisfactory to the Seller that the Purchaser, and each of its relevant Affiliates, are authorised to execute this Agreement, the Tax Indemnity, the Ancillary Agreements and the Local Transfer Documents (including, where relevant, any notarial deeds referred to in this Schedule 15), in each case to the extent that they are parties thereto.  2Transfer of the Shares and Vaccines Group Businesses  2.1General Transfer Obligations  On Closing or such other date as agreed between the parties, the Seller shall procure that the Share Sellers and Business Sellers shall, and the Purchaser shall, execute and/or deliver and/or make available Local Transfer Documents and take such steps as are required to transfer the Shares and Vaccines Group Businesses in accordance with this Agreement.  2.2Specific Transfer Obligations  For the purposes of compliance with paragraph 2.1, the Seller and the Purchaser shall, between the date of this Agreement and Closing, negotiate in good faith any and all Local Transfer Documents and other such steps as are required to transfer the Shares and Vaccines Group Businesses in accordance with this Agreement.  149


Schedule 16 Post Closing Adjustments (Clause 7)  Part 1 Preparation of Closing Statement  1Preparation  1.1No later than 60 days following Closing, the Seller shall deliver to the Purchaser the Draft Closing Statement. Prior to such delivery, the Seller shall so far as is practicable consult with the Purchaser with a view to reducing the potential areas of disagreement.  1.2In order to enable the Seller to prepare the Draft Closing Statement, the Purchaser shall keep up-to-date and, subject to reasonable notice, make available to the Sellers representatives and to the Sellers accountants all books and records relating to the Vaccines Group during normal office hours and co-operate with them with regard to the preparation, review and agreement or determination of the Draft Closing Statement. The Purchaser agrees to make available the services of the employees of the Vaccines Group to assist the Seller in the preparation, review and agreement or determination of the Draft Closing Statement.  In order to allow the Purchaser to review the Draft Closing Statement, the Seller shall, subject to reasonable notice, make available to the Purchasers representatives and to the Purchasers accountants all books and records relating to the Vaccines Group during normal office hours and co-operate with them with regard to their review of the Draft Closing Statement. The Seller agrees to make available the services of the employees of the Seller and its Affiliates to assist the Purchaser in its review of the Draft Closing Statement.  1.3If the Purchaser does not within 60 days of presentation to it of the Draft Closing Statement give notice to the Seller that it disagrees with the Draft Closing Statement or any item thereof, such notice stating the reasons for the disagreement in reasonable detail and specifying the adjustments which, in the Purchasers opinion should be made to the Draft Closing Statement (the Purchasers Disagreement Notice), the Draft Closing Statement shall be final and binding on the parties for all purposes. If the Purchaser gives a valid Purchasers Disagreement Notice within such 60 days, the Seller and the Purchaser shall attempt in good faith to reach agreement in respect of the Draft Closing Statement and, if they are unable to do so within 30 days of such notification, the Seller or the Purchaser may by notice to the other require that the Draft Closing Statement be referred to the Reporting Accountants (an Appointment Notice).  1.4Within 30 days of the giving of an Appointment Notice, the Seller may by notice to the Purchaser indicate that, in the light of the fact that the Purchaser has not accepted the Draft Closing Statement in its entirety, it wishes the Reporting Accountants to consider matters relating to the Draft Closing Statement in addition to those specified in the Purchasers Disagreement Notice, provided that such matters as are related to the matters specified in the Purchasers Disagreement Notice and that the notice states in reasonable detail the reasons why and in what respects the Seller believes that the Draft Closing Statement should be altered in respect of such matters (the Sellers Disagreement Notice).  150


1.5The Reporting Accountants shall be engaged jointly by the Seller and the Purchaser on the terms set out in this paragraph 1 and otherwise on such terms as shall be agreed; provided that neither the Seller nor the Purchaser shall unreasonably (having regard, inter alia, to the provisions of this paragraph 1) refuse its agreement to terms proposed by the Reporting Accountants or by the other party. If the terms of engagement of the Reporting Accountants have not been settled within 45 days of their identity having been determined (or such longer period as the Seller and the Purchaser may agree) then, unless the Seller or the Purchaser is unreasonably refusing its agreement to those terms, those accountants shall be deemed never to have become the Reporting Accountants and new Reporting Accountants shall be selected in accordance with the provisions of this Agreement.  1.6Except to the extent that the Seller and the Purchaser agree otherwise, the Reporting Accountants shall determine their own procedure but:  1.6.1apart from procedural matters and as otherwise set out in this Agreement shall determine only:  (i)whether any of the arguments for an alteration to the Draft Closing Statement put forward in the Purchasers Disagreement Notice or the Sellers Disagreement Notice is correct in whole or in part; and  (ii)if so, what alterations should be made to the Draft Closing Statement in order to correct the relevant inaccuracy in it;  1.6.2shall apply the accounting principles, policies, procedures, practices and estimation techniques as set out in Part 2 of this Schedule;  1.6.3shall make their determination pursuant to paragraph 1.6.1 as soon as is reasonably practicable;  1.6.4the procedure of the Reporting Accountants shall:  (i)give the Seller and Purchaser a reasonable opportunity to make written and oral representations to them;  (ii)require that each party supply the other with a copy of any written representations at the same time as they are made to the Reporting Accountants;  (iii)permit each party to be present while oral submissions are being made by the other party; and  (iv)for the avoidance of doubt, the Reporting Accountants shall not be entitled to determine the scope of their own jurisdiction.  1.7The Reporting Accountants shall send the Seller and the Purchaser a copy of their determination pursuant to paragraph 1.6.1 within one month of their appointment. Such determination:  1.7.1shall be made available to the Seller and the Purchaser in writing; and  1.7.2unless otherwise agreed by the Seller and the Purchaser, shall include reasons for each relevant determination.  1.8The Reporting Accountants shall act as experts and not as arbitrators and their determination of any matter falling within their jurisdiction shall be final and binding on the Seller and the Purchaser save in the event of manifest error (when the relevant part of their  151


determination shall be void and the matter shall be remitted to the Reporting Accountants for correction). In particular, their determination shall be deemed to be incorporated into the Draft Closing Statement.  1.9The expenses (including amounts in respect of VAT) of the Reporting Accountants shall be borne as they shall direct at the time they make any determination under paragraph 1.6.1(i) or, failing such direction, equally between the Purchaser and the Seller.  1.10The Seller and the Purchaser shall co-operate with the Reporting Accountants and comply with their reasonable requests made in connection with the carrying out of their duties under this Agreement. In particular, the Purchaser shall keep up-to-date and, subject to reasonable notice, make available to the Sellers representatives, the Sellers accountants and the Reporting Accountants all books and records relating to the Vaccines Group during normal office hours as the Seller or the Reporting Accountants may reasonably request during the period from the appointment of the Reporting Accountants down to the making of the relevant determination.  1.11Nothing in this Schedule 16 shall entitle a party or the Reporting Accountants access to any information or document which is protected by legal professional or litigation privilege, provided that neither the Seller nor the Purchaser shall be entitled to refuse to supply such part or parts of documents as contain only the facts on which the relevant claim or argument is based.  1.12Each party and the Reporting Accountants shall, and shall procure that its accountants and other advisers shall, keep all information and documents provided to them pursuant to this paragraph 1 confidential and shall not use the same for any purpose, except for disclosure or use in connection with the preparation of the Draft Closing Statement, the proceedings of the Reporting Accountants or another matter arising out of this Agreement.  152


Part 2 Closing Statement Principles  This Part 2 of Schedule 16 comprises the specific rules, principles, policies and practices, without limitation, for preparing the Closing Statement.  The Closing Statement sets out the Working Capital, the Working Capital Adjustment, the Vaccines Group Companies Cash Balances, the Intra-Group Non-Trade Receivables, the Third Party Indebtedness, the Intra-Group Non-Trade Payables and the Tax Adjustment, in each case as prepared in accordance with the specific rules, principles, policies and practices set forth in this Part 2 of Schedule 16. The Closing Statement shall be prepared in the form of the Illustrative Closing Statement in Part 3 of this Schedule 16 which also sets forth, for illustrative purposes only, a computation of each of the components of the Closing Statement as of the close of business on 31 December 2013.  For the avoidance of doubt, the Closing Statement as referred to in this Part 2 of Schedule 16 shall inclusively apply to each of the Draft Closing Statement and the Closing Statement.  1Closing Statement Rules  1.1The Closing Statement shall be prepared as follows:  1.1.1in accordance with the specific accounting treatments set out in paragraph 2 of this Part 2 of Schedule 16; and, subject thereto  1.1.2adopting the same accounting principles, methods, procedures and practices utilized in preparing the Statement of Net Assets, as detailed in the Statement of Net Asset Rules, applied on a consistent basis using consistent estimation methodologies and judgments and with consistent classifications as were used to prepare the Statement of Net Assets; and subject thereto  1.1.3in accordance with IFRS.  1.2For the avoidance of doubt, paragraph 1.1.1 shall take precedence over paragraphs 1.1.2 and 1.1.3, and paragraph 1.1.2 shall take precedence over paragraph 1.1.3.  2Specific requirements  2.1Cut-off  The Closing Statement (including the Draft Closing Statement) shall not take into account any additional events and any additional information that becomes available after the Statement time up to the date that such Closing Statement is prepared.  2.2Change of Ownership  The Closing Statement shall not be adjusted for any charges, provisions, reserves or write-offs in respect of any costs, liabilities or charges that may be incurred by the Vaccines Group prior to or after the Closing as a consequence of the change of ownership of the Vaccines Group or any changes in the management strategy, direction or priority or possible closure of any part of the Vaccines Group by the Purchaser after Closing, whether or not resulting from the change in ownership.  2.3Deferred Tax  The Closing Statement (including the Draft Closing Statement) shall not take into account or provide for deferred Tax.  153


2.4Other Taxes  The Closing Statement (including the Draft Closing Statement) shall take account of or provide for all income taxes and sales taxes, to which lines BS14_120 Taxes other than income taxes (Liability account) and BS13_108 Value added tax receivable apply.  3Illustrative Working Capital Statement  3.1Part 4 of this Schedule 16 sets forth, for illustrative purposes only a computation of the Working Capital as of the close of business on 31 December 2013 (the Illustrative Working Capital Statement).  4Base Working Capital  4.1Base Working Capital is US$575 million to US$700 million and references in this Agreement to amounts being in excess of, greater than or less than Base Working Capital shall mean less than US$575 million and greater than or in excess of US$700 million.  4.2In relation to the France Business and the Netherlands Business, if one or both businesses is not transferred to the Purchaser under the terms of this Agreement at Closing, the Working Capital relating to such business (or businesses) shall not be included in the determination of the Working Capital at the Effective Time. If one or both of the France Business or the Netherlands Business are transferred to the Purchaser after Closing, then a further adjustment shall be made to the Closing Statement on the assumption that the France Business and/or the Netherlands Business were included in the Closing Statement taking the relevant items for the relevant business as of the date they are transferred to the Purchaser. Any adjustment arising as a result of including the France Business or the Netherlands Business in the Closing Statement after the date of this Agreement shall be agreed and paid on the same basis as the Closing Statement was agreed and paid in respect thereof made.  154


Part 3 Illustrative Closing Statement  [***]  155


Part 4 Illustrative Working Capital Statement  [***]  156


Schedule 17 Milestone and Royalty Payments  1Milestone Payments  1.1MenABCWY Single Milestone Payment  1.1.1The Purchaser shall promptly pay, or cause to be paid, to the Seller (or one of its Affiliates as designated by the Seller) a milestone payment in cash of US$450 million (the MenABCWY Milestone Payment) upon issuance to the Purchaser or any of its Affiliates or their respective authorised sub-licensees or assignees (the Relevant Parties) on or before 31 December 2018 of a letter of approval of a Biologics License Application or supplemental Biologics License Application (a BLA) issued by the FDA for any meningococcal vaccine (groups A, B, C, W-135 and Y) whether adjuvanted, combined or otherwise (the MenABCWY Product) for use in, at a minimum, Adolescents.  1.1.2The Purchaser shall not be obliged to make the MenABCWY Milestone Payment more than once under this paragraph 1.1 and its maximum aggregate liability under this paragraph 1.1 shall not exceed the amount of the MenABCWY Milestone Payment.  1.2Bexsero Single Milestone Payment  1.2.1The Purchaser shall promptly pay, or cause to be paid, to the Seller (or one of its Affiliates as designated by the Seller) a milestone payment in cash of US$450 million (the Bexsero Milestone Payment) following the first Calendar Year during which Net Sales of Bexsero worldwide excluding the US in excess of [***] are achieved.  1.2.2The Purchaser shall not be obliged to make the Bexsero Milestone Payment more than once under this paragraph 1.2 and its maximum aggregate liability under this paragraph 1.2 shall not exceed the amount of the Bexsero Milestone Payment.  1.3ACIP Category A Single Milestone Payment  1.3.1The Purchaser shall promptly pay, or cause to be paid, to the Seller (or one of its Affiliates as designated by the Seller) a milestone payment in cash of US$450 million (the ACIP Category A Milestone Payment) upon any positive Category A recommendation by the Advisory Committee on Immunization Practices to the U.S. Centers for Disease Control and Prevention (or its successor) (ACIP), before 31 December 2019, regardless of the population, sub-population, age group or risk-factor-based group to which the recommendation pertains, with respect to either (i) the MenABCWY Product; or (ii) Bexsero (whichever is earlier, and provided such milestone is paid only once).  1.3.2The Purchaser shall not be obliged to make the ACIP Category A Milestone Payment more than once under this paragraph 1.3 and its maximum aggregate liability under this paragraph 1.3 shall not exceed the amount of the ACIP Category A Milestone Payment.  157


1.4GBS Single Milestone Payment  1.4.1The Purchaser shall promptly pay, or cause to be paid, to the Seller (or one of its Affiliates as designated by the Seller) a milestone payment in cash of US$450 million (the GBS Milestone Payment) upon any positive Category A or Category B recommendation by ACIP, regardless of the population, sub-population, age group or riskfactor-based group to which the recommendation pertains, with respect to any Group B streptococcus vaccine, whether adjuvanted, combined or otherwise (the GBS Product).  1.4.2The Purchaser shall not be obliged to make the GBS Milestone Payment more than once under this paragraph 1.4 and its maximum aggregate liability under this paragraph 1.4 shall not exceed the amount of the GBS Milestone Payment.  2Notification and Settlement of Milestone Payments  2.1As promptly as practicable, but in any event within five days, the Purchaser shall notify the Seller in writing of any Milestone Payment becoming due.  2.2The Purchaser shall pay each Milestone Payment within 30 days of achievement of the relevant Milestone.  2.3All Milestone Payments due from the Purchaser to the Seller shall be made to the Seller or to an entity designated by the Seller by wire transfer of immediately available funds in US dollars to the credit of such bank account or accounts as may be designated by the Seller from time to time.  3Royalty Payments  3.1GBS Worldwide Royalty Payments  Subject to paragraph 3.5, the Purchaser shall pay, or cause to be paid, royalty payments to the Seller (or one of its Affiliates as designated by the Seller) on the aggregate Net Sales of the GBS Product and any adjuvanted or combined versions thereof, in the world in each Calendar Year, at the rate of 10% of such Net Sales in the world (the GBS Royalty Payments).  3.2MenABCWY US Royalty Payments  Subject to paragraph 3.5, the Purchaser shall pay, or cause to be paid, royalty payments to the Seller (or one of its Affiliates as designated by the Seller) on the aggregate Net Sales of the MenABCWY Product and any adjuvanted or combined versions thereof, in the US in each Calendar Year, at the rate of 10% of such Net Sales in the US (the MenABCWY US Royalty Payments).  3.3US Royalty Payments  Subject to paragraph 3.5, the Purchaser shall pay, or cause to be paid, royalty payments to the Seller (or one of its Affiliates as designated by the Seller) on the aggregate Net Sales of Bexsero and any adjuvanted or combined versions (excluding, for the avoidance of doubt, MenABCWY) thereof, in the US in each Calendar Year, at the rate of 10% of such Net Sales in the US (the Bexsero US Royalty Payments).  158


3.4Bexsero Ex-US Royalty Payments  Subject to paragraph 3.5, the Purchaser shall pay, or cause to be paid, royalty payments to the Seller (or one of its Affiliates as designated by the Seller) on the aggregate Net Sales of Bexsero and any adjuvanted or combined versions (excluding, for the avoidance of doubt, MenABCWY) thereof, in the world (excluding the US) in each Calendar Year, at the rate of 10% of such Net Sales in the world (excluding the US) in excess of [***] in such Calendar Year (the Bexsero Ex-US Royalty Payments).  3.5Combinations  If the GBS Product, the MenABCWY Product or Bexsero is sold as part of the combination (each a Combination Product) then, for the purposes of paragraph 3.1, 3.2, 3.3 or 3.4 (as applicable), the figure of Net Sales of the relevant Combination Product shall be calculated by multiplying the total amount of Net Sales of that Combination product by the fraction A/(A+B), where A is the invoice price of the GBS Product, the MenABCWY Product or Bexsero (as applicable) sold separately and B is the invoice price of the other active ingredients and/or active antigens and/or adjuvants in the Combination Product.  4Settlement of Royalty Payments  4.1Each Royalty Payment shall be an independent obligation of the Purchaser (not linked to any Royalty Payment in respect of another Applicable Product or Calendar Year) and shall continue to be due and payable indefinitely in accordance with the terms of this Agreement.  4.2Each Royalty Payment shall be payable on a Calendar Quarter basis in accordance with paragraph 5.  4.3In respect of any period between the Closing Date and the start of the next Calendar Quarter (the Stub Period), the amount of any Royalty Payments due in respect of the Stub Period shall be adjusted on a pro rata basis to reflect the number of days in the Stub Period as a proportion of the number of days in the Calendar Quarter in which Closing occurs.  5Reporting of Royalty Payments  5.1Within 10 Business Days of the end of:  5.1.1each Calendar Quarter, the Purchaser shall provide to the Seller a Sales & Royalties Report; and  5.1.2each Calendar Year, the Purchaser shall provide to the Seller an Annual Reconciliation Report.  5.2The Seller shall submit an invoice to the Purchaser in a form agreed by the Seller and the Purchaser from time to time with respect to any Royalty Payment and/or Estimated Quarterly Bexsero Ex-US Royalty Payment shown as due in a Sales & Royalties Report.  5.3The Purchaser shall pay each Royalty Payment and/or Estimated Quarterly Bexsero Ex-US Royalty Payment due within 30 days of receipt of an invoice in respect of the same pursuant to paragraph 5.2.  5.4All Royalty Payments due from the Purchaser to the Seller shall be made to the Seller or to an entity designated by the Seller by wire transfer of immediately available funds in US  159


dollars to the credit of such bank account or accounts as may be designated by the Seller from time to time.  6Reconciliation of Bexsero Ex-US Royalty Payments  6.1Following agreement or determination of the amount of the Bexsero Ex-US Royalty Payment due in respect of each Calendar Year (a Final Bexsero Ex-US Royalty Payment) either as set out in any Annual Reconciliation Report or as subsequently agreed or determined in accordance with paragraphs 7 and 8:  6.1.1if the Paid Bexsero Ex-US Royalty Payment is greater than the Final Bexsero Ex-US Royalty Payment, the Seller shall repay to the Purchaser an amount equal to the excess; or  6.1.2if the Paid Bexsero Ex-US Royalty Payment is less than the Final Bexsero Ex-US Royalty Payment, the Purchaser shall pay to the Seller an additional amount equal to the deficiency.  6.2The Seller or the Purchaser (as applicable) shall pay any amount due under paragraph 6.1 within 30 days of the agreement or determination of the Final Bexsero Ex-US Royalty Payment due in respect of such Calendar Year.  6.3Any payment to be made in accordance with paragraph 6.2 shall include interest thereon calculated from the date on which the amount would have been due for payment (had the Estimated Bexsero Ex-US Royalty Payments for the Calendar Year been equal to the Bexsero Ex-US Royalty Payment for such Calendar Year) to the date of payment at a rate per annum of two per cent. above LIBOR. Such interest shall accrue from day to day.  7Records and Audit  7.1The Purchaser shall, and, so far as it is able to do so, shall cause the Relevant Parties to, keep in all material respects complete, true and accurate books and records in accordance with its Accounting Standards in relation to this Agreement including in relation to Net Sales and Royalty Payments. The Purchaser shall, and, so far as it is able to do so, shall cause the Relevant Parties to, keep such books and records for at least five years following the Calendar Year to which they pertain.  7.2The Seller shall have the right, for a period of five years after receiving each Report, to audit such Report, whether by itself or through its Affiliates and/or to appoint an internationally-recognised independent accounting firm to audit (whether the Seller, its Affiliates, or the accounting firm, the Auditor) such Report, and to inspect the relevant records of the Relevant Parties to verify such Report and the underlying statements, records or books of accounts, as applicable. Where the Auditor is not the Seller, the Auditor shall have the right to disclose to the Seller and/or other Affiliates its conclusions regarding any payments owed hereunder to the Seller.  7.3The Purchaser shall, and shall cause the other Relevant Parties to, make their records available for inspection by the Auditor during regular business hours at such place or places where such records are customarily kept upon receipt of reasonable advance notice from the Auditor to verify the accuracy of each Report and compliance with this Schedule 17.  160


7.4The Seller shall bear the cost of any audit pursuant to this paragraph 7, as well as its own costs, fees and expenses associated with enforcing its rights with respect to any payments hereunder, except that, if it is determined by the Auditor that the amounts set out in the Sales & Royalties Report for any Calendar Quarter are more than three per cent. below the amounts actually due pursuant to this Schedule 17, the reasonable costs, fees and expenses charged or incurred by the Auditor shall be paid or reimbursed by the Purchaser.  7.5In the event that the final result of the inspection reveals an undisputed underpayment or overpayment by the Purchaser, the underpaid or overpaid amount, as applicable, shall be settled promptly by the Seller or the Purchaser (as applicable).  8Disputes  In the event of any dispute between the parties in respect of whether a Milestone Payment or a Royalty Payment is due, or the amount of any such payment due, in accordance with this Schedule 17, the dispute shall be determined by the Reporting Accountants on the application of the Seller or the Purchaser. Paragraphs 1.6 to 1.12 of Part 1 of Schedule 16 shall apply mutatis mutandis to the engagement and determination of the Reporting Accountants pursuant to this paragraph 8.  9Covenants  9.1The Purchaser agrees to procure that, following Closing, the Purchasers Group uses its commercially reasonable endeavours to satisfy each of the Milestones.  9.2The Purchaser agrees that it will not, and it shall procure that no member of the Purchasers Group will, take any action or omit to take any action, in either case which is intended to frustrate the achievement of any of the Milestones, or which is intended to reduce the amount of any Milestone Payment or Royalty Payment due pursuant to this Schedule 17.  10Definitions  The following further definitions apply in this Schedule 17:  Accounting Standards means, with respect to a Relevant Party, IFRS as generally and consistently applied by the Relevant Partys Group. The Purchaser shall promptly notify the Seller in writing in the event that it or its Group changes the Accounting Standards pursuant to which its records are maintained, it being understood that the Purchaser and its Group may only use internationally recognised accounting principles;  Adolescents means individuals aged anywhere between 11 and 18 years old;  Annual Reconciliation Report means a written report or reports in a form to be agreed by the Seller and the Purchaser from time to time showing a reconciliation of the amount of the Estimated Bexsero Ex-US Royalty Payment to the amount of the Bexsero Ex-US Royalty Payment due in respect of such Calendar Year;  Applicable Product(s) means the GBS Product, the MenABCWY Product and Bexsero;  Calendar Quarter means each of the four periods of 3 consecutive calendar months, starting on 1 January, 1 April, 1 July and 1 October;  161


Calendar Year means each period of 12 consecutive calendar months starting on 1 January and ending on 31 December;  Estimated Bexsero Ex-US Royalty Payment means the Purchasers reasonable estimate of the Bexsero Ex-US Royalty Payment that will be payable pursuant to paragraph 3.4 in respect of the current Calendar Year;  Estimated Quarterly Bexsero Ex-US Royalty Payment means one quarter of the Estimated Bexsero Ex-US Royalty Payment;  Milestone Payments means the MenABCWY Milestone Payment, the Net Sales Milestone Payment, the ACIP Category A Milestone Payment and the GBS Milestone Payment, and Milestone Payment means any one of them;  Milestones means the facts, matters and circumstances giving rise to the requirement for the Purchaser to make the Milestone Payments;  Net Sales means, in respect of an Applicable Product, the net sales by the Relevant Parties for the Applicable Product(s) sold to Third Parties other than sublicensees or assignees, as determined in accordance with Accounting Standards consistently applied by the Purchaser. The deductions booked by the Relevant Parties to calculate the recorded net sales from gross sales shall include the following:  (i)normal trade, quantity and cash discounts;  (ii)sales taxes, value added taxes and other taxes directly linked to the sale of Products to the extent included in the gross amount invoiced;  (iii)amounts repaid or credited by reasons of defects, rejections, recalls or returns;  (iv)rebates, commissions and chargebacks to customers and Third Parties;  (v)any amounts recorded in gross revenue associated with goods provided to customers for free, with the exception of samples;  (vi)amounts provided or credited to customers through coupons, other discount programs and co-pay assistance programs;  (vii)delayed ship order credits, discounts or payments related to the impact of price increases between purchase and shipping dates; and  (viii)fees for service payments to customers for any non-separate services (including compensation for maintaining agreed inventory levels and providing information),  and with respect to the calculation of Net Sales:  (a)Net Sales only include the value charged or invoiced on the first sale to a Third Party and sales between or among Respective Parties shall be disregarded for purposes of calculating Net Sales;  (b)if a Product is delivered to the Third Party before being invoiced (or is not invoiced), Net Sales will be calculated at the time all the revenue recognition criteria under Accounting Standards are met; and  (c)distributors shall not be considered as sublicensees/assignees;  Paid Bexsero Ex-US Royalty Payment means the aggregate of all Estimated Quarterly Bexsero Ex-US Royalty Payments paid by the Purchaser in each Calendar Year;  162


Report means any Annual Reconciliation Report or Sales & Royalties Report;  Royalty Payments means the GBS Royalty Payments, the MenABCWY US Royalty Payments, the Bexsero US Royalty Payments and the Bexsero Ex-US Royalty Payments, and Royalty Payment means any one of them;  Sales & Royalties Report means a written report or reports in a form to be agreed by the Seller and the Purchaser from time to time showing, on an Applicable Product-by-Applicable Product basis:  (i)each of (a) gross sales; (b) Net Sales; and (c) Royalty Payments (other than the Bexsero Ex-US Royalty Payments) payable, for each such Applicable Product in respect of the relevant Calendar Quarter;  (ii)the Purchasers reasonable estimate of gross sales and Net Sales of the Bexsero Product in the world (excluding the US) in the current Calendar Year;  (iii)the Estimated Quarterly Bexsero Ex-US Royalty Payment; and  (iv)the information in paragraphs (i) to (iii) for (a) the equivalent Calendar Quarter in the prior Calendar Year; and (b) the cumulative totals for the current Calendar Year;  Third Party means any person other than a party or an Affiliate of a party; and  US means the United States of America, its territories and possessions, any state of the United States and the District of Columbia; and possessions include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.  163


Schedule 18 Warranties given under Clause 9.1  1Authority and Capacity  1.1Incorporation  The Seller and each Share Seller and Business Seller is validly existing and is a company duly incorporated and registered under the law of its jurisdiction of incorporation.  1.2Authority to enter into Agreement  1.2.1The Seller and each Share Seller and Business Seller has the legal right and full power and authority to enter into and perform this Agreement, any Ancillary Agreement to which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement or any Ancillary Agreement.  1.2.2The documents referred to in paragraph 1.2.1 will, when executed, constitute valid and binding obligations on the Seller and each Share Seller and Business Seller in accordance with their respective terms.  1.2.3Except as referred to in this Agreement, the Seller:  (i)is not required to make any announcement, consultation, notice, report or filing; and  (ii)does not require any consent, approval, registration, authorisation or permit,  in each case in connection with the performance of this Agreement or any other document referred to in paragraph 1.2.1.  1.2.4The execution and delivery of the documents referred to in paragraph 1.2.1 and the performance by the Seller, each Share Seller and each Business Seller of their respective obligations under them, will not:  (i)result in a breach of any provision of the memorandum or articles of association or by laws or equivalent constitutional document of the relevant member of the Sellers Group;  (ii)result in a breach of, or constitute a default under, any instrument or contract to which the relevant member of the Sellers Group is party or by which the relevant member of the Sellers Group is bound where such breach is material to their ability to perform their obligations under such documents;  (iii)result in a breach of any existing order, judgment or decree of any court, Governmental Entity by which the relevant member of the Sellers Group is bound and where such breach is material to their ability to perform their obligations under such documents.  1.3Authorisation  The Seller and each Share Seller and Business Seller has taken, or will have taken by Closing, all corporate action required by it to authorise it to enter into and to perform this Agreement, any Ancillary Agreement to which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement or any Ancillary Agreement.  164


2Vaccines Group  2.1Organisation and Standing of the Vaccines Group Companies  2.1.1Schedule 2 sets out a complete and accurate list of each of the Vaccines Group Companies, together with its jurisdiction of organisation, its authorised and outstanding capital stock or other equity interests, all of which equity interests are held by the Seller or an Affiliate of the Seller unless otherwise stated in Schedule 2.  2.1.2Each Vaccines Group Company is duly incorporated, validly existing and in good standing, under the laws of its jurisdiction of organisation and has all necessary corporate power under its constitutional documents to conduct its portion of the Business as at the date of this Agreement.  2.2The Shares  2.2.1Either the Seller or one of its Affiliates is the legal and beneficial owner of the Shares.  2.2.2There is no option, right to acquire, mortgage, charge, pledge, lien or other form of security or Encumbrance or equity on, over or affecting the Shares or the shares, capital stock or other equity interests in the Subsidiaries or any of them and there is no agreement or commitment to give or create any.  2.2.3All of the Shares and all of the shares, capital stock or other equity interests in the Subsidiaries have been duly authorised and validly issued and are fully paid and non-assessable. There are no options, warrants, rights, convertible, exercisable or exchangeable securities, phantom stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which any of the Vaccines Group Companies is a party or by which it is bound obligating any of the Vaccines Group Companies to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible into, or exercisable or exchangeable for, any capital stock of, or other equity interest in, such Vaccines Group Company.  2.2.4There are no outstanding Contracts to which any of the Vaccines Group Companies is a party or is otherwise bound to repurchase, redeem or otherwise acquire any shares, capital stock or other equity interest of such Vaccines Group Company.  2.2.5None of the Shares, and the shares, capital stock and other equity interests in the Subsidiaries and Minority Interest Entities is subject to and was not issued in violation of any purchase option, call option, right of first refusal, pre-emptive right, subscription right or similar right or any provision of Applicable Law or the constitutional documents of the Vaccines Group Companies.  2.3The Assets  Save in relation to the Transferred Intellectual Property Rights, either the Seller or another member of the Sellers Group has good and valid title to the assets listed in Clause 2.3.1 free and clear of all Encumbrances other than Permitted Encumbrances.  165


2.4Accounts  The Accounts of each Vaccines Group Company:  2.4.1were prepared in accordance with accounting practices generally accepted in the jurisdiction of incorporation of the relevant Vaccines Group Company at the time they were audited; and  2.4.2show in accordance with applicable legal requirements:  (i)the assets and liabilities of the relevant Vaccines Group Company at the Accounts Date; and  (ii)of the profits or losses of the relevant Vaccines Group Company for the accounting period ended on the Accounts Date.  2.5Income Statements  2.5.1The 2013 Income Statement:  (i)is based on information properly extracted from the Sellers Group accounting records without adjustment; and  (ii)presents fairly in all material respects the results of operations of the Vaccines and Diagnostics division of the Sellers Group as reported in the Vaccines and Diagnostics segment in the Novartis 2013 Annual Report for the period from and including 1 January 2013 up to and including 31 December 2013 excluding the Diagnostics Business but including the Influenza Business and the Out-Licensing Programme.  2.6Statement of Net Assets  2.6.1Schedule 23 sets out the Statement of Net Assets.  2.6.2The Statement of Net Assets was prepared, in all material respects, in accordance with the Statement of Net Assets Rules, and on that basis fairly presents, in all material respects, the financial position of the Vaccines Group as of the date thereof, subject to year-end audit adjustments and the absence of footnote discussions and similar presentation items therein.  2.7Changes Since 31 December 2013  Except as a result of the execution and delivery of this Agreement and, other than as contemplated by Clause 2.3.5 or Clause 5, from 31 December 2013 to the date of this Agreement:  2.7.1the Business of the Vaccines Group has been conducted in all material respects in the ordinary and usual course;  2.7.2the Vaccines Group has not entered into any material contract or commitment outside the ordinary course of business as conducted prior to 31 December 2013; and  2.7.3to the Sellers knowledge, there has been no event or circumstance arising which is reasonably likely to have had a Material Adverse Effect (as if reference in the definition of Material Adverse Effect to the date of this Agreement were to 31 December 2013).  166


2.8Third Party Indebtedness and financial instruments  None of the Vaccines Group Companies: (i) has any Third Party Indebtedness exceeding $1 million (other than short-term bank borrowings in the ordinary course of business) or (ii) is a party to any financial instruments (including any swaps or derivatives)  2.9Gross Profit and DCOGS  2.9.1So far as the Seller is aware, based on management allocations and adjustments, and having regard to the purpose for which it was prepared, the 2013 Gross Profit does not materially misstate the gross profit of the Vaccines Group for the period from and including 1 January 2013 up to and including 31 December 2013.  2.9.2So far as the Seller is aware, the 2013 DCOGS:  (i)is derived from information extracted from the Sellers Group reporting systems with reasonable care and attention; and  (ii)having regard to the purpose for which the 2013 DCOGS was prepared, does not materially misstate the direct cost of goods of each of the Products identified in the 2013 DCOGS for the period from and including 1 January 2013 up to and including 31 December 2013.  3Real Property and Key Sites  3.1Company Real Properties  3.1.1The Company Real Properties are the only material freehold, leasehold or other immovable property in any part of the world owned, used or occupied by the Vaccines Group Companies or in respect of which any Vaccines Group Company has any estate, or any material interest, right or liability.  3.1.2Each of the Company Real Properties is used and occupied for the purpose of the business of a member of a Vaccines Group Company.  3.1.3A member of the Sellers Group is solely legally and beneficially entitled to such Company Real Property.  3.1.4No person has or will have any right to possession, occupation or use of such Company Real Property in a manner that has or will have a material adverse effect on the use of, or operations at, such Company Real Property.  3.1.5There are no mortgages or charges affecting any of the Company Real Properties other than those registered in the relevant Land Register.  3.1.6There are no material outstanding disputes, actions, claims or demands in respect of any Company Real Property, nor has the Seller or any member of the Sellers Group received any notice threatening the same.  3.1.7In respect of each Company Leased Real Property, all material covenants and conditions contained in the Company Lease have been observed and performed to date.  3.2Transferred Real Properties  3.2.1The Transferred Real Properties are the only material freehold, leasehold or other immovable property in any part of the world owned or occupied by the Vaccines  167


Group Businesses or in respect of which any Vaccines Group Business has any estate, or any material interest, right or liability.  3.2.2Each of the Transferred Real Properties is used and occupied for the purpose of the business of the Vaccines Group Business.  3.2.3A member of the Sellers Group is solely legally and beneficially entitled to such Transferred Real Property.  3.2.4No person has or will have any right to possession, occupation or use of such Transferred Real Property in a manner that has or will have a material adverse effect on the use of, or operations at, such Transferred Real Property.  3.2.5There are no mortgages or charges affecting any of the Transferred Real Properties other than those registered in the relevant Land Register.  3.2.6There are no material outstanding disputes, actions, claims or demands in respect of any Transferred Real Property, nor has the Seller or any member of the Sellers Group received any notice threatening the same.  3.2.7In respect of each Transferred Leased Real Property, all material covenants and conditions contained in the Lease have been observed and performed to date.  3.3Key Sites  3.3.1The Key Sites are the only properties used or occupied by the Sellers Group for the purpose of Manufacturing in respect of the Business.  3.3.2No consents, licences, approvals, permits, authorisations or waivers are required from any Landlord, superior landlord or other third party to transfer any Key Site to the Purchaser (or any other member of the Purchasers Group) indirectly (through the transfer of the Vaccines Group Companies).  3.3.3There is no circumstance which would entitle any third party to exercise a right of power of entry or to take possession which would materially adversely restrict the continued possession, enjoyment or existing use of each Key Site and there are no material restrictive conditions of servitude or public easements attaching to each Key Site.  3.3.4No member of the Sellers Group has had any notice from any competent authority to make any alteration, repair or addition to any Key Site, including with regards to the disposal of effluent or the state of buildings or the number of legally required parking spaces which is presently outstanding.  4Intellectual Property and Information Technology  4.1Schedule 4 sets out, as of the date of this Agreement, complete and accurate details of Registered Vaccines Group Intellectual Property Rights, including for each such item, as applicable, (i) the identity of the record owner, (ii) the registration or application number, and (iii) the jurisdiction of issuance or registration.  4.2In relation to Products or Pipeline Products which are material to the Business, all documents and instruments necessary to maintain and preserve any extension of patent terms including Patent Term Extensions and patent term adjustments in relation to: the (i) Registered Vaccines Group Intellectual Property Rights; and (ii) any Registered Intellectual Property Rights licensed under any Vaccines Group Intellectual Property Contracts for  168


which the Seller controls the prosecution and maintenance; and in each case, where such applications have a reasonable prospect of success, have been validly executed, delivered and filed in a timely manner with the appropriate Governmental Entity.  4.3Each of the Patents: (i) included within the Registered Vaccines Group Intellectual Property Rights for the Products or Pipeline Products which are material to the Business; and (ii) to the Sellers Knowledge, included within the Registered Intellectual Property Rights licensed under the Vaccines Group Intellectual Property Contracts for Products or Pipeline Products material to the Business, in each case, correctly identifies by name each inventor thereof as determined in accordance with the Applicable Law of each jurisdiction in which such Patent issued and/or is pending.  4.4To the Sellers Knowledge, the Patents forming part of (i) the Registered Vaccines Group Intellectual Property Rights, and (ii) the Registered Intellectual Property Rights licensed under the Vaccines Group Intellectual Property Contracts in each case for the Products or Pipeline Products which are material to the Business are subsisting, valid and enforceable and have not lapsed or been abandoned.  4.5All renewal, application and other registry fees required for the maintenance, prosecution and enforcement of the Registered Vaccines Group Intellectual Property Rights relating to Products or Pipeline Products that are material to the Business have been paid.  4.6Schedule 4 sets out, a complete and accurate list of each material Vaccines Group Intellectual Property Contract. Neither the Seller nor any of its Affiliates has given, or received, written notice to terminate any material Vaccines Group Intellectual Property Contract or the Merck 2012 Licence, and neither the Seller nor any Affiliate of the Seller is in default of any material Vaccines Group Intellectual Property Contract or the Merck 2012 Licence. To the Sellers Knowledge, no third party is in default under any material Vaccines Group Intellectual Property Contract or the Merck 2012 Licence.  4.7The Seller and its Affiliates between them own all Registered Vaccines Group Intellectual Property Rights and the Beta Interferon Patent Rights free of all Encumbrances except Permitted Encumbrances. The Seller and its Affiliates have taken reasonable steps to protect the confidentiality of Proprietary Information and Know-How relating to the Products.  4.8To the Sellers Knowledge: (i) the conduct of the Business as currently conducted does not infringe or misappropriate the Intellectual Property Rights of any third party; and (ii) there is no material judicial, administrative or arbitral action, suit, hearing, inquiry, investigation or other proceeding (public or private) before any Governmental Entity pending against the Seller or any of its Affiliates in which it is alleged that the conduct of the Business as currently conducted by the Seller and its Affiliates infringes or misappropriates any Intellectual Property Rights of any third party.  Neither the Seller nor any of its Affiliates has received any written notice of such infringement or misappropriation.  4.9To the Sellers Knowledge, no third party is infringing or misappropriating any Vaccines Group Intellectual Property Rights or Proprietary Information and neither the Seller nor its Affiliates have made any such claims against any such persons, nor, to the Sellers knowledge is there any basis for such a claim.  4.10The Vaccines Group Intellectual Property Rights, the Intellectual Property Rights licensed under the Vaccines Group Intellectual Property Contracts, and the Intellectual Property Rights licensed under the Purchaser Intellectual Property Licence Agreement constitute all  169


the material Intellectual Property Rights used in the conduct of the Business as currently conducted by the Seller and its Affiliates on a worldwide basis; provided however, that the foregoing is not a representation of non-infringement, non-misappropriation, or any other non-violation of Intellectual Property Rights of any third party, which representation is solely set out in paragraph 4.8 above.  4.11All Information Technology necessary for the Business to be conducted in all material respects as it is carried on at the date of this Agreement is: (i) Owned Information Technology; (ii) is Transferred Information Technology; or (iii) will be provided by the Seller and its Affiliates to the Purchaser and the Business under the Transitional Services Agreement.  4.12The Business has not, in the 12 months prior to the date of this Agreement, experienced any material disruption in its operations as a result of any failure of its Information Technology.  5Contracts  5.1No Vaccines Group Company or Business Seller is a party to or subject to any Contract, transaction, arrangement, understanding or obligation (other than in relation to any Property, lease or contract of employment, Information Technology or Intellectual Property Right) which is material to the business of the Vaccines Group and which:  5.1.1is not in the ordinary course of business or is unduly onerous;  5.1.2is not on an arms length basis;  5.1.3has an unexpired term or likely duration of 10 years or more;  5.1.4restricts its freedom to carry on its business in any part of the world in such manner as it thinks fit;  5.1.5involves an aggregate outstanding expenditure by it of more than US$50 million, exclusive of VAT;  5.1.6can be terminated in the event of a change of underlying ownership or control of a Vaccines Group Company; or  5.1.7involves the supply of goods and services, the aggregate sales value of which (exclusive of VAT) will be more than 5 per cent of turnover of the Vaccines Group (exclusive of VAT) for the preceding financial year.  5.2Save in relation to any Vaccines Group Intellectual Property Contract, no Vaccines Group Company is in material default under any material Contract to which it is party and no third party is in material default under any material Contract to which a Vaccines Group Company is party and, to the Sellers knowledge, there are no circumstances in either case likely to give rise to such a material default.  5.3Save in relation to any Vaccines Group Intellectual Property Contract, no Business Seller is in material default under any material Contract to which it is party and no third party is in material default under any material Contract to which a Business Seller is party and, to the Sellers knowledge, there are no circumstances in either case likely to give rise to such a material default.  170


6Joint Ventures etc.  No Vaccines Group Company or Business Seller is, or has agreed to become, a member of any joint venture, consortium, partnership or other unincorporated association (other than a recognised trade association in relation to which the Vaccines Group Company or Business Seller has no liability or obligation except for the payment of annual subscription or membership fees).  7Agreements with Connected Parties  7.1There are no existing contracts or arrangements material to the business of the Vaccines Group between, on the one hand, any Business Seller or Vaccines Group Company and, on the other hand, the Seller, any Relevant Seller other than on normal commercial terms in the ordinary course of business.  7.2No Affiliate Contract is required to run the Business and the termination of any Affiliate Contract will not, when taken together with the rights and services under the Ancillary Agreements and for the respective terms thereof, have a material effect on the Business.  7.3The Vaccines Group Companies do not currently carry on any Sellers Group Retained Business (other than the Influenza Business).  8Sufficiency of Vaccines Group  8.1Each of the assets listed in Clause 2.3.1 is owned both legally and beneficially by the Seller or its Affiliates and each of those assets capable of possession is, save where in the possession of third parties in the ordinary course of business, in the possession of the Seller or its Affiliates.  8.2Save for Permitted Encumbrances, no option, right to acquire, mortgage, charge, pledge, line or other form of security or Encumbrance (excluding licences of Intellectual Property or Know-How) or equity on, over or affecting the whole or any part of the assets listed in Clause 2.3.1 is outstanding and, save in relation to Permitted Encumbrances, there is no agreement or commitment entered into by any member of the Sellers Group to give or create any and no claim has been made against any member of the Sellers Group by any person entitled to any.  8.3The Vaccines Group Businesses, assets of the Vaccines Group Companies and the assets of the Minority Interest Entities, when taken together with the rights and services under the Ancillary Agreements and for the respective terms thereof:  (i)comprise all of the assets required to carry out the Business of the Vaccines Group in substantially the same manner as it has been during the twelve months prior to the date of this Agreement; and  (ii)are sufficient in all material respects to carry out the Business of the Vaccines Group after the Closing substantially as conducted by the Seller and its Affiliates as of the date of this Agreement,  provided however, that the foregoing is not a warranty of non-infringement, non-misappropriation or any other non-violation of Intellectual Property Rights of any third party, which warranty is solely set out in paragraph 4.8.  171


9Compliance with Laws, Permits and Anti-Bribery  9.1None of the Seller or its Affiliates is in breach of any Applicable Law where such breach is reasonably likely to be material to the Vaccines Group.  9.2Neither the Seller nor any of its Affiliates has received any written notice from any Governmental Entity that it is not in compliance (or any warning letter that it may not be in compliance) with any Applicable Law or is not in possession of any permits, licences, certificates or other authorisations or consents of a Governmental Entity in each case as is necessary for the conduct of the Business of the Vaccines Group in all material respects as presently conducted (each a Permit and, collectively, the Permits), except where such non-compliance or non-possession does not remain outstanding or uncured as of Closing or would not reasonably be expected to have a material effect on the Business.  9.3With respect to the Vaccines Group, since 1 January 2009, neither the Seller nor any of its Affiliates, nor any of their respective directors, officers or employees and, to the Sellers Knowledge, no Seller Partner has, directly or indirectly: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity or to influence official action; (ii) made or offered to make any unlawful payment to any foreign or domestic government official or employee, or agent, political party or any official of such party, or political candidate from corporate funds; (iii) made or offered to make any bribe, rebate, payoff, influence payment, money laundering, kickback or other unlawful payment; or (iv) violated or is in violation of any provision of any applicable Anti-Bribery Law; and with respect to the Vaccines Group, the Seller and its relevant Affiliates have instituted and maintain policies and procedures reasonably designed to ensure compliance with applicable Anti-Bribery Law.  9.4With respect to the Vaccines Group, neither the Seller nor any of its Affiliates, nor any of their respective directors, officers or employees and, to the Sellers Knowledge, no Seller Partner: (i) is currently the subject of, nor has it been since 1 January 2009, the subject of, any action alleging a violation, or possible violation, of any Anti-Bribery Law, or been since 1 January 2009, the recipient of a subpoena, letter of investigation or other document alleging a violation, or possible violation, of any Anti-Bribery Law, or (ii) has, since 1 January 2009, improperly or inaccurately recorded in any books and records (A) any payments, cash, contributions, gifts, hospitalities or entertainment to a foreign or domestic government official, employee of an enterprise owned or controlled in whole or in part by any foreign government, official of a foreign or domestic political party or campaign, or a foreign or domestic candidate for political office; or (B) other expenses related to political activity or lobbying.  9.5With respect to the Vaccines Group, since 1 January 2009, neither the Seller nor any of its Affiliates, nor any of their respective directors or officers, and, to the Sellers Knowledge, none of their respective employees has received notice that any such person is or has been alleged to be in violation of any sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or by the U.S. Department of State or equivalent measures of the United Kingdom, European Union, or the United Nations (the Sanctions Law). With respect to the Vaccines Group, neither the Seller nor any of its Affiliates, nor any of their respective directors or officers, and, to the Sellers Knowledge, none of their respective employees has conducted any of their business activities whatsoever with, or for the benefit of, a government, national or legal entity to the extent such actions would violate any Sanctions Law. None of the execution, delivery and performance of this Agreement and the direct or indirect use of proceeds from any  172


transaction contemplated hereby or the fulfilment of the terms hereof will result in a violation by any person of any Sanctions Law.  9.6Each member of the Sellers Group, in connection with the Products, the Product Approvals, the Product Applications, the Transferred Contracts and the Transferred Intellectual Property Contracts requires its Service Providers to act in accordance with the requirements of applicable Anti-Bribery Law and uses all reasonable endeavours to procure that they do so. Each such Service Provider has in place policies, systems, controls and procedures designed to prevent, and which are reasonably expected to continue to prevent, it and its Associated Persons from violating applicable Anti-Bribery Law.  10Product Approvals  10.1The Seller or one of its Affiliates is the registered holder of each of the Product Approvals.  All material Product Approvals held by Seller or its Affiliates are in full force and effect. No material deficiencies have been asserted by any applicable Government Entity with respect to any Product Approval or Product Filing, nor, to the Sellers knowledge, are there any facts or circumstances that would be likely to lead to such assertions being made.  10.2Each Product was and is being researched, developed, manufactured, marketed or sold in all material respects in accordance with the specifications and standards contained in the relevant Product Approval and the related Marketing Authorisation Data and in accordance with Applicable Law.  10.3Neither the Seller or any of its Affiliates has received any written notice that any Governmental Entity with jurisdiction over the Products has commenced or will commence any action: (i) to withdraw the approval of any Product or otherwise revoke or materially amend any Product Approval or Marketing Authorisation Data; or (ii) enjoin production, marketing or sale of any Product and, to the Sellers knowledge, no such action has been threatened.  10.4All application and renewal fees due and payable with respect to all material Product Approvals have been paid.  10.5All preclinical and clinical investigations with respect to the Products are being and have been conducted in compliance with Applicable Law in all material respects. The Seller and its Affiliates have not, and to the Sellers Knowledge, none of its Product Partners or any other third party under any Licensed Intellectual Property Contract has received since 1 January 2009, any written notices or other correspondence from any Governmental Entity with respect to any on-going clinical or pre-clinical studies or tests of any Product requiring the termination, suspension or material modification of such studies or tests.  10.6None of the Seller or its Affiliates or, to the Sellers Knowledge, any Product Partner or any other third parties pursuant to any Licensed Intellectual Property Contract, has any knowledge of any adverse event, arising since the date three years prior to the date of this Agreement, reportable with respect to the safety or efficacy of any Product which is expected to be material.  11Product Recall  11.1No Product (or any component thereof) has been recalled, suspended, withdrawn, seized, discontinued or the subject of a refusal to file, clinical hold, deficiency or similar action letter (including any correspondence questioning data integrity) as a result of any action by  173


any Governmental Entity, by the Seller or any of its Affiliates; nor are any such actions pending or under consideration (or any facts, conditions, or circumstance known) by the Seller or any of its Affiliates, or, to the Sellers Knowledge, by any Governmental Entity.  There is not, to the Sellers Knowledge, pending or threatened litigation anywhere in the world seeking the recall, withdrawal, suspension, seizure or discontinuance of any of the Products.  12Product Liability  The Products sold by the Business during the Relevant Period have complied in all material respects with all applicable product specifications and have been Manufactured in all material respects in accordance with applicable requirements of then current GMP and any Applicable Law, except for any such non-compliance that has not had, and would not reasonably be expected to have, a materially adverse impact on the relevant Product.  13Taxes  13.1Each Vaccines Group Company and each Tax Group to which it belongs has, and every member of the Sellers Group with an interest in the Vaccines Group has in respect of the Vaccines Group, duly, and within any appropriate time limits, filed all Tax Returns required to be filed and has maintained all records required to be maintained for tax purposes in relation to the assets comprised in the Vaccines Group; all such information was and remains complete and accurate in all material respects and all such Tax Returns were complete and accurate in all material respects and were made on the proper basis.  13.2There are no Tax liens on any asset comprised in the Vaccines Group Businesses (other than Permitted Encumbrances).  13.3No Vaccines Group Company and no Tax Group to which a Vaccines Group Company belongs is currently under audit or examination by a Tax Authority that could result in the assessment of a material amount of Tax and neither the Seller nor any Vaccines Group Company (nor any Tax Group to which a Vaccines Group Company belongs) has received notice from a Tax Authority of any dispute or disagreement outstanding or contemplated at the date of this Agreement with any Tax Authority regarding liability or potential liability to any Tax recoverable from any Vaccines Group Company or regarding the availability of any relief from Tax to any Vaccines Group Company and, so far as the Seller is aware, there are no circumstances which make it likely that any such dispute or disagreement will commence.  13.4The Disclosure Letter lists every written agreement that a Vaccines Group Company has entered into, in each case, which is currently in force, to have its Tax affairs dealt with on a consolidated basis and for any Tax sharing arrangement (including without limitation any arrangement under which Tax losses or Tax reliefs are surrendered or agreed to be surrendered or claimed) in respect of the profits, gains or losses of that Vaccines Group Company with any company not being another Vaccines Group Company.  13.5No Vaccines Group Company, and no Tax Group to which a Vaccines Group Company belongs, has received or requested any extension of time to file a Tax Return that remains unfiled or has granted or requested a waiver or extension of a limitation on any period for audit and examination or assessment and collection of Tax for any taxable period as to which Tax could be assessed.  13.6No member of the Sellers Group with an interest in the Vaccines Group has received notice from a Tax Authority of, and so far as the Seller is aware, there is not any dispute or  174


disagreement outstanding at the date of this Agreement with any Tax Authority regarding the proper method of computing the profits of the Vaccines Group (or any part of it) for Tax purposes or the proper treatment for VAT purposes of any supplies of goods or services made (or treated as made) in the course of the Vaccines Group and, so far as the Seller is aware, there are no circumstances which make it likely that any such dispute or disagreement will commence.  13.7So far as the Seller is aware, no Vaccines Group Company benefits from any preferential Tax regime, granted by law or by special authorisation issued by any Tax Authority or by any other authority, which would in whole or in part be withdrawn as a result of the signature of this Agreement.  13.8So far as the Seller is aware, no Tax Authority has within the past three years operated or agreed to operate any special arrangement (being an arrangement which is not based on relevant legislation or any published practice) in relation to any assets comprised in the Vaccines Group.  13.9In respect of all documents which establish or are necessary to establish the title of the relevant member of the Sellers Group to each material asset comprised in the Vaccines Group, or by virtue of which the relevant member of the Sellers Group has any right in respect of each such asset, all applicable stamp duties, transfer taxes, registration charges or similar duties or charges have been duly paid.  13.10So far as the Seller is aware, other than any payments which are of a nature or type (such as expenditure on business entertainment or marketing) which are not deductible for Tax purposes by reason of a general restriction on deductibility applicable to payments of that nature or type under the laws of the jurisdiction in which the relevant Vaccines Group Company is resident for Tax purposes or carries on its business, no Vaccines Group Company is under any obligation to make any future payment which will not be deductible for Tax purposes in an amount which, if the payment were deductible for Tax purposes, would reduce the Tax liability of the relevant Vaccines Group Company by an amount exceeding US$5 million.  13.11The country of incorporation which is given in Schedule 2 for each Vaccines Group Company is also the Tax residence of each Vaccines Group Company, and is the only country whose Tax Authorities seek to charge Tax on the worldwide profits or gains of that Vaccines Group Company and no Vaccines Group Company has, within the past three years, carried on the Business of the Vaccines Group through a permanent establishment in any other country.  14Environmental Matters  14.1To the Sellers Knowledge, each Business Seller (with respect to its conduct of the Business and any Transferred Real Property) and Vaccines Group Company is in compliance in all material respects with all Environmental Laws.  14.2To the Sellers Knowledge, each Vaccines Group Company and each Business Seller (with respect to its conduct of the Business and any Transferred Real Property) possesses all material Permits required under applicable Environmental Laws necessary to conduct its portion of the Business.  14.3To the Sellers Knowledge, no Vaccines Group Company nor any Business Seller (with respect to its conduct of the Business and any Transferred Real Property) has received  175


any written notice alleging a material violation of any Environmental Laws, other than matters that have been resolved in all material respects.  14.4To the Sellers Knowledge, no Vaccines Group Company nor any Business Seller (with respect to its conduct of the Business and any Transferred Real Property) has received any written notice or claim alleging that it is or may be liable to any person in any material respect under any applicable Environmental Law as a result of a release or threatened release of any Hazardous Substance at any Transferred Real Property, other than matters that have been resolved in all material respects.  14.5To the Sellers Knowledge, no Vaccines Group Company nor any Business Seller (with respect to its conduct of the Business and any Transferred Real Property) is a party to any pending proceedings relating to any Environmental Laws, other than proceedings that would not reasonably be expected to have a Material Adverse Effect.  15Employees  15.1The Employees are all employed by a Vaccines Group Company or a Business Seller and work wholly or substantially in the Business (as carried on by the Vaccines Group).  15.2The Disclosure Letter contains a true, complete and correct list of the following information in respect of each Vaccines Business Employee and each Vaccines Group Company Employee as of 17 April 2014 (organised by country and, in relation to any Vaccines Group Company, by legal employer): (A) employee identification details; (B) date of birth; (C) employment status (part-time or full-time); (D) employment start date; (E) base salary; (F) target annual incentive for 2014 (and actual bonus for 2013); and (G) target long-term incentive for 2014 (and actual long-term incentive for 2013).  15.3In each of the Material Employee Jurisdictions except as would not be reasonably expected to have a Material Adverse Effect:  15.3.1as of the date of this Agreement there is not, and in the two years prior to the date of this Agreement there has not been, nor to the Sellers Knowledge is there pending or threatened, any labour strike, dispute, work stoppage or lockout by any group of either Vaccines Business Employees or Vaccines Group Company Employees;  15.3.2no trade union or works council is recognised in any way for bargaining, information or consultation purposes in relation to any of the Vaccines Business Employees or Vaccines Group Company Employees and no collective bargaining negotiations, whether voluntary or mandatory, are currently taking place with respect to any of the Vaccines Business Employees or Vaccines Group Company Employees and, as of the date of this Agreement, no Vaccines Group Company or Business Seller is a party to any agreement (whether legally binding or not) with any trade union or works council affecting any Vaccines Business Employee or Vaccines Group Company Employee and there is no existing dispute with any such representative body (or, to the Sellers Knowledge, pending or threatened) in relation to the Business (as carried on by the Vaccines Group);  15.3.3there is no material litigation, claim or other dispute existing, nor to the Sellers Knowledge, pending or threatened by or in respect of any Employees (or any former employees of the Vaccines Group Companies) in respect of their employment or any matter arising from their employment; and  176


15.3.4no Vaccines Group Company or Business Seller has, within the 2 years prior to the date of this Agreement, closed any plant or facility, effectuated any layoffs of employees or implemented any early retirement, separation or similar programme in each case in violation of the WARN Act, nor has any Vaccines Group Company or Business Seller announced any such action or programme for the future.  15.4No Key Personnel has given notice terminating his or her contract of employment, nor is under notice of dismissal.  15.5To the Sellers Knowledge, and subject to the next sentence, no Vaccines Group Company Employee will, as a result of the entering into of this Agreement or Closing, be entitled to receive any payment or benefit which he would not otherwise be entitled to receive (including, without limitation, an enhanced severance package on a subsequent termination) or be entitled to treat either such event as amounting to a breach of his terms and conditions of employment or to treat himself as redundant or dismissed or released from any obligation. This warranty shall not apply to any retention arrangements (in the form of cash or shares) put in place by the Seller or any member of the Sellers Group to retain key employees in connection with the matters contemplated by this Agreement as described in paragraphs 10 and 11 of Schedule 11, or any arrangement relating to the share-based incentive schemes of the Sellers Group pursuant to paragraph 11 of Schedule 11.  15.6Since the Statement of Net Assets Date, no material change has been made, announced or proposed to the emoluments or other terms of employment of any Employee, and no such change, and no negotiation or request for such a change, is due or expected within 12 months from the date of this Agreement, and the employing company is under no obligation to make such a change (with or without retrospective operation) other than any arrangement relating to the share-based incentive schemes of the Sellers Group pursuant to paragraph 11 of Schedule 11.  15.7All the employees needed to carry on the Business (as carried on by the Vaccines Group) at the date of this Agreement at the Key Sites are employed by a Vaccines Group Company and, to the Sellers Knowledge (other than insofar as would not reasonably be expected to have a Material Adverse Effect) have not resigned and are not expected to resign their employment as a result of this Agreement or the transactions it contemplates.  16Employee Benefits  16.1The Disclosure Letter contains a true, complete and correct list of all bonus, staff incentives (including any share-based incentive schemes), redundancy or other benefits payable on termination of employment (whether voluntary or involuntary but excluding arrangements required in accordance with Applicable Law), ill-health, Employee Benefits or other benefits which are the material benefits available to the Vaccines Business Employees and the Vaccines Group Company Employees in the Material Employee Jurisdictions. To the Sellers Knowledge, other than any arrangement relating to the share-based incentive schemes of the Sellers Group pursuant to paragraph 11 of Schedule 11, no Vaccines Group Company or Business Seller has made any promises or commitments to make available any additional benefits to the Vaccines Business Employees and the Vaccines Group Company Employees in the Material Employee Jurisdictions, or to modify or change in any material way any existing benefits in the Material Employee Jurisdictions, or to continue or maintain the level of any existing benefits generally for any period, which in each case could reasonably be expected to have a Material Adverse Effect.  177


16.2The Disclosure Letter contains true and complete copies of all documents of any written benefit schemes, plans or arrangements referred to in paragraph 16.1 above applicable to either Vaccines Business Employees or Vaccines Group Company Employees in the Material Employee Jurisdictions containing material terms (including governing documents, and for benefit plans that are not share-based incentive schemes, related trust agreements or other funding documents) and a true, complete and correct summary of the material terms of any unwritten benefit schemes, plans or arrangements referred to in paragraph 16.1 above.  16.3Benefit Plans  16.3.1In the Material Employee Jurisdictions all benefit and compensation schemes, plans, funds, contracts, policies, agreements or arrangements (other than the US Benefit Plans and any schemes, plans, funds, contracts, policies, agreements or arrangements operated by any Governmental Entity) (A) operated by or on behalf of a Vaccines Group Company or Business Seller, with respect to Vaccines Group Company Employees or Vaccines Business Employees or current or former employees or directors of a Vaccines Group Company, (B) in respect of which any Vaccines Group Company or Business Seller, with respect to Vaccines Group Company Employees or Vaccines Business Employees, the Seller or any member of the Sellers Group contributes or has contributed or (C) in respect of which any Vaccines Group Company or Business Seller, with respect to Vaccines Group Company Employees or Vaccines Business Employees, has any liability (whether actual or contingent), including, but not limited to, plans providing Employee Benefits or during periods of sickness or disablement, or any deferred or incentive compensation, welfare, healthcare, medical, stock or stock-related award plans, including individual pension commitments, jubilee pension benefits and retirement and termination indemnity arrangements, and in relation to Switzerland, all plans, funds, contracts, policies, agreements or arrangements providing pension or other benefits on retirement (such schemes, plans, funds, contracts, policies, agreements and arrangements hereinafter being referred to as Non-US Benefit Plans) and the US Benefit Plans have been administered in accordance with their terms and are in compliance with Applicable Law, except for any failures to so administer or be in compliance that, individually and in the aggregate, would not reasonably be expected to have a Material Adverse Effect. All required filings for all Benefit Plans have been made on time and with the appropriate Governmental Entity, except for any failures to timely file that, individually and in the aggregate, would not reasonably be expected to have a Material Adverse Effect. As of the date of this Agreement, there is no existing, pending or, to the Sellers Knowledge, threatened material litigation, claim or other dispute relating to Benefit Plans.  16.3.2The Vaccines Group Companies or Business Sellers, with respect to Vaccines Group Company Employees or Vaccines Business Employees in each Material Employee Jurisdiction, (A) are in material compliance with all Applicable Law respecting employment, employment practices, terms and conditions of employment, occupational health, safety, wages and hours, (B) have withheld all amounts required by Applicable Law, collective bargaining agreements or the Benefit Plans to be withheld from the wages, salaries or other payments to the Vaccines Group Company Employees or the Vaccines Business Employees and former employees of the Vaccines Group Companies, (C) in respect of the Vaccines Group Company Employees or Vaccines Business Employees or former  178


employees of the Vaccines Group Companies, are not liable under any applicable provisions of the Benefit Plans and any Applicable Law for any arrears, wages, Taxes, other than payments not yet due, or any penalty for failure to comply with the foregoing and (D) are not liable under any applicable provisions of the Benefit Plans and any Applicable Law for any payment to any trust or other fund or to any Governmental Entity with respect to unemployment compensation benefits, workers compensation, social security or other benefits for Vaccines Group Company Employees or Vaccines Business Employees or former employees of the Vaccines Group Companies, other than payments not yet due, except, in each case, for any failures to comply, failures to withhold or liabilities that, individually and in the aggregate, would not reasonably be expected to have a Material Adverse Effect.  16.3.3All material contributions that the Vaccines Group Companies or Business Sellers, with respect to Vaccines Business Employees or the Vaccines Group Company Employees in a Material Employee Jurisdiction and Switzerland, are required to make to any Benefit Plan in respect of the period on or before the date of this Agreement have been fully and timely paid when due.  17Litigation  17.1No Vaccines Group Company or Business Seller is involved whether as claimant or defendant or other party in any claim or Proceeding (other than as claimant in the collection of debts arising in the ordinary course of its business none of which exceeds US$5 million) which is material to the Business.  17.2To the Sellers Knowledge, no such claim or Proceeding of material importance is pending or threatened by or against any Vaccines Group Company or Business Seller.  18Insolvency  18.1No order has been made and no resolution has been passed for the winding up of any Share Seller or any Business Seller, or for the appointment of any administrator, receiver (including administrative receiver) or liquidator (provisional or otherwise) over the whole or any part of the property, assets and/or undertaking of any Share Seller or any Business Seller.  18.2No petition has been presented or meeting convened for the purpose of considering a resolution or resolution circulated for the winding up of any Share Seller or any Business Seller, or for the appointment of any administrator, receiver (including administrative receiver) or liquidator (provisional or otherwise) over the whole or any part of the property, assets and/or undertaking of any Share Seller or any Business Seller.  18.3Neither any Share Seller nor any Business Seller has stopped payment or suspended payment of its debts generally, is insolvent or deemed unable to pay its debts as they fall due.  19Insurance  All material insurance policies relating to the Vaccines Group are in full force and effect and, to the Sellers Knowledge, no notice of cancellation, termination or default has been received with respect to any such insurance policy. All premiums due and payable on such policies covering periods up to Closing have been paid in full or accrued.  179


20Consents and Licences  20.1All governmental and quasi-governmental licences, consents, permissions, waivers, exceptions and approvals required for carrying on the Business of the Vaccines Group, the absence of which, individually or in the aggregate, would be material to the Vaccines Group, are in force and, to the Sellers Knowledge, no written notice has been received by the Seller or any member of the Sellers Group which indicates that any such licence, consent, permission, waiver, exception or approval is likely to be revoked or which may confer a right of revocation.  21Delinquent and Wrongful Acts  21.1To the Sellers Knowledge, no member of the Sellers Group has, during the Relevant Period, committed any criminal or illegal act which relates to the Vaccines Group Companies or the Vaccines Group Businesses.  21.2No member of the Sellers Group has, during the Relevant Period, received notification that any investigation or inquiry is being or has been conducted by any supranational, national or local authority or governmental agency specifically related to the Vaccines Group, which is material in respect of the Vaccines Group.  22Compliance  22.1No member of the Sellers Group has received in the Relevant Period any written notification or written claim (in each case, which remains outstanding) that it has conducted the Business of the Vaccines Group with respect to the research, development, manufacturing, distribution and sale of the Products in a manner which does not in any respect comply with all Applicable Law, or which in any respect is defective or dangerous, where the pursuit of any such notification or claim is, or would reasonably be expected to be, material in respect of the Vaccines Group.  22.2So far as the Seller is aware, the Vaccines Group has, and has during the Relevant Period been, operated in all material respects in compliance with all Applicable Law or standards and to the Sellers Knowledge there are no circumstances that could involve or lead to a material violation of any material Applicable Law or standards.  23Pipeline Products  23.1The Seller or one of its Affiliates is the registered holder of each of the Pipeline Product Approvals, and the benefit of each Pipeline Product Approval can be transferred to the Purchaser (or another member of the Purchasers Group) regardless as to whether such transfer occurs directly (whether by way of transfer, reissuance or any other equivalent mechanism under Applicable Law of the relevant jurisdiction) or indirectly (through the transfer of the Vaccines Group Companies).  23.2All development activities in relation to the Pipeline Products have been conducted in the ordinary course and in accordance with all Applicable Law and standards and to the Sellers Knowledge there are no circumstances relating to the development of the Pipeline Products that could involve or lead to a material violation of any material Applicable Law or standards.  23.3No material regulatory, clinical or safety event has occurred in relation to the Pipeline Products and no member of the Sellers Group has received any notification or claim from any person of any such event (or the possibility of any such event).  180


24Manufacturing Licences and Manufacture  24.1All Manufacturing Licences which are material to the Vaccines Group, are in effect and are validly held by a member of the Sellers Group and during the Relevant Period, to the Sellers Knowledge, no member of the Sellers Group has received any written notice of any suit, action or proceeding regarding the revocation or modification of any such Manufacturing Licence.  24.2No directive, order or notice has been given to the Seller or any member of the Sellers Group by any relevant regulatory authority to update, modify, amend, vary, supplement or delete any process and/or methodology relevant to the manufacture at the Sites of any Product currently manufactured at the Sites and, so far as the Seller is aware, no such directive, order or notice is pending.  25No Industrial Action  To the Sellers Knowledge, there is no industrial action currently taking place, threatened or expected which is, or is expected to be, material to the Business.  26Ongoing Clinical Trials  Schedule 22 contains a complete list of all Ongoing Clinical Trails.  181


Schedule 19 Warranties given by the Purchaser under Clause 9.3  1Authority and Capacity  1.1Incorporation  The Purchaser is validly existing and is a company duly incorporated and registered under the law of its jurisdiction of incorporation.  1.2Authority to enter into Agreement  1.2.1The Purchaser and each member of its Group has the legal right and full power and authority to enter into and perform this Agreement, any Ancillary Agreement to which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement or any Ancillary Agreement.  1.2.2The documents referred to in paragraph 1.2.1 will, when executed, constitute valid and binding obligations on the Purchaser and each member of its Group in accordance with their respective terms.  1.2.3Except as referred to in this Agreement, the Purchaser:  (i)is not required to make any announcement, consultation, notice, report or filing; and  (ii)does not require any consent, approval, registration, authorisation or permit,  in each case in connection with the performance of this Agreement or any other document referred to in paragraph 1.2.1.  1.2.4The execution and delivery of the documents referred to in paragraph 1.2.1 and the performance by the Purchaser and each member of its Group of their respective obligations under them, will not:  (i)result in a breach of any provision of the memorandum or articles of association or by laws or equivalent constitutional document of the relevant member of the Purchasers Group;  (ii)result in a breach of, or constitute a default under, any instrument or contract to which the relevant member of the Purchasers Group is party or by which the relevant member of the Purchasers Group is bound where such breach is material to their ability to perform their obligations under such documents;  (iii)result in a breach of any existing order, judgment or decree of any court, Governmental Entity by which the relevant member of the Purchasers Group is bound and where such breach is material to their ability to perform their obligations under such documents.  1.3Authorisation  The Purchaser has taken, or will have taken by Closing, all corporate action required by it to authorise it to enter into and to perform this Agreement, any Ancillary Agreement to  182


which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement or any Ancillary Agreement.  183


Schedule 20 Pre-Closing Obligations (Clause 5.2)  Part 1 Seller Restrictions  The actions for the purposes of Clause 5.1.2 are:  1amend or otherwise modify the constitutional documents of any Vaccines Group Company other than minor or administrative amendments or modifications which are not adverse to the Business or to the Purchaser of any member of the Purchasers Group;  2create, allot or issue, or grant an option or right to subscribe for or purchase, any share capital or other securities or loan capital of any Vaccines Group Company;  3repay, redeem or repurchase any share capital, or other securities of any Vaccines Group Company;  4make any acquisition or disposal which has a value in excess of US$10 million, exclusive of VAT;  5grant any guarantee or indemnity for the obligations of any person which has a value in excess of US$5 million (other than in the ordinary course of trading);  6dispose of, or agree to dispose of, any material asset or material stock at below market value other than in the ordinary course of business;  7acquire or agree to acquire any share, shares or other interest in any company, partnership or other venture, other than an investment of 5 per cent or less of the total shares or interest in such company, partnership or venture and provided the investment is not more than US$5 million;  8enter into, extend, amend, give notice to terminate or vary in any material respect any lease of real property or change the existing use of such property which is material to the Vaccines Group;  9cease, compromise or settle any dispute including litigation, arbitration or administrative proceedings in relation to (or otherwise compromise or settle) any claim by Pfizer which relates to any form of meningococcal vaccine (Group B) whether adjuvanted, combined or otherwise (or any similar product) of Pfizer or enter into any licensing arrangements with Pfizer in relation to such products or Intellectual Property Rights relevant to them;  10enter into any borrowing facility which has a value in excess of US$10 million;  11enter into any off-balance sheet finance arrangements;  12sell, lease, license, transfer or dispose of, or create any Encumbrance over, any material assets of the Vaccines Group other than (i) in the ordinary course of business (including any sale of inventory); or (ii) any Permitted Encumbrance;  13(a) terminate, materially amend (or amend in any respect in relation to a Product or Pipeline Product which is material to the Business) or grant any material waiver under (or any waiver in relation to a Product or Pipeline Product which is material to the Business)  184


any Vaccines Group Intellectual Property Contract or the Merck 2012 Licence or (b) terminate any Transferred Contract other than in the ordinary course of business or terminate any Contract held by the Vaccines Group Companies other than in the ordinary course of business;  14fail to comply in all material respects with all Applicable Law, Product Approvals, Pipeline Product Approvals and Marketing Authorisations applicable to the operation of the Business;  15assign, dispose of, license (save in respect of non-exclusive licences relating to the Sellers research, development or Commercialisation of the Products) abandon any material Vaccines Group Intellectual Property Rights (or any Vaccines Group Intellectual Property Rights in respect of a Product or Pipeline Product which is material to the Business), or cease to prosecute or otherwise dispose of, fail to maintain, defend or pursue applications for any material Registered Vaccines Group Intellectual Property Rights (or any Registered Vaccines Group Intellectual Property Rights in respect of a Product or Pipeline Product which is material to the Business);  16save where requested in writing by the Purchaser or required by any applicable Governmental Entity, cancel, surrender or materially amend (or amend in any respect in relation to a Product or Pipeline Product which is material to the Business) any applications, submissions or filings with respect to Registered Vaccines Group Intellectual Property Rights;  17instigate, cease, compromise or settle any litigation or arbitration proceedings related to the Vaccines Group in relation to a claim for which the potential liability attaching thereto is in excess of US$5 million;  18make any material amendment to any Marketing Authorisation, Manufacturing Licence or Environmental Permit, in each case except to the extent required by: (a) Applicable Law; (b) any Governmental Entity, or (c) the standards, policies and procedures of the Sellers Group as then in force;  19enter into or amend in any material respect any Transferred Contract, or incur any commitment, which is not capable of being terminated without compensation at any time with twelve months notice or less or which is not in the ordinary course of business, or which involves or may involve total annual expenditure in excess of US$10 million, exclusive of VAT;  20enter into any contract which would materially restrict the freedom of the Vaccines Group to operate in any part of the world;  21terminate (except for good cause) the employment of any Key Personnel;  22take any steps to increase or reduce the proportion of time spent working in the Business (as carried on by the Vaccines Group) by any employee of any member of the Sellers Group or to transfer the employment of any Employee to another member of the Sellers Group or to employ or offer to employ or engage any new persons in the Business (as carried on by the Vaccines Group) other than in the ordinary course of business consistent with past practice and subject to an aggregate increase of not more than 2.5 per cent. in total staff costs of the Business (as carried on by the Vaccines Group) per annum, provided that this restriction shall not apply to the redeployment of any Vaccines Group Company Employee who is not wholly or substantially engaged in the Business (as carried  185


on by the Vaccines Group) before the Closing Date to employment with another member of the Sellers Group;  23make, or commit to make, any changes to the terms and conditions of employment (including pension fund commitments or any increase to remuneration) or to any employee benefit plan of any Employee, other than (a) those required by Applicable Law or (b) pursuant to normal annual pay reviews in the ordinary course of business consistent with past practice and subject to an aggregate increase of not more than five per cent. in total staff costs of the Business (as carried on by the Vaccines Group) per annum or (c) retention arrangements in the form of cash or shares to retain key employees in connection with the matters contemplated by this Agreement as described in paragraphs 10 and 11 of Schedule 11, or (d) those changes to the share-based incentive schemes made for the purpose of complying with paragraph 11 of Schedule 11;  24make any promises or commitment to any Employees or employee representative body concerning the matters contemplated by this Agreement or offer or otherwise give any assurances to any Employees as to the possibility of continued employment with the Purchasers Group after Closing;  25make any change or commitment to make any change to the terms of any redundancy policy or practice applying to the Employees (including amounts payable on redundancy);  26enter into (where there is no existing agreement) or materially amend any collective bargaining agreement or other contract with a labour organisation, works council or employee organisation to create new or additional obligations for any member of the Sellers Group, in each case in relation to the Business (as carried on by the Vaccines Group); and  27undertake any recall or withdrawal of any Product (other than in the ordinary course of business or to comply with Applicable Law).  186


Part 2 Seller Obligations  1Obligations Prior to be Satisfied prior to the Closing  At least five Business Days prior to the Closing Date, the Seller shall provide the Purchaser with a list of any required actions that must be taken within three (3) months after Closing with respect to the payment of any registration, maintenance, or renewal fees or the filing of any documents, applications or certificates in order to maintain any Registered Vaccines Group Intellectual Property Rights in full force and effect. Upon the Purchasers reasonable request, the Seller shall execute and deliver assignment agreements and other transfer documentation, including, where applicable, duly executed assignments of such Registered Vaccines Group Intellectual Property Rights for recording with the applicable Governmental Entity, and to take such further actions, in each case at the Purchasers reasonable cost and expense and as may be required, to give effect to the foregoing assignments.  2Obligations from the Date of the Agreement to the Closing  The requirements for the purposes of Clause 5.1.3 are:  2.1so far as permitted by Applicable Law, the Seller shall procure that each member of the Sellers Group informs the Purchaser promptly if the Seller becomes aware of, or has reasonable grounds for suspecting any violation of Anti-Bribery Law which is reasonably likely to have an impact on the Vaccines Group, and  2.2carry out capital expenditure in relation to any site operated by the Vaccines Group where the Products are manufactured in a manner materially consistent (and within a variance of 10 per cent. in aggregate) with the Sellers capital expenditure programme for the Business as at the date of this Agreement;  2.3maintain and keep any Registered Vaccines Group Intellectual Property Rights and ensure that all filings and notifications required to be made in respect of the same are made in accordance with past practice;  2.4progress, in accordance with past practice any applications, submissions, filings or other correspondence relating to the grant of new Registered Vaccines Group Intellectual Property Rights;  2.5progress, in accordance with past practice during the Relevant Period, any applications, submissions, filings or other correspondence initiated by such member of the Sellers Group relating to the grant of new Manufacturing Licences and Environmental Permits in respect of the Vaccines Group;  2.6continue to promote, market and Commercialise the Products in accordance with past practice during the Relevant Period and do not materially accelerate or increase the quantity of Products distributed to the relevant distributors and/or wholesalers, in each case except in respect of a bona fide increase in demand for the relevant Product by the relevant distributor and/or wholesaler which has not been stimulated in any way by discounts, rebates, claw-backs or the like outside of the ordinary course of business or the grant of preferred terms offered by the Sellers Group outside of the ordinary course;  2.7not discontinue or cease to operate or materially reduce the resources applied to any part of the Business;  187


2.8maintain the level of Manufacturing Stocks and Manufacturing Inventory held for use in the Business materially in accordance with the Sellers Groups operating policies as applied to the Vaccines Group from time to time in force;  2.9maintain the level of In-Market Inventory held for use in the Business materially in accordance with the Sellers Groups operating policies as applied to the Vaccines Group from time to time in force;  2.10use all reasonable endeavours to ensure that the manufacture of the Products by the Sellers Group comply with Applicable Law;  2.11use all reasonable endeavours to ensure that the Products sold by the Business comply with Applicable Law;  2.12continue to conduct the Ongoing Clinical Trials in accordance with GCP and the Seller Groups policies and procedures; and  2.13notify the Purchaser in writing of any actual safety or quality issue in respect of any Product or the manufacture of any Product (as soon as reasonably practicable after becoming aware of the same) which issue the relevant member of the Sellers Group, acting reasonably and in good faith, considers material in the context of the manufacture or commercialisation of such Product.  2.14so far as permitted by Applicable Law, report periodically to the Purchaser concerning the status of the Business, including delivering to the Purchaser as soon as reasonably practicable each month:  2.14.1an update on material commercial developments in relation to the Business and the Products during the previous month;  2.14.2the gross profit for each Product in respect of the previous month; and  2.15a report on the month-end in-trade inventory in respect of each Product for the previous month prepared in the ordinary course of business consistent with past practice, together with a comparison against the comparable period of trading for the prior year;  2.16use all reasonable endeavours to obtain a waiver in relation to the Transaction from the joint venture partner in Zhejiang Tianyuan Bio-Pharmaceutical Co. Ltd in respect of the joint venture partners rights of first refusal; and  2.17shall or shall procure that each member of the Sellers Group continues to respond to any Calls For Tender in accordance with past practices in the relevant market.  188


Part 3 Exceptions  Clause 5.1 shall not operate so as to prevent or restrict the declaration, making or payment of any dividend or other distribution to shareholders.  189


Schedule 21 Key Employees (Clause 1.1)  [***]  190


Schedule 22 Ongoing Clinical Trials  (Clause 1.1)  [***]  191


Schedule 23 Statement of Net Assets  (Clause 1.1)  Part 1 Statement of Net Assets Rules  Part 1 of Schedule 23 comprises the Statement of Net Assets Rules.  Part 2 of Schedule 23 sets forth, for illustrative purposes only, a computation of the Statement of Net Assets as of the close of business on 31 December 2013 (the Statement of Net Assets).  1Preparation of the Statement of Net Assets  1.1Period  The Statements of Net Assets is prepared as of the close of business on the final day of the relevant calendar month.  1.2Translation of Reporting Entitys Statements of Net Assets  A reporting entity reports in local currency. All reports are translated into US dollars by the Seller for reporting purposes. The Statement of Net Assets is translated with the period-end exchange rates which are the rates provided by Novartis Group Treasury and are based on Bloombergs mid-morning CET exchange rates and are published in the Group Treasury section of the Novartis intranet.  1.3Novartis Reporting System and Materiality:  1.3.1Financial information is obtained from the Financial Consolidation & Reporting System of Novartis and the supporting general ledgers are prepared in accordance with Novartis Accounting Manual (the NAM). The Financial Consolidation & Reporting System is the system of record for Novartis external reporting. References in the Statement of Net Assets included as part 2 of this Schedule 23 shown as BS01 lines 010-671 relate to the groupings shown in Novartis monthly reporting form BS01  Balance sheet.  1.3.2For the Sellers reporting purposes, the financial reporting of a legal entity is separated into a divisional part, which includes operating items and a corporate part, which mainly captures the amounts related to taxes, post-employment benefit obligations and most of the financial assets and liabilities. The Statement of Net Assets contains the business of the Vaccines division (including the Influenza Business) as included in Novartis segment reporting (column C - Vaccines Divisional Reported Statement of Net Assets), and items of the corporate Statement of Net Assets for the Vaccines Group Companies (Column D  Vaccines Statement of Net Assets of the Corporate part of the Vaccines Group Companies and items related to the Statement of Net Assets for the Novartis Vaccines Institute for Global Health (column E  Statement of Net Assets of the part of Novartis Vaccines Institute for Global Health) as well as adjustments for certain items which are either excluded from or added to the transaction (columns F -Excluded items). A US$10 million threshold was applied.Column H shows the impact of the Influenza Business which is excluded from the transaction. For the purpose of the carve out of the Influenza Business allocations have been made  192


based on managements best estimate of the contribution of the Influenza Business. For Receivables own BU (BS01_130) and Payables own BU (BS01_620) items related to the entity in Liverpool, which will not transfer have been added back into the statement of net assets. For other entities amounts related to the Influenza Business have not been added back in as they are offsetting each other.  Payables and Receivables to Other BUs related to the Influenza Business have been left in the statement of net assets as they are not expected to be material on a net basis. A materiality threshold of US$ 50million applies to the Influenza Business.  1.3.3The Statement of Net Assets has been prepared as follows:  (i)in accordance with the specific accounting treatments set out below; and, subject thereto,  (ii)adopting the same accounting principles, methods, procedures and practices utilized in preparing the consolidated financial statements of Novartis AG as described in the Novartis Accounting Manual applied on a consistent basis using consistent estimation methodologies and judgments and with consistent classifications and, subject thereto,  (iii)in accordance with IFRS.  1.3.4For the avoidance of doubt, paragraph 1.3.3(i) shall take precedence over paragraphs 1.3.3(ii) and 1.3.3(iii), and paragraph 1.3.3(ii) shall take precedence over paragraph 1.3.3(iii).  2Specific Policies  The following supplement the description in the NAM for certain items included in the Vaccines Group Statement of Net Assets:  2.1Non-Current assets  2.1.1Property, plant and equipment (BS01_010)  For the purpose of the Vaccines Divisional Statement of Net Assets an amount of US$122 million is included for assets which are not dedicated to the Vaccines Group and will not transfer to the Purchaser (as reflected in Column F). These assets comprise all property, plant and equipment located in Emeryville, California and in Pernambuco, Brazil.  2.1.2Financial assets & subsidiaries/JV (BS01_040)  This line reflects equity investments that Vaccines Group Companies hold in other Vaccines Group Companies. These relationships have been eliminated in the Statement of Net Assets (as reflected in Column F).  2.1.3Total financing and loans to subsidiaries/JV (BS01_050)  This line represents financing owed by any member of the Sellers Group to a Transferred Subsidiary. For the purpose of the Statement of Net Assets balances within the Vaccines Group have been excluded (as reflected in Column F).  193


2.2Current Assets:  2.2.1Trade receivables (BS01_120)  An amount of US$51 million of trade receivables is excluded from this Statement of Net Assets (as reflected in Column F) as it relates to non-Vaccines business activity such as licence fee receivables related to HCV and HIV patents.  2.2.2Receivables own BU (BS01_130)  Column C of the Statement of Net Assets represents receivables against other entities within the Vaccines division, which are offset by an equivalent amount in the line Payables own BU. These amounts have been eliminated in Column F of the Statement of Net Assets.  2.2.3Receivables own BU  Corporate and Institute for Global Health (BS01_130)  Columns D and E of the Statement of Net Assets represent receivables against other members of the Sellers Group as well as other Vaccines Group Companies.  The receivables against other Vaccines Group Companies have been eliminated in Column F of the Statement of Net Assets.  2.2.4Receivables other BUs (BS01_140)  Receivables recognized on this line are due from members of the Sellers Group operating in the Pharmaceuticals and Sandoz segments which are selling vaccines in markets where the Vaccines Group is not represented. The receivable of the Vaccines Institute for Global Health relates to a Transferred Subsidiary and has therefore been eliminated.  2.2.5Other current assets (BS01_160)  An amount of US$5 million is related to current assets of the divested Diagnostics business, which did not transfer to the purchaser of the Diagnostics business. They are excluded from the Statement of Net Assets as they do not relate to the activities of the Vaccines Group (as reflected in Column F). Furthermore, an amount of US$1 million is related to assets of the plant in Pernambuco, Brazil which will not be transferred and has therefore been excluded (as reflected in Column F) from the Statement of Net Assets.  2.2.6Prepaid share-based payments (BS01_161)  An asset for prepaid share-based compensation is recognized to reflect Novartis internal charge-out mechanism for its equity settled share-based compensation plans. For entities settling the charge for the shares at the beginning of the vesting period, it reflects the expense yet to be recognized for the unvested part of a share-based compensation plan. This asset has been excluded (as reflected in Column F) and is not reflected in the Statement of Net Assets.  2.3Long-term Liabilities:  2.3.1Total financing and loans from subsidiaries/JV (BS01_520)  This line represents financing received from any member of the Sellers Group. For the purpose of the Statement of Net Assets, balances within the Vaccines Group have been excluded (as reflected in Column F).  194


2.3.2Other non-current liabilities (BS01_540)  Column F excludes net liabilities for post-employment benefits of US$90 million included in the corporate part of the Vaccines Group Companies as their treatment is addressed separately in Schedule 12.  2.4Current Liabilities:  2.4.1Trade payables (BS01_610)  An amount of US$11 million included in this line relates to the construction of the plant in Pernambuco, Brazil which will not be transferred and has therefore been excluded (as reflected in Column F) from the Statement of Net Assets.  2.4.2Payables own BU (BS01_620)  Column C of the Statement of Net Assets represents payables against other entities within the Vaccines division, which are offset by an equivalent amount in the line Receivables own BU. These amounts have been eliminated in the Statement of Net Assets.  2.4.3Payables own BU  Corporate (BS01_620)  Column D of the Statement of Net Assets represents payables against other Vaccines Group Companies as well as payables against other members of the Sellers Group. The corporate payables against Vaccines Group Companies have been eliminated in Column F of the Statement of Net Assets.  2.4.4Payables other BUs (BS01_630)  Payables recognized on this line are due to members of the Sellers Group, except for a payable recognized by the Vaccines Institute for Global Health, which is owed to a Vaccines Group Company and has therefore been eliminated.  2.4.5Accrued and other current liabilities (BS01_670)  An amount of US$35 million is related to short term liabilities of the divested Diagnostics business, which did not transfer to the purchaser of this Diagnostics business. They are excluded from the Statement of Net Assets (as reflected in Column F) as they do not relate to the activities of the Vaccines Group. Furthermore, an amount of US$3 million relates to the construction of the plant in Pernambuco, Brazil, which will not be transferred and has therefore also been excluded (as reflected in Column F) from the Statement of Net Assets. An amount of US$1 million relates to legal fees for litigation not related to the Vaccines Group.  2.4.6Accrued share-based payments (BS01_671)  A liability for share-based compensation is recognized to reflect Novartis internal charge-out mechanism for its equity-settled share-based compensation plans. For entities settling the charge for the shares after the vesting period, it reflects the expense recognized for the vested part of a share based compensation plan. This liability has been excluded (as reflected in Column F) and is not reflected in the Statement of Net Assets.  195


Part 2 Statement of Net Assets  [***]  196


Schedule 24 Regulatory Approvals  The following table provides the additional jurisdictions and applicable antitrust, merger control, or foreign investment rules referenced in Clause 4.1.3.  This list of jurisdictions and statutes is not meant to be indicative of a known filing or approval requirement in these jurisdictions. To the extent that clearances, approvals, waivers, no action letters or consents are not required to be obtained or not otherwise agreed by the parties to be appropriate, and waiting periods are not required to have expired in these jurisdictions, prior to Closing, such clearances, approvals, waivers, no action letters, consents, and waiting period expirations will not be conditions precedent to Closing  Country

Statute Under Which Filing/Approval is RequiredAustralia

The Competition and Consumer Act of 2010Brazil

Law No. 12,529 of November 30, 2011Canada

The Competition ActChina

The Chinese Anti-Monopoly LawIndia

The Competition Act of 2002, as amended by   The Competition (Amendment) Act of 2007Israel

The Restrictive Trade Practices Law,   5748-1988Japan

The Act on Prohibition of Private   Monopolisation and Maintenance of Fair Trade No. 54 of 1947Mexico

The Federal Law on Economic CompetitionNew Zealand

The Commerce Act of 1986Russia

Federal Law No. 135-FZ of July 16,   2006 on Protection of CompetitionSouth Africa

The Competition Act 89 of 1998South Korea

The Monopoly Regulation and Fair Trade ActTaiwan

The Fair Trade Law of 1991Turkey

The Law on Protection of Competition   No. 4054 of 1994  197


Table of Contents  Contents

Page1
Interpretation

12
Sale and Purchase of the   Vaccines Group

293
Consideration

354
Conditions

375
Pre-Closing

436
Closing

467
Post-Closing Adjustments

498
Post-Closing Obligations

519
Warranties

5910
Limitation of Liability

6011
Claims

6412
Restrictive Covenants

6513
Confidentiality

6714
Insurance

6915
France Business and   Netherlands Business

6916
Other Provisions

71Schedule 1 Details of the   Share Sellers, Shares etc. (Clause 2.1)

80Schedule 2 Companies,   Subsidiaries and Minority Interest Entities

81Schedule 3 The Properties   Part 1 (Company Real Property)

86Schedule 3 The Properties   Part 2 (Transferred Real Property)

87Schedule 3 The Properties   Part 3 Terms relating to the Company Real Property

88Schedule 3 The Properties   Part 4 Terms relating to the Transferred Real Property

92  i


Schedule 4 Vaccines Group   Intellectual Property Rights and Vaccines Group Intellectual Property   Contracts (Clause 2.3)

104Schedule 5 Excluded   Employees (Clause 1.1)

105Schedule 6 International   Assignees (Clause 1.1)

106Schedule 7 Permitted   Encumbrances (Clause 1.1)

107Schedule 8 Product Approvals   and Product Applications Part 1 Terms relating to the Product Approvals   and Product Applications

108Schedule 8 Product Approvals   and Product Applications Part 2 Transfer of Marketing Authorisations

110Schedule 8 Product Approvals   and Product Applications Part 3 List of Products, Products Under   Registration and Pipeline Products

116Schedule 8 Product Approvals   and Product Applications Part 4 Tenders

117Schedule 9 Certificate   (Clause 1.1)

118Schedule 10 Transferred   Contracts (Clause 2.3)

119Schedule 11 Employees   (Clause 2.4.1)

122Schedule 12 Employee   Benefits (Clause 2.4.2)

137Schedule 13 Allocation of   Purchase Price (Clauses 3.3 and 7.6)

145Schedule 14 VAT (Clause 3.4)

146Schedule 15 Closing   Obligations (Clause 6)

148Schedule 16 Post Closing   Adjustments (Clause 7)

150Schedule 17 Milestone and   Royalty Payments

157Schedule 18 Warranties given   under Clause 9.1

164Schedule 19 Warranties given   by the Purchaser under Clause 9.3

182Schedule 20 Pre-Closing   Obligations (Clause 5.2)

184Schedule 21 Key Employees   (Clause 1.1)

190Schedule 22 Ongoing Clinical   Trials (Clause 1.1)

191Schedule 23 Statement of Net   Assets (Clause 1.1)

192  ii


Schedule 24 Regulatory   Approvals

197  iii