Exhibit 4.5


 


EXECUTION
VERSION


 


Purchase and Option Agreement


 


 


As of 6 April 2008


 


(this “Agreement”)


 


Between


 


 


Nestlé S.A.


Avenue Nestlé, 55


1800 Vevey


 


Switzerland


 


 


(the “Seller”)


 


 


and


 


 


Novartis
AG


Lichtstrasse 35


4056 Basel


 


Switzerland


 


 


(the “Buyer”)


 


 


Concerning


 


the Sale and
Purchase of


 


Common Shares
of Alcon, Inc. (the “Company”)


 


owned by the
Seller


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 1. 
  DEFINITIONS AND INTERPRETATION

  	
  1

  
	
   

  
	
   

  	
  Section 1.1
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 1.2
  Interpretation

  	
  16

  
	
   

  
	
  ARTICLE 2. 
  FIRST STAGE ACQUISITION

  	
  17

  
	
   

  
	
   

  	
  Section 2.1
  Sale and Purchase of the First Stage Shares

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 2.2
  First Stage Closing Date

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 2.3
  Transactions To be Effected at the First Stage Closing

  	
  17

  
	
   

  
	
  ARTICLE 3. 
  SECOND STAGE ACQUISITION

  	
  18

  
	
   

  
	
   

  	
  Section 3.1
  Put/Call Option

  	
  18

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.2
  Sale and Purchase of Second Stage Shares

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.3
  Second Stage Closing Date

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.4
  Transactions to be Effected at the Second Stage Closing

  	
  21

  
	
   

  
	
  ARTICLE 4. 
  REPRESENTATIONS AND WARRANTIES OF THE SELLER

  	
  22

  
	
   

  
	
   

  	
  Section 4.1
  Organization and Authority of the Seller and the Company

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.2
  Ownership of the Shares

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.3
  No Conflict

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.4
  Capital Stock of the Company

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.5
  Financial Statements; Other Liabilities

  	
  25

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.6
  Agreements

  	
  25

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.7
  Insurance

  	
  27

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.8
  Real Property

  	
  27

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.9
  Taxes

  	
  28

  
				



 


i

















 


	
   

  	
  Section 4.10
  Litigation and Other Proceedings; Orders

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.11
  No Material Adverse Change

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.12
  Licenses and Permits

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.13
  Environmental Matters

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.14
  Governmental Consents and Approvals

  	
  32

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.15
  Intellectual Property and Know-How

  	
  33

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.16
  Employee Plans and Personnel Matters

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.17
  Compliance with Legal Requirements

  	
  35

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.18
  Regulatory Compliance

  	
  36

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.19
  SEC Filings

  	
  38

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.20
  Brokers

  	
  40

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.21
  No Restrictions on the Transactions

  	
  40

  
	
   

  
	
  ARTICLE 5. 
  REPRESENTATIONS AND WARRANTIES OF THE BUYER

  	
  40

  
	
   

  
	
   

  	
  Section 5.1
  Organization and Authority

  	
  40

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.2
  No Conflict

  	
  41

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.3
  Governmental Consents

  	
  41

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.4
  Financing of the Transactions

  	
  41

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.5
  Brokers

  	
  41

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.6
  Investigation

  	
  42

  
	
   

  
	
  ARTICLE 6. 
  INDEMNIFICATION

  	
  42

  
	
   

  
	
   

  	
  Section 6.1
  Indemnification by the Seller

  	
  42

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 6.2
  Indemnification by the Buyer

  	
  46

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 6.3
  Survival and Notice of Claims

  	
  48

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 6.4
  Remedies

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 6.5
  Third Party Claims

  	
  49

  



 


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  Section 6.6
  Treatment of Indemnity Payments

  	
  50

  
	
   

  
	
  ARTICLE 7. 
  OTHER COVENANTS OF THE PARTIES

  	
  51

  
	
   

  
	
   

  	
  Section 7.1
  Access to Information Prior to the Second Stage Closing Date

  	
  51

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.2
  Access to Information After the Second Stage Closing Date

  	
  51

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.3
  Certain Actions

  	
  52

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.4
  Further Action

  	
  52

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.5
  Regulatory and Other Authorizations

  	
  53

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.6
  Seller-Company Agreements

  	
  57

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.7
  Notifications

  	
  57

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.8
  Limitation on Purchases and Sales of Common Shares

  	
  57

  
	
   

  
	
  ARTICLE 8. 
  CONDITIONS PRECEDENT, WAIVER, AND TERMINATION PROVISIONS OF FIRST STAGE
  ACQUISITION

  	
  58

  
	
   

  
	
   

  	
  Section 8.1
  Conditions Precedent to Performance of the Parties

  	
  58

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 8.2
  Conditions Precedent to Performance of the Seller

  	
  59

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 8.3
  Conditions Precedent to Performance of the Buyer

  	
  59

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 8.4
  Waiver; Determination of Satisfaction of Conditions

  	
  60

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 8.5
  Termination Prior to the First Stage Closing

  	
  60

  
	
   

  
	
  ARTICLE 9. 
  CONDITIONS PRECEDENT, WAIVER, AND TERMINATION PROVISIONS OF SECOND
  STAGE ACQUISITION

  	
  61

  
	
   

  
	
   

  	
  Section 9.1
  Conditions Precedent to Performance of the Parties

  	
  61

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 9.2
  Conditions Precedent to Performance of the Seller

  	
  63

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 9.3
  Conditions Precedent to Performance of the Buyer

  	
  63

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 9.4
  Waiver; Determination of Satisfaction of Conditions

  	
  64

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 9.5
  Termination After the First Stage Closing and Prior to the Second Stage
  Closing

  	
  64

  



 


iii

















 


	
  ARTICLE 10. 
  MISCELLANEOUS

  	
  65

  
	
   

  
	
   

  	
  Section 10.1
  Entire Agreement

  	
  65

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.2
  Transaction Costs

  	
  65

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.3
  Modifications

  	
  65

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.4
  Notices

  	
  66

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.5
  Public Announcements

  	
  67

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.6
  Severability

  	
  67

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.7
  Assignment

  	
  67

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.8
  Confidentiality Agreement

  	
  67

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.9
  Governing Law

  	
  68

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.10
  Specific Performance

  	
  68

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.11
  Dispute Resolution

  	
  68

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.12
  Counterparts; Facsimile Signature

  	
  69

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.13
  Certain Other Covenants of the Seller

  	
  69

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 10.14
  Rights Cumulative

  	
  69

  



 


iv

















 


PURCHASE AND OPTION AGREEMENT


 


Preamble:


 


WHEREAS, the Seller is the owner, beneficially
and of record of 230,137,500 Common Shares;


 


WHEREAS, the Buyer wishes to purchase from the
Seller, and the Seller wishes to sell to the Buyer, the First Stage Shares;


 


WHEREAS, the Buyer and the Seller wish to set
forth certain agreements regarding the potential purchase by the Buyer and the
potential sale by the Seller of the Second Stage Shares; and


 


WHEREAS, concurrently with the execution and
delivery of this Agreement, the Buyer and the Seller are entering into a
shareholders agreement, dated as of even date herewith (as amended from time to
time, the “Shareholders Agreement”), providing for certain corporate
governance matters of the Company and certain other agreements between the
Buyer and the Seller;


 


NOW, THEREFORE, in consideration of the
foregoing premises and other good and valuable consideration, the sufficiency
of which is hereby acknowledged, and the mutual agreements and covenants
hereinafter set forth, the Buyer and the Seller hereby agree as follows:


 


ARTICLE 1.                           DEFINITIONS AND INTERPRETATION


 


Section 1.1                         Definitions.


 


For purposes
of this Agreement, including the Preamble, the following terms have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):


 


	
  “Adjusted One Week VWAP”

  	
   

  	
  As defined in Section 3.2(b).

  
	
   

  	
   

  	
   

  
	
  “Affiliate”

  	
   

  	
  With respect to any specified Person, any other Person that controls,
  is controlled by or is under common control with such Person (it being
  understood that a Person will be deemed to “control” another Person, for
  purposes of this definition, if such Person directly or indirectly has the
  power to direct or cause the direction of the management and policies of such
  other Person, whether through the ownership of voting securities of such
  other Person, through contract or otherwise); provided that for all
  purposes of this Agreement and the Shareholders Agreement, in no event shall the
  Company (or any of its 

  



 

















 


	
   

  	
   

  	
  Subsidiaries) be deemed an Affiliate of the Buyer at any time prior
  to the Second Stage Closing.

  
	
   

  	
   

  	
   

  
	
  “Agreement”

  	
   

  	
  As defined on the title page.

  
	
   

  	
   

  	
   

  
	
  “Beneficial Owner” or “Beneficially Own”

  	
   

  	
  Has the meaning assigned to such term in Rule 13d-3 under the
  Exchange Act, and a Person’s beneficial ownership of securities shall be
  calculated in accordance with the provisions of such Rule; provided
  that, for purposes of determining beneficial ownership of Common Shares by
  the Buyer or the Seller, (i) the option to purchase and the option to
  sell Common Shares set forth in Article 3 of this Agreement,
  (ii) any Common Shares held by the Company in its treasury and
  (iii) the provisions of the Shareholders Agreement in respect of the voting
  of Common Shares, shall each be disregarded.

  
	
   

  	
   

  	
   

  
	
  “Business Day”

  	
   

  	
  Any day that is not a Saturday, a Sunday or other day on which banks
  are required or authorized by law to be closed in the cities of Basel, Zurich
  or Vevey, Switzerland.

  
	
   

  	
   

  	
   

  
	
  “Buyer”

  	
   

  	
  As defined on the title page.

  
	
   

  	
   

  	
   

  
	
  “Buyer Designated Affiliate”

  	
   

  	
  As defined in Section 10.7.

  
	
   

  	
   

  	
   

  
	
  “Buyer Designee”

  	
   

  	
  As defined in the Shareholders Agreement.

  
	
   

  	
   

  	
   

  
	
  “Buyer Exercise Notice”

  	
   

  	
  As defined in Section 3.1(a).

  
	
   

  	
   

  	
   

  
	
  “Buyer Incurred Damages”

  	
   

  	
  As defined in Section 6.1(a).

  
	
   

  	
   

  	
   

  
	
  “Buyer’s Specified Businesses”

  	
   

  	
  Any businesses of the Buyer to the extent engaged in treating or
  curing vision, ear or nose diseases or vision defects (including surgical
  equipment and instruments for all types of eye procedures and products for
  contact lens care).

  
	
   

  	
   

  	
   

  
	
  “Call Price”

  	
   

  	
  As defined in Section 3.2(b).

  
	
   

  	
   

  	
   

  
	
  “Change of Control”

  	
   

  	
  With respect to either of the Buyer or the Seller, the occurrence of
  any of the following: (i) the direct or indirect sale, transfer,
  conveyance or other disposition (other than by way of merger or
  consolidation), in one or a series of related transactions, of all or
  substantially all of the properties or assets of such Person to a Third
  Party; (ii) the adoption of a plan relating to the liquidation or
  dissolution of such Person; (iii) the consummation of any transaction
  (including any 

  



 


2

















 


	
   

  	
   

  	
  merger, consolidation or other business combination) the result of
  which is that (x) any Third Party becomes the Beneficial Owner of more
  than 50% of the voting power of such Person or (y) such Person’s
  shareholders immediately before such transaction Beneficially Own,
  immediately after consummation of such transaction, in the aggregate less
  than 50% of the voting power of the surviving or acquiring Person; or
  (iv) within any two-year period, a majority of the members of the board
  of directors (or similar governing body) of such Person are not Continuing
  Directors.

  
	
   

  	
   

  	
   

  
	
  “Code”

  	
   

  	
  The United States Internal Revenue Code of 1986, as amended.

  
	
   

  	
   

  	
   

  
	
  “Commissioner”

  	
   

  	
  As defined in Section 8.1(a).

  
	
   

  	
   

  	
   

  
	
  “Common Shares”

  	
   

  	
  Any common shares of the Company with a par value of CHF 0.20 per
  share, whether issued or not.

  
	
   

  	
   

  	
   

  
	
  “Company”

  	
   

  	
  As defined on the title page.

  
	
   

  	
   

  	
   

  
	
  “Company Employees”

  	
   

  	
  The employees of the Company or its Subsidiaries.

  
	
   

  	
   

  	
   

  
	
  “Company Employee Plan”

  	
   

  	
  Any Company Plan or Seller Plan which covers any current or former
  Company Employees.

  
	
   

  	
   

  	
   

  
	
  “Company Filed SEC Documents”

  	
   

  	
  As defined in Section 4.

  
	
   

  	
   

  	
   

  
	
  “Company Intellectual Property”

  	
   

  	
  All Intellectual Property owned or licensed by the Company or any of
  its Subsidiaries that is (i) registered or the subject of an application
  for registration or (ii) trademarks, trade names, brand names and domain
  names and in either case that is material to and used in the conduct of the
  business of the Company and its Subsidiaries, taken as a whole.

  
	
   

  	
   

  	
   

  
	
  “Company Know-How”

  	
   

  	
  All Know-How owned by the Company or any of its Subsidiaries that is
  material to and used in the conduct of the business of the Company and its
  Subsidiaries, taken as a whole.

  
	
   

  	
   

  	
   

  
	
  “Company Plan”

  	
   

  	
  Any Plan or portion thereof (including any liabilities thereof),
  solely covering employees of Company and its Subsidiaries.

  
	
   

  	
   

  	
   

  
	
  “Company SEC Documents”

  	
   

  	
  As defined in Section 4.19.

  



 


3

















 


	
  “Competition Act”

  	
   

  	
  As defined in Section 4.14.

  
	
   

  	
   

  	
   

  
	
  “Confidentiality Agreement”

  	
   

  	
  As defined in Section 10.1.

  
	
   

  	
   

  	
   

  
	
  “Continuing Directors”

  	
   

  	
  As of any date of determination, any member of the board of directors
  (or similar governing body) of a Person who: (i) was a member of such
  board of directors (or similar governing body) on the Signing Date or
  (ii) was nominated for election or elected to such board of directors
  (or similar governing body) with the approval of a majority of the Continuing
  Directors who were members of such board of directors (or similar governing
  body) at the time of such nomination or election (other than as a result of a
  counter-proposal or another proposal submitted, or requested or threatened to
  be submitted, to the shareholders’ meeting by a shareholder other than a
  member of the board of directors at the time of such nomination or election).

  
	
   

  	
   

  	
   

  
	
  “Daily VWAP”

  	
   

  	
  As defined in Section 3.2(b).

  
	
   

  	
   

  	
   

  
	
  “Encumbrance”

  	
   

  	
  Any security interest, pledge, hypothecation, mortgage or lien, other
  than any licenses of Intellectual Property.

  
	
   

  	
   

  	
   

  
	
  “Environmental Law”

  	
   

  	
  Any national, federal, state (including cantonal), provincial,
  municipal, county, city, local or similar statute, law, constitution,
  ordinance, regulation, rule, code, order, consent decree, directive or
  judgment, as in effect on the First Stage Closing Date or the Second Stage
  Closing Date, as applicable, relating to (i) the protection of the
  environment or natural resources (including air, water vapor, surface water,
  sediments, groundwater, drinking water supply, wastewater treatment, surface
  or subsurface land); or (ii) the exposure to, or the use, storage,
  recycling, treatment, generation, transportation, processing, handling,
  labeling, recycling, release or disposal of, Hazardous Substances.

  
	
   

  	
   

  	
   

  
	
  “Environmental Liabilities”

  	
   

  	
  Any claim, demand, order, suit, obligation, liability, cost
  (including the cost of any investigation, testing, compliance or remedial
  action), loss or expense (including reasonable and incurred attorney’s and
  consultant’s fees and expenses) arising out of, relating to or resulting 

  



 


4

















 


	
   

  	
   

  	
  from any Environmental Law or environmental, health or safety matter
  or condition, including natural resources, and related in any way to the
  Company or to this Agreement or its subject matter, in each case, whether
  arising or incurred before, at or after the First Stage Closing Date or the
  Second Stage Closing Date, as applicable.

  
	
   

  	
   

  	
   

  
	
  “Environmental Permits”

  	
   

  	
  Any permit, approval, license or other authorization required by a
  Governmental Authority under or issued by a Governmental Authority pursuant
  to any applicable Environmental Law.

  
	
   

  	
   

  	
   

  
	
  “European Commission”

  	
   

  	
  The Commission of the European Communities.

  
	
   

  	
   

  	
   

  
	
  “Event of Insolvency”

  	
   

  	
  With respect to a party, (i) the entry by a court of competent
  jurisdiction of a decree or order, unstayed on appeal or otherwise and in
  effect for 30 days, adjudicating such party bankrupt or insolvent;
  (ii) the entry by a court of competent jurisdiction of a decree or order
  appointing a receiver or liquidator or trustee of the party or of
  substantially all the property of the party, or approving as properly filed a
  petition seeking reorganization, arrangement, adjustment or composition of or
  in respect of the party under Title 11 or 12 of the Swiss SchKG, Title 11 of
  the United States Code or under any similar provision of any other Federal or
  state or non-United States bankruptcy or other similar statute, each as now
  constituted or as hereafter in effect; but only if and when such decree or
  order shall have continued unstayed on appeal or otherwise and in effect for
  60 days; or (iii) the filing by the party of a petition in voluntary
  bankruptcy under any of the provisions of any bankruptcy law (including
  petitions required by applicable corporate or other law, such as by art. 725
  para. 2 second sentence of the Swiss Code of Obligations); or the
  consenting by the party to the filing of any bankruptcy or reorganization
  petition against it under any such law; or (without limitation of the
  generality of the foregoing) any filing by the party of a petition seeking
  relief under Title 11 or 12 of the Swiss SchKG, Title 11 of the United States
  Code or under any similar provision of any other Federal or state or non-

  



 


5














 


	
   

  	
   

  	
  United States bankruptcy or other similar statute, each as now
  constituted or as hereafter in effect; or the making by the party of an
  assignment for the benefit of creditors; or the admitting in writing by the
  party of its inability to pay its debts generally as they become due; or the
  consenting by the party to the appointment of a receiver or liquidator or
  custodian or trustee of it or of substantially all its property.

  
	
   

  	
   

  	
   

  
	
  “Exchange Act”

  	
   

  	
  The U.S. Securities Exchange Act of 1934, as amended, and the
  rules and regulations promulgated thereunder.

  
	
   

  	
   

  	
   

  
	
  “Exercise Notice”

  	
   

  	
  As defined in Section 3.1(a).

  
	
   

  	
   

  	
   

  
	
  “Exercise Notice Date”

  	
   

  	
  As defined in Section 3.1(e).

  
	
   

  	
   

  	
   

  
	
  “Extraordinary Dividend Adjustment”

  	
   

  	
  An amount equal to the sum of (1) with respect to any Special
  Dividend paid by the Company on its Common Shares from (and including) the
  Signing Date to (and including) the Second Stage Closing Date, or declared by
  the Company with a record date during such period, an amount equal to
  (x) the per Common Share value of such Special Dividend on the date of
  declaration multiplied by (y) the aggregate number of Second
  Stage Shares plus (2) with respect to any Normal Dividend paid by
  the Company on its Common Shares from (and including) the Signing Date to
  (and including) the Second Stage Closing Date, or declared by the Company
  with a record date during such period, an amount equal to (x) the amount
  by which the per Common Share value of such Normal Dividend on the date of
  declaration exceeds fifty (50)% of the net earnings per Common Share of the
  Company, net of Material Extraordinary Items, for the fiscal year in respect
  of which such dividend was paid or declared, multiplied by
  (y) the aggregate number of Second Stage Shares.

  
	
   

  	
   

  	
   

  
	
  “FCPA”

  	
   

  	
  As defined in Section 4.17.

  
	
   

  	
   

  	
   

  
	
  “FDA”

  	
   

  	
  As defined in Section 4.18(a).

  
	
   

  	
   

  	
   

  
	
  “FDCA”

  	
   

  	
  As defined in Section 4.12.

  
	
   

  	
   

  	
   

  
	
  “Final Data Room”

  	
   

  	
  An electronic file (preserved in a permanent, read-only,
  write-protected data storage format commonly utilized by Merrill Corporation)
  that 

  



 


6

















 


	
   

  	
   

  	
  preserves the status and contents of the electronic data room
  pursuant to which documents and information relating to the Company and its
  Subsidiaries (other than documents and information contained in folders Z and
  R, which shall not be deemed to be part of the Final Data Room) were made
  available to the Buyer, its Affiliates, directors, officers or employees, as
  such electronic data room existed at 8:00 pm New York time on 4
  April 2008 (the “Data Room Cut-off Time”), which file shall
  be delivered to the parties as soon as practicable after the Data
  Room Cut-off Time.

  
	
   

  	
   

  	
   

  
	
  “First Stage Acquisition”

  	
   

  	
  As defined in Section 2.1.

  
	
   

  	
   

  	
   

  
	
  “First Stage Closing”

  	
   

  	
  As defined in Section 2.2.

  
	
   

  	
   

  	
   

  
	
  “First Stage Closing Date”

  	
   

  	
  As defined in Section 2.2.

  
	
   

  	
   

  	
   

  
	
  “First Stage Closing Date Amount”

  	
   

  	
  As defined in Section 2.3(b).

  
	
   

  	
   

  	
   

  
	
  “First Stage Damages”

  	
   

  	
  As defined in Section 6.1(c).

  
	
   

  	
   

  	
   

  
	
  “First Stage Deductible”

  	
   

  	
  As defined in Section 6.1(c).

  
	
   

  	
   

  	
   

  
	
  “First Stage Purchase Price”

  	
   

  	
  As defined in Section 2.1.

  
	
   

  	
   

  	
   

  
	
  “First Stage Shares”

  	
   

  	
  As defined in Section 2.1.

  
	
   

  	
   

  	
   

  
	
  “Governmental Authority”

  	
   

  	
  Any federal, national, state, local, cantonal, municipal,
  international or multinational government, governmental, regulatory or
  administrative authority, agency or commission, or any court, tribunal, or
  judicial or arbitral body of competent jurisdiction.

  
	
   

  	
   

  	
   

  
	
  “Governmental Permits”

  	
   

  	
  Any permit, approval, license or other authorization required by a
  Governmental Authority under or issued by a Governmental Authority pursuant
  to any applicable Legal Requirement, with the exception of Environmental
  Laws.

  
	
   

  	
   

  	
   

  
	
  “Hazardous Substance”

  	
   

  	
  Any waste, material, chemical or substance in any form that is
  regulated, controlled or defined as hazardous, toxic, or a pollutant under
  any applicable Environmental Law, including all materials regulated under any
  applicable Environmental Law as capable of causing harm or injury to human
  health or the environment, including oils, petroleum, polychlorinated 

  



 


7

















 


	
   

  	
   

  	
  biphenyls, petroleum products and constituents, and asbestos.

  
	
   

  	
   

  	
   

  
	
  “HSR Act”

  	
   

  	
  The U.S. Hart – Scott – Rodino Antitrust Improvements Act of 1976, as
  amended, and the rules and regulations promulgated thereunder.

  
	
   

  	
   

  	
   

  
	
  “Indemnified Party”

  	
   

  	
  As defined in Section 6.5(a).

  
	
   

  	
   

  	
   

  
	
  “Indemnifying Party”

  	
   

  	
  As defined in Section 6.5(a).

  
	
   

  	
   

  	
   

  
	
  “Intellectual Property”

  	
   

  	
  U.S., foreign and international (i) design and utility patents
  and patent applications (including all reexaminations, reissues, divisions,
  continuations, continuations-in-part, and extensions of any patent or patent
  application), industrial designs (registered and unregistered) and
  applications for registration of industrial designs, including all rights, to
  the extent permitted by applicable Legal Requirements, to file corresponding
  applications in any country in the world; (ii) copyrights (registered
  and unregistered), copyright applications, original works of authorship,
  design rights, design right registrations; (iii) registrations and
  applications for trademarks, service marks, trade dress, business names and
  trade names, assumed names, symbols, brand names, d/b/a’s, fictitious names,
  logos and product names whether registered, unregistered or existing at common
  law, including the goodwill associated therewith; (iv) registration and
  applications for domain names; and (v) software, data processing,
  communications, inventory management, website content, programs, program
  interfaces, object code, source code, other computer systems and all
  documentation relating to the foregoing.

  
	
   

  	
   

  	
   

  
	
  “Intellectual Property Agreements”

  	
   

  	
  Any agreement pursuant to which the Company or any of its
  Subsidiaries owns, or has developed or acquired, or licenses, any Company
  Intellectual Property.

  
	
   

  	
   

  	
   

  
	
  “IRS”

  	
   

  	
  The Internal Revenue Service of the United States.

  
	
   

  	
   

  	
   

  
	
  “Know-How”

  	
   

  	
  Each of the following items as they relate to the development,
  manufacturing, sale and distribution of the goods produced, distributed,
  marketed or sold by the Company and its 

  



 


8

















 


	
   

  	
   

  	
  Subsidiaries on the First Stage Closing Date or the Second Stage
  Closing Date, as applicable: all trade secrets, confidential or proprietary
  information, including all product composition data and specifications,
  recipes, packaging specifications, research and development data as well as
  purchasing and marketing data and procedures, customer lists, databases,
  technologies in development, instructions, formulae and information,
  manufacturing drawings, engineering drawings, manuals, designs, lab journals,
  notebooks, schematics, blue prints, research and development reports,
  technical information, design and engineering specifications, including those
  related to products under development.

  
	
   

  	
   

  	
   

  
	
  “Leased Real Property”

  	
   

  	
  Any parcel of real property leased or subleased and any other rights
  to use or occupy any land, buildings, structures, improvements, fixtures or
  other interests in real property held by the Company or its Subsidiaries that
  is material to the business of the Company and its Subsidiaries, taken as a
  whole.

  
	
   

  	
   

  	
   

  
	
  “Legal Requirement”

  	
   

  	
  Any federal, national, state (including cantonal), local,
  international, multinational or administrative order, law, ordinance,
  regulation, statute or treaty.

  
	
   

  	
   

  	
   

  
	
  “Liabilities”

  	
   

  	
  Any and all debts, liabilities and obligations, whether accrued or
  fixed, absolute or contingent, matured or unmatured or determined or
  determinable, including those arising under any Legal Requirement, Proceeding
  or any order, writ, judgment, injunction, decree, stipulation, determination
  or award entered by or with any Governmental Authority and those arising
  under any contract, agreement, arrangement, commitment or undertaking.

  
	
   

  	
   

  	
   

  
	
  “Loss”

  	
   

  	
  As defined in Section 6.1(a).

  
	
   

  	
   

  	
   

  
	
  “MAC Assertion Notice”

  	
   

  	
  As defined in Section 3.1(c).

  
	
   

  	
   

  	
   

  
	
  “MAC Determination Date”

  	
   

  	
  As defined in Section 3.1(c).

  
	
   

  	
   

  	
   

  
	
  “Material Adverse Change” or 

  “Material Adverse Effect”

  	
   

  	
  Any event, circumstance, change in or effect on the Company or its
  Subsidiaries that, individually or in the aggregate, is materially adverse to
  the 

  



 


9

















 


	
   

  	
   

  	
  results of operations or the financial condition of the Company and
  its Subsidiaries or their business, taken as a whole; provided, however,
  that the following events, circumstances, changes or effects shall not be
  taken into account in determining whether a “Material Adverse Change”
  or a “Material Adverse Effect” has occurred or could reasonably be
  expected to occur: (i) those fully and fairly disclosed to the Buyer by
  the Seller in the Final Data Room; (ii) those caused by, arising out of
  or attributable to the general political or economic environment or affecting
  the securities markets generally; (iii) those caused by, arising out of
  or attributable to the announcement of the sale of the First Stage Shares or
  the Second Stage Shares or the consummation of the transactions contemplated
  hereby and by the Shareholders Agreement; (iv) those that generally
  affect the industries in which the Company and its Subsidiaries operate
  (including legal and regulatory changes); (v) those caused by, arising
  out of or attributable to acts of terrorism or war (whether or not declared);
  or (vi) those caused by any action or inaction of the Seller, the Company
  or any of its Subsidiaries pursuant to or in accordance with this Agreement
  or the Shareholders Agreement or pursuant to a request or at the direction of
  the Buyer.

  
	
   

  	
   

  	
   

  
	
  “Material Contract”

  	
   

  	
  As defined in Section 4.6(a).

  
	
   

  	
   

  	
   

  
	
  “Material Extraordinary Items”

  	
   

  	
  Any extraordinary item within the meaning of APB 30.

  
	
   

  	
   

  	
   

  
	
  “Medical Product”

  	
   

  	
  As defined in Section 4.18(a).

  
	
   

  	
   

  	
   

  
	
  “Normal Dividend”

  	
   

  	
  The annual dividend from available earnings proposed at the Annual
  General Meeting of the Company and paid shortly thereafter following receipt
  of shareholder approval therefor.

  
	
   

  	
   

  	
   

  
	
  “One Week VWAP”

  	
   

  	
  As defined in Section 3.2(b).

  
	
   

  	
   

  	
   

  
	
  “Owned Real Property”

  	
   

  	
  Any parcel of real property owned by the Company or its Subsidiaries
  that is material to the business of the Company and its Subsidiaries, taken
  as a whole.

  
	
   

  	
   

  	
   

  
	
  “Permitted Encumbrances”

  	
   

  	
  Mechanics’, carriers’, workmen’s, repairmen’s, 

  



 


10

















 


	
   

  	
   

  	
  materialmen’s, maritime and statutory liens and rights in rem or
  other like liens arising or incurred in the ordinary course of business in
  respect of Liabilities which are not delinquent; liens for Taxes, assessments
  and charges and other claims not yet due and payable, or the validity of
  which are being contested in good faith; imperfections of title, liens,
  easements, covenants, rights of way or other restrictions on use the
  existence of which would not materially adversely affect the value of the
  relevant property or which do not materially impair the use of the property
  or asset subject thereto for its current purpose.

  
	
   

  	
   

  	
   

  
	
  “Person”

  	
   

  	
  Individuals or entities, including any corporation, limited liability
  company, joint venture, trust, body corporate (wherever located),
  unincorporated association, partnership or other entity.

  
	
   

  	
   

  	
   

  
	
  “Plan”

  	
   

  	
  Any employee benefit plan, scheme, program, agreement, arrangement,
  commitment, or understanding of any kind (written or unwritten), including
  any bonus, incentive, stock, stock option, phantom stock, equity-based
  compensation, deferred compensation, change in control, vacation, sick leave,
  retention, severance, salary continuation, defined benefit or defined
  contribution retirement, pension, savings, profit sharing, supplemental
  retirement, medical, dental, vision, life insurance, accident, disability,
  long-term care, retiree medical or other welfare or fringe benefit plan,
  scheme, or program (together with any trust, escrow or other agreement
  related thereto), and including any “employee benefit plan” as defined in
  Section 3(3) of ERISA.

  
	
   

  	
   

  	
   

  
	
  “Proceeding”

  	
   

  	
  Any action, suit, claim, inquiry or legal or administrative
  proceeding or arbitration or other alternative dispute resolution proceeding
  or formal investigation (whether civil, criminal or administrative) by or
  before any Governmental Authority.

  
	
   

  	
   

  	
   

  
	
  “Product Recall”

  	
   

  	
  As defined in Section 4.10(a).

  
	
   

  	
   

  	
   

  
	
  “Put Price”

  	
   

  	
  As defined in Section 3.2(b).

  
	
   

  	
   

  	
   

  
	
  “Real Property”

  	
   

  	
  Owned Real Property and Leased Real Property.

  



 


11

















 


	
  “SEC”

  	
   

  	
  The United States Securities and Exchange Commission.

  
	
   

  	
   

  	
   

  
	
  “Second Stage Acquisition”

  	
   

  	
  As defined in Section 3.2(a).

  
	
   

  	
   

  	
   

  
	
  “Second Stage Closing”

  	
   

  	
  As defined in Section 3.3.

  
	
   

  	
   

  	
   

  
	
  “Second Stage Closing Date”

  	
   

  	
  As defined in Section 3.3.

  
	
   

  	
   

  	
   

  
	
  “Second Stage Closing Date Amount”

  	
   

  	
  As defined in Section 3.4(b).

  
	
   

  	
   

  	
   

  
	
  “Second Stage Purchase Price”

  	
   

  	
  As defined in Section 3.2(b).

  
	
   

  	
   

  	
   

  
	
  “Second Stage Shares”

  	
   

  	
  As defined in Section 3.2(a).

  
	
   

  	
   

  	
   

  
	
  “Securities Act”

  	
   

  	
  The U.S. Securities Act of 1933, as amended, and the rules and
  regulations promulgated thereunder.

  
	
   

  	
   

  	
   

  
	
  “Seller”

  	
   

  	
  As defined on the title page.

  
	
   

  	
   

  	
   

  
	
  “Seller Disclosure Letter”

  	
   

  	
  As defined in Section 4.

  
	
   

  	
   

  	
   

  
	
  “Seller Exercise Notice”

  	
   

  	
  As defined in Section 3.1(a).

  
	
   

  	
   

  	
   

  
	
  “Seller Designee”

  	
   

  	
  As defined in the Shareholders Agreement.

  
	
   

  	
   

  	
   

  
	
  “Seller Incurred Damages”

  	
   

  	
  As defined in Section 6.2(a).

  
	
   

  	
   

  	
   

  
	
  “Seller’s Pension Fund”

  	
   

  	
  Any pension institutions or funds substantially related to the Seller
  or any of its Affiliates (including any pension institution or fund whose
  legal purpose is set up to provide pension benefits to employees of the
  Seller or any of its Affiliates, or whose governing body is composed, to a
  substantial part, of employer’s representatives nominated by the Seller or
  its Affiliates (besides any possible employees’ representatives)).

  
	
   

  	
   

  	
   

  
	
  “Seller Plan”

  	
   

  	
  Any Plan that Seller or any of its Subsidiaries has sponsored,
  maintained or been required to contribute to for the benefit of any current
  or former employees, directors or consultants of Seller or any of its
  Subsidiaries, and their predecessors, and with respect to which Seller or any
  of its Subsidiaries has any Liability (whether known or unknown and whether
  accrued, absolute, contingent or otherwise).

  
	
   

  	
   

  	
   

  
	
  “Seller’s Knowledge”

  	
   

  	
  The actual knowledge of the Persons listed in
  Section 1.1(a) of the Seller Disclosure Letter after due inquiry of
  the individuals listed on Section 1.1(b) of the Seller Disclosure
  Letter.

  
	
   

  	
   

  	
   

  
	
  “Shareholders Agreement”

  	
   

  	
  As defined in the Preamble.

  



 


12

















 


	
  “Shared Arrangements”

  	
   

  	
  All agreements and arrangements between the Seller or any of its
  Affiliates (other than the Company and its Subsidiaries), or with a Seller’s
  Pension Fund, on the one hand, and the Company or any of its Subsidiaries, on
  the other hand

  
	
   

  	
   

  	
   

  
	
  “Shared Site Agreement”

  	
   

  	
  Any written agreement between the Seller and its Affiliates (other
  than the Company and its Subsidiaries), on the one hand, and the Company and
  its Subsidiaries, on the other hand, providing for arrangements pursuant to
  which sites in Brazil, Norway and South Africa are shared between the Seller
  or its applicable Subsidiary (other than the Company and its Subsidiaries),
  on the one hand and the Company or its applicable Subsidiary, on the other
  hand; provided that, in the case of any such written agreement that is
  a real property lease, a true and complete copy of such lease is in the Final
  Data Room.

  
	
   

  	
   

  	
   

  
	
  “Shares”

  	
   

  	
  As defined in Section 4.2.

  
	
   

  	
   

  	
   

  
	
  “Significant Countries”

  	
   

  	
  Switzerland, the United States, Japan, France, Spain, Canada,
  Germany, Brazil, Italy, the United Kingdom, Australia and Mexico.

  
	
   

  	
   

  	
   

  
	
  “Significant Subsidiaries”

  	
   

  	
  As defined in Rule 1-02(w) of Regulation S-X of the
  Securities Act.

  
	
   

  	
   

  	
   

  
	
  “Signing Date”

  	
   

  	
  6 April 2008, being the date of the execution and delivery of
  this Agreement by the parties hereto.

  
	
   

  	
   

  	
   

  
	
  “Single Source Supply Contracts”

  	
   

  	
  All contracts related to the single source supply arrangements
  referred to on page 34 of the Company’s annual report on Form 20-F
  for the year ended 31 December 2007.

  
	
   

  	
   

  	
   

  
	
  “SOX”

  	
   

  	
  The U.S. Sarbanes-Oxley Act of 2002, as amended, and the
  rules and regulations promulgated thereunder.

  
	
   

  	
   

  	
   

  
	
  “Special Arbitration Procedure”

  	
   

  	
  Expedited arbitration procedure to be determined by mutual agreement
  of the parties hereto as promptly as reasonably practicable after the Signing
  Date and embodying the following principles: (a) the arbitration
  tribunal shall be composed of three arbitrators, (b) the parties shall
  use their reasonable best efforts to cause all of the following actions in
  this clause (b) to be completed within fourteen (14) calendar days after
  receipt of a notice demanding arbitration 

  



 


13

















 


	
   

  	
   

  	
  under the procedure as follows: each party hereto shall select one
  arbitrator and such two arbitrators shall select a third arbitrator, in each
  case, from a list of ten potential arbitrators that shall be agreed to by the
  parties hereto as promptly as reasonably practicable after the Signing Date
  (or, if the number of such potential arbitrators that are then available is less
  than three, any other unconflicted individual selected by the applicable
  party or by such two arbitrators, as applicable), (c) the parties hereto
  shall use their reasonable best efforts to cause and enable the arbitration
  tribunal to reach a decision on the applicable disagreement or dispute by no
  later than the date that is one hundred and thirty five (135) calendar days
  after the arbitration tribunal has been selected (and in any event the
  arbitration tribunal shall reach a decision by no later than the date that is
  one hundred and sixty-six (166) calendar days after the arbitration tribunal
  has been selected), (d) the decision of the arbitration tribunal shall
  be final and non-appealable by the parties hereto, (e) any arbitration
  under the procedure shall be conducted in English and shall be held in
  Zurich, Switzerland and (f) to the extent not inconsistent with clauses
  (a) through (e) above, the procedure shall be pursuant to
  Article 42 of the Swiss Rules of International Arbitration and
  otherwise in accordance with the Swiss Rules of International
  Arbitration of the Swiss Chambers of Commerce.

  
	
   

  	
   

  	
   

  
	
  “Special Dividend”

  	
   

  	
  Any dividend, distribution or similar payment to shareholders of the
  Company (including a capital reduction payment), other than a Normal
  Dividend.

  
	
   

  	
   

  	
   

  
	
  “Special Notice Procedure”

  	
   

  	
  A procedure to be agreed by the parties as promptly as practicable
  following the First Closing Date that will provide for secure and confirmed
  receipt by an independent Third Party of any Exercise Notice delivered
  pursuant to Section 3.1.

  
	
   

  	
   

  	
   

  
	
  “Specified Leases”

  	
   

  	
  The leases listed in Section 1.1(c) of the Seller
  Disclosure Letter.

  
	
   

  	
   

  	
   

  
	
  “Subsidiary”

  	
   

  	
  With respect to any Person, any corporation, partnership, joint
  venture or other legal entity of 

  



 


14

















 


	
   

  	
   

  	
  which such Person (either alone or together with any other
  subsidiary) owns, directly or indirectly, more than fifty percent (50%) of
  the capital stock (or equivalent), the holders of which are generally
  entitled to vote for the election of the board of directors or other
  governing body of such corporation, partnership, joint venture or other legal
  entity.

  
	
   

  	
   

  	
   

  
	
  “Supplemental Disclosure Date”

  	
   

  	
  As defined in Section 4.6(a).

  
	
   

  	
   

  	
   

  
	
  “Swiss IP Ownership %”

  	
   

  	
  As defined in Section 4.9(i).

  
	
   

  	
   

  	
   

  
	
  “Swiss Code of Obligations”

  	
   

  	
  Bundesgesetz betreffend die
  Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil:
  Obligationenrecht) vom 30, März 1911 (SR 220), as amended.

  
	
   

  	
   

  	
   

  
	
  “Swiss SchKG”

  	
   

  	
  Schweizerisches Bundesgesetz über
  Schuldbetreibung und Konkurs vom 11, April 1889 (SR 281.1), as amended.

  
	
   

  	
   

  	
   

  
	
  “Tax” or “Taxes”

  	
   

  	
  All taxes, duties, levies or imposts imposed by any Governmental
  Authority on or with respect to any income (including capital gains),
  capital, gross receipts, payroll, employment, excise, severance, stamp,
  occupation, premium, windfall profits, environmental (including taxes under
  Code §59A), customs duties, capital stock, franchise, profits, withholding,
  social security (or similar), unemployment, disability, workers’
  compensation, property (including real property and personal property),
  sales, use, transfer, registration or value-added taxes, stamp duties,
  alternative or add-on minimum, estimated, or other tax of any kind
  whatsoever, whether computed on a separate or consolidated, unitary or
  combined basis or in any other manner, including any interest, penalty,
  surcharge, fine or addition thereto.

  
	
   

  	
   

  	
   

  
	
  “Tax Returns”

  	
   

  	
  Any and all filings, returns, reports and forms required to be filed
  with a Governmental Authority with respect to Taxes.

  
	
   

  	
   

  	
   

  
	
  “Third Party”

  	
   

  	
  With respect to any specified Person, any other Person who is not an
  Affiliate of such specified Person.

  
	
   

  	
   

  	
   

  
	
  “2007 Financial Statements”

  	
   

  	
  As defined in Section 4.5(a).

  



 


15














 


	
  “U.S.$”

  	
   

  	
  The valid currency of the United States of America.

  



 


Section 1.2         Interpretation.  Except to the extent
that the context otherwise, requires:


 


(i)            when
a reference is made in this Agreement to an Article or Section, such
reference is to an Article or Section of this Agreement unless
otherwise indicated;


 


(ii)           the
table of contents and headings for this Agreement are for reference purposes
only and do not affect in any way the meaning or interpretation of this
Agreement;


 


(iii)          whenever
the words “include”, “includes” or “including” are used in this Agreement, they
are deemed to be followed by the words “without limitation”;


 


(iv)          the
words “hereof”, “herein” and “hereunder” and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement;


 


(v)           all
terms defined in this Agreement have the defined meaning when used in any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;


 


(vi)          the
use of “or” is not intended to be exclusive unless expressly indicated
otherwise;


 


(vii)         references
to “this Agreement” shall include the Seller Disclosure Letter;


 


(viii)        references
to “the transactions contemplated by this Agreement” shall include the
consummation of each of the First Stage Acquisition and the Second Stage
Acquisition; and


 


(ix)          the thresholds, de minimis provisions and
deductibles contained in Section 4.6, 4.10 and Article 6 hereof are
specifically negotiated provisions relevant only in the context of those
provisions and do not affect in any way the meaning or interpretation of other
provisions of this Agreement and in particular are not indicative of any
agreement between the parties as to the definition of “materiality” “Material
Adverse Change”, “Material Adverse Effect” or comparable provisions in this
Agreement, which, depending on the circumstances, could be greater or less than
those amounts.


 


16

















 


ARTICLE 2.       FIRST STAGE ACQUISITION


 


Section 2.1         Sale and Purchase of the
First Stage Shares


 


Subject to and in accordance with the terms and conditions of this
Agreement, at the First Stage Closing the Seller shall sell, transfer and
deliver to the Buyer, and the Buyer shall purchase from the Seller, 74,061,237
Common Shares (the “First Stage Shares”), free and clear of all
Encumbrances, for an aggregate purchase price equal to U.S.$ 10,603,962,009
(the “First Stage Purchase Price”), payable and subject to adjustment as
provided in Sections 2.2 and 2.3(b).  The
purchase and sale of the First Stage Shares is referred to in this Agreement as
the “First Stage Acquisition”.


 


Section 2.2         First Stage Closing Date


 


The closing of the First Stage Acquisition (the “First Stage Closing”)
shall take place at the offices of the Seller, avenue Nestlé 55, CH-1800 Vevey,
Switzerland, on the second Business Day following the satisfaction (or, to the
extent permitted, the waiver) of the conditions set forth in Section 8.1,
or, if on such day any condition set forth in Section 8.2 or 8.3 has not
been satisfied (or, to the extent permitted, waived by the party entitled to
the benefit thereof), as soon as practicable after all the conditions set forth
in Article 8 have been satisfied (or, to the extent permitted, waived by
the parties entitled to the benefits thereof), or at such other place, time and
date as shall be agreed between the Seller and the Buyer; provided, however,
that if all the conditions set forth in Article 8 shall have been
satisfied (or, to the extent permitted, waived by the party entitled to the
benefit thereof) prior to 6 May 2008, then the obligations of the Buyer
and the Seller to consummate the First Stage Closing shall be automatically
suspended until 6 May 2008.  The
date on which the First Stage Closing occurs is referred to in this Agreement
as the “First Stage Closing Date”.


 


Section 2.3         Transactions To be
Effected at the First Stage Closing


 


At the First Stage Closing:


 


(a)           The
Seller shall deliver to the Buyer (i) declaration of assignment to
transfer the ownership of the First Stage Shares from the Seller to the Buyer
and (ii) evidence reasonably satisfactory to the Buyer that the First
Stage Shares have been transferred with full voting rights from the Seller to
the Buyer.


 


(b)           The
Buyer shall deliver to the Seller payment, by wire transfer to a bank account
designated in writing by Seller (such designation to be made at least two
Business Days prior to the date on which the First Stage Closing shall occur),
of immediately available funds in an amount equal to (i) the First Stage
Purchase Price, minus (ii) an amount equal to (x) the per
share value of any dividends (or any other distribution with an equivalent


 


17

















 


economic effect)
paid by the Company with respect to its Common Shares during the period from 6 April 2008
to the First Stage Closing Date, or declared by the Company with a record date
during such period, multiplied by (y) the aggregate number of First
Stage Shares (the First Stage Purchase Price, minus any such amount, being
hereinafter called the “First Stage Closing Date Amount”).


 


(c)           Notwithstanding
the foregoing, if between the Signing Date and the First Stage Closing Date the
number of outstanding Common Shares shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination, spin-off
or exchange of shares, or any similar event shall have occurred, then any
number or amount contained herein that is based upon the number of First Stage
Shares will be appropriately adjusted to provide to the Buyer and the Seller
the same economic effect as contemplated by this Agreement prior to such event
and, without limiting the generality of the foregoing, the definition of “First
Stage Shares” shall be deemed to include any shares into which the Common
Shares shall have been converted, any shares exchanged for Common Shares and
any shares distributed in respect of the Common Shares.  If the Company shall offer or issue rights or
warrants to all holders of Common Shares entitling them to subscribe for or
purchase Common Shares at a price per share less than the current market price
on the date fixed for determination of shareholders entitled to receive such
rights or warrants, the First Stage Purchase Price shall be adjusted by
multiplying it by a fraction, the numerator of which shall be the number of
Common Shares outstanding on the record date plus the number of Common Shares
that the aggregate offering price would purchase at such current market price
and the denominator of which shall be the number of Common Shares outstanding
on the record date plus the number of Common Shares subject to the rights or
warrants for subscription or purchase.


 


ARTICLE 3.       SECOND STAGE ACQUISITION


 


Section 3.1         Put/Call Option


 


(a)           Subject
to Sections 3.1(b) and 3.1(d), on any Business Day during the period
beginning on 1 January 2010 and ending on 31 July 2011, (x) the
Buyer may deliver written notice to the Seller of its intent to purchase from
the Seller the Second Stage Shares (such notice, a “Buyer Exercise Notice”)
or (y) the Seller may deliver written notice to the Buyer of its intent to
sell to the Buyer the Second Stage Shares (such notice, a “Seller Exercise
Notice”).  A Buyer Exercise Notice
and a Seller Exercise Notice are each sometimes herein referred to as an “Exercise
Notice”).


 


18

















 


(b)           In
the event of a Change of Control of either the Buyer or the Seller prior to 1 January 2010,
then the Buyer (in the case of a Change of Control of the Seller) or the Seller
(in the case of a Change of Control of the Buyer) shall thereafter be entitled,
for a period of 90 days after the occurrence of such Change of Control, to
deliver an Exercise Notice to the other party.


 


(c)            If
the Buyer determines that a Material Adverse Change has occurred, it may notify
the Seller in writing, which notice shall set forth the facts and circumstances
on which such a determination is based (such notice, a “MAC Assertion Notice”).  The Seller shall have a period of ten
Business Days after receipt of a MAC Assertion Notice to notify the Buyer in
writing that it accepts, or disagrees with, the Buyer’s determination that such
a Material Adverse Change has occurred. 
If the Seller disagrees with the Buyer’s determination that such a
Material Adverse Change has occurred or fails to answer such MAC Assertion
Notice within such ten Business Day period, the Buyer may commence the Special
Arbitration Procedure by providing written notice to that effect to the Seller,
and upon the Seller’s receipt of such notice, the Special Arbitration Procedure
shall be applied to resolve such disagreement. 
The earlier of the time, if any, (i) at which the parties agree in
writing that such a Material Adverse Change has occurred or (ii) it is
determined that such a Material Adverse Change has occurred pursuant to the
Special Arbitration Procedure is referred to herein as the “MAC Determination
Date”.


 


(d)            If a MAC Determination Date occurs prior to
1 January 2010, the Buyer shall be entitled to deliver a Buyer Exercise
Notice until the later of (x) one hundred and eighty (180) days from the
Seller’s receipt of the MAC Assertion Notice and (y) the tenth day
following the MAC Determination Date, and immediately upon the expiry of the
period referred to in this clause (d) the Buyer’s right to deliver a Buyer
Exercise Notice pursuant to this Section 3.1(d) (but not pursuant to Section 3.1(a))
shall automatically terminate.


 


(e)            Each Exercise Notice shall be
irrevocable.  In the event that both a
Buyer Exercise Notice and a Seller Exercise Notice are delivered pursuant to
Sections 3.1(a) and 10.4, then for all purposes of this Agreement the Exercise
Notice received and confirmed in accordance with Section 10.4 first in
time shall be deemed to be the only Exercise Notice given.  The date on which an Exercise Notice is first
properly delivered hereunder is referred to as the “Exercise Notice Date.”  Any Exercise Notice delivered in
contravention of this Section 3.1 shall be null and void.


 


(f)            From
and after the MAC Determination Date, the Seller’s right to deliver a Seller
Exercise Notice pursuant to this Section 3.1 shall automatically
terminate.


 


19

















 


Section 3.2         Sale and Purchase of
Second Stage Shares


 


(a)           Subject to and in accordance with the terms
and conditions of this Agreement, following delivery of an Exercise Notice in
accordance with Section 3.1, the Seller shall sell, transfer and deliver
to the Buyer, and the Buyer shall purchase from the Seller, all of the Common
Shares Beneficially Owned by the Seller at the Second Stage Closing (the “Second
Stage Shares”), free and clear of all Encumbrances, for an aggregate
purchase price equal to the Second Stage Purchase Price, payable and subject to
adjustment as provided in Sections 3.3 and 3.4.  The purchase and sale of the Second Stage
Shares is referred to in this Agreement as the “Second Stage Acquisition”.


 


(b)           As used in this Agreement:


 


“Adjusted One Week VWAP” means the
product of (A) the One Week VWAP multiplied by (B) 1.2047.


 


“Call Price” means an amount equal to (A) the
product of (I) the number of Second Stage Shares minus 4,088,485, multiplied
by (II) U.S.$ 181.00, plus (B) 4,088,485 multiplied by
$143.1783, plus (C) (if the Second Stage Closing Date is after 1 January 2010)
interest accrued on the sum of the amounts calculated pursuant to subparts (A) and
(B) at a rate per annum of
1.45%, calculated on the basis of a 360-day year, for the period from (and
including) 1 January 2010 to (but excluding) the Second Stage Closing
Date.


 


“Daily VWAP” means, for any trading
day, the volume weighted average price of one Common Share for such trading day
as reported by Bloomberg L.P. for Common Shares on the New York Stock Exchange.


 


“One Week VWAP” means, as of any day,
the average of the Daily VWAPs for each of the five trading days ending on (and
including) the trading day immediately prior to such day, weighted by the total
volume of trading in Common Shares on each such trading day.


 


“Put Price” means the lesser of (A) the
sum of (x) the product of (I) the number of Second Stage Shares minus
4,088,485, multiplied by (II) the Adjusted One Week VWAP,
calculated as of the date on which the Seller Exercise Notice was delivered,
and (y) the product of (I) 4,088,485 multiplied by  (II) $143.1783, and (B) the Call
Price.


 


“Second Stage Purchase Price” means (x) in
the event a Seller Exercise Notice shall have been delivered, the Put Price and
(y) in the event a Buyer Exercise Notice shall have been delivered, the
Call Price.


 


20

















 


Section 3.3         Second Stage Closing Date


 


The closing of the Second Stage Acquisition (the “Second Stage
Closing”) shall take place at the offices of the Seller, avenue Nestlé 55,
CH-1800 Vevey, Switzerland, on the second Business Day following the
satisfaction (or, to the extent permitted, the waiver) of the conditions set
forth in Section 9.1, or, if on such day any condition set forth in Section 9.2
or 9.3 has not been satisfied (or, to the extent permitted, waived by the party
entitled to the benefit thereof), as soon as practicable after all the
conditions set forth in Article 9 have been satisfied (or, to the extent
permitted, waived by the parties entitled to the benefits thereof), or at such
other place, time and date as shall be agreed between the Seller and the Buyer;
provided, however, that if all the conditions set forth in Article 9
shall have been satisfied (or, to the extent permitted, waived by the party
entitled to the benefit thereof) prior to the date that is 30 days after the
Exercise Notice Date, then the obligations of the Buyer and the Seller to
consummate the Second Stage Closing shall be automatically suspended until such
30th day (or if such 30th day is not a Business Day, the next Business
Day).  The date on which the Second Stage
Closing occurs is referred to in this Agreement as the “Second Stage Closing
Date”.


 


Section 3.4         Transactions to be
Effected at the Second Stage Closing


 


At the Second Stage Closing:


 


(a)           The Seller shall deliver to the Buyer (i) a
declaration of assignment to transfer the ownership of the Second Stage Shares
from the Seller to the Buyer and (ii) evidence reasonably satisfactory to
the Buyer that the Second Stage Shares have been transferred with full voting
rights from the Seller to the Buyer.


 


(b)           The Buyer shall deliver to the Seller
payment, by wire transfer to a bank account designated in writing by Seller
(such designation to be made at least two Business Days prior to the date on
which the Second Stage Closing shall occur), of immediately available funds in
an amount equal to (i) the Second Stage Purchase Price, minus (ii) any
Extraordinary Dividend Adjustment (the Second Stage Purchase Price, minus any
such Extraordinary Dividend Adjustment, being hereinafter called the “Second
Stage Closing Date Amount”).


 


(c)           Notwithstanding the foregoing, if between
the First Stage Closing Date and the Second Stage Closing Date the number of
outstanding Common Shares shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, spin-off or exchange of
shares, or any similar event shall have occurred, then any number or amount
contained herein that is based upon the number of Second Stage Shares will be
appropriately adjusted to provide to the Buyer and the Seller the same economic
effect as contemplated by this Agreement prior to such event and, without
limiting the generality of the foregoing, the


 


21

















 


definition of “Second Stage Shares” shall be deemed to include any
shares into which the Common Shares shall have been converted, any shares
exchanged for Common Shares and any shares distributed in respect of the Common
Shares.  If the Company shall offer or
issue rights or warrants to all holders of Common Shares entitling them to subscribe
for or purchase Common Shares at a price per share less than the current market
price on the date fixed for determination of shareholders entitled to receive
such rights or warrants, the Second Stage Purchase Price shall be adjusted by
multiplying it by a fraction, the numerator of which shall be the number of
Common Shares outstanding on the record date plus the number of Common Shares
that the aggregate offering price would purchase at such current market price
and the denominator of which shall be the number of Common Shares outstanding
on the record date plus the number of Common Shares subject to the rights or
warrants for subscription or purchase.


 


ARTICLE 4.       REPRESENTATIONS AND
WARRANTIES OF THE SELLER


 


Except (i) as disclosed in any report, schedule, form, statement
or other document (including exhibits and other information incorporated
therein) required to be filed (or furnished) by the Company or any of its
Subsidiaries with the SEC under the Securities Act, the Exchange Act or SOX
with respect to any fiscal period ending after 1 January 2006, or with
respect to any development, event or state of facts occurring since 1 January 2006,
or in any document filed (or furnished) since 1 January 2006 by the
Company with the SEC on a voluntary basis, and in each case publicly available (x) in
respect of the First Stage Acquisition, prior to the Business Day preceding the
Signing Date and (y) in respect of the Second Stage Acquisition, prior to
the Business Day preceding the Second Stage Closing Date (the “Company Filed
SEC Documents”); provided, however, that with respect to the
Second Stage Acquisition, any disclosure made pursuant to this clause (i) that
would not be permitted to be included in an update of the Seller Disclosure
Letter (as defined below) pursuant to Section 7.7 and clause (ii) below
shall not be given any effect, (ii) as set forth in the disclosure letter
(with reference to the particular Section or subsection of this Agreement
to which the information set forth in such disclosure letter relates; provided,
however, that any information set forth in one section of such
disclosure letter shall be deemed to apply to each other Section or
subsection thereof to which its relevance is reasonably apparent on its face) (x) in
respect of the First Stage Acquisition, delivered by the Seller to the Buyer
prior to the execution of this Agreement and (y) in respect of the Second
Stage Acquisition, as updated from time to time by the Seller pursuant to and
in accordance with Section 7.7 prior to the  Second Stage Closing Date (as delivered, and
as so updated, the “Seller Disclosure Letter”) or (iii) as fully
and fairly disclosed in writing in the documents or other materials contained
in the Final Data Room, the Seller hereby represents and warrants to the Buyer
as of the Signing Date and, as applicable, as of the First Stage Closing Date
and the Second Stage Closing Date (except to the extent expressly made as of an
earlier date, in which case as of such date) as follows:


 


22

















 


Section 4.1         Organization and
Authority of the Seller and the Company


 


(a)           The
Seller is a corporation duly organized and validly existing under the laws of
Switzerland and has all necessary corporate power and authority to enter into
this Agreement and the Shareholders Agreement, and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.  The execution and delivery
of this Agreement and the Shareholders Agreement by the Seller, the performance
by the Seller of its obligations hereunder and thereunder and the consummation
by the Seller of the transactions contemplated hereby and thereby have been
duly authorized by all requisite corporate action on the part of the Seller.


 


(b)           Each
of this Agreement and the Shareholders Agreement has been duly executed and
delivered by the Seller and (assuming due authorization, execution and delivery
by the Buyer) constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with their respective terms.


 


(c)           To
the Seller’s Knowledge, the Company is duly organized, validly existing under
the laws of Switzerland and has the necessary corporate power and authority to
own its assets and properties and carry on its business as currently conducted,
except where the failure to be so organized or existing would not (i) adversely
affect the ability of the Seller to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement and the
Shareholders Agreement or (ii) materially adversely affect the ability of
the Company to conduct its business as it is currently conducted.


 


(d)           To
the Seller’s Knowledge, each Significant Subsidiary of the Company as set forth
in Section 4.1(d) of the Seller Disclosure Schedule is duly
incorporated and validly existing under the laws of their respective
jurisdiction of incorporation.  To the
Seller’s Knowledge, the Company, directly or indirectly, owns all the shares in
each such Significant Subsidiary, free and clear of any Encumbrances; all such
shares are validly issued and fully paid up to their par value.


 


Section 4.2         Ownership of the Shares


 


As of the Signing Date and as of the First Stage Closing Date, the
Seller owns beneficially and of record the First Stage Shares, and as of the
Signing Date and as of the Second Stage Closing Date, the Seller owns
beneficially and of record the Second Stage Shares, in each case, free and
clear of all Encumbrances.  The First
Stage Shares and the Second Stage Shares (together, the “Shares”) are
validly issued, fully paid and non-assessable and were not (and will not be, as
applicable) issued in violation of any preemptive rights.  As of the Signing Date, neither the Seller
nor any of its Affiliates holds or owns any options, warrants,


 


23

















 


agreements, conversion rights, exchange rights, preemptive rights or
other rights, whether contingent or not, to subscribe for, purchase or acquire
any issued or unissued Common Shares (or any other shares of the Company).  Except for the Shareholders Agreement, there
are (i) no voting trusts, shareholder agreements, proxies or other
agreements in effect with respect to the voting or transfer of the Shares and (ii) no
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments relating to the Shares or any other securities of
the Company obligating the Seller, or any of the Seller’s Affiliates to issue,
sell, purchase, redeem or otherwise acquire any equity interest in the Company.


 


Section 4.3         No Conflict


 


Assuming that all consents, approvals, authorizations and other actions
described or listed in Sections 4.6(b) and 4.14 of this Agreement or the
Seller Disclosure Letter have been obtained, all filings and notifications
described or listed in Section 4.14 of this Agreement or the Seller
Disclosure Letter have been made and any applicable waiting period has expired
or been terminated, and except as may result from any facts or circumstances
relating solely to the Buyer or any of its Affiliates, neither the execution or
delivery by the Seller of this Agreement or the Shareholders Agreement, or the
performance by the Seller of its obligations under this Agreement or the
Shareholders Agreement, or the consummation of the transactions contemplated
hereby or thereby will (a) result in any breach of any provision of the
articles of association, organizational regulations, certificate or articles of
incorporation or by-laws (or other similar organizational documents) of the
Seller, the Company or any Subsidiary of the Company, (b) result in any
material breach of, or constitute a default under, any Material Contract or
order or judgment to which the Seller, the Company or any Subsidiary of the
Company is a party or by which it is bound or (c) violate any applicable
material Legal Requirement, other than such breaches, defaults or violations
that would not, in the case of clause (b), (i) materially and adversely
affect the ability of the Seller to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement and the
Shareholders Agreement or (ii) otherwise have a Material Adverse Effect.


 


Section 4.4         Capital Stock of the
Company


 


As of 4 April 2008, (i) the Company has an authorized
share capital (i.e. the share capital and the conditional capital registered in
the commercial register of Zug) of 328,955,000 Common Shares, (ii) 298,083,424
Common Shares are issued and outstanding, (iii) 13,800,664  Common Shares are held by the Company in
its treasury and (iv) there were 14,778,976  Common Shares underlying outstanding stock options,
share-settled SARs, restricted share units and share-settled performance units,
in each case issued under the Company’s 2002 Incentive Plan.


 


24

















 


Section 4.5         Financial Statements;
Other Liabilities


 


(a)           Section 4.5(a) of
the Seller Disclosure Letter contains the audited balance sheets of the Company
and its Subsidiaries as of 31 December 2007 and 2006, and the related
consolidated statements of earnings, shareholders’ equity and comprehensive
income, and cash flows for each of the years in the three-year period ended 31 December 2007
(the “2007 Financial Statements”).


 


(b)           The
2007 Financial Statements (i) comply as to form in all material respects
with the published rules and regulations of the SEC, (ii) were
prepared in conformity with U.S. generally accepted accounting principles
consistently applied and in accordance with the books of account and other
financial records of the Company and its Subsidiaries (except in each case as
may be indicated in the notes thereto) and (iii) present fairly, in all
material respects, the consolidated financial position and the consolidated
results of operations of the Company and its Subsidiaries as of the dates
thereof or for the periods covered thereby.


 


(c)           As
of the date of the 2007 Financial Statements, except as disclosed in the notes
to the 2007 Financial Statements, there was no material “off-balance sheet”
financial indebtedness relating to the business of the Company and its
Subsidiaries.  Neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that, individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.


 


Section 4.6         Agreements


 


(a)           Section 4.6(a) of
the Seller Disclosure Letter lists, as of the Signing Date or as of the date of
the most recent update delivered to the Seller Disclosure Letter pursuant to Section 7.7
(such date, the “Supplemental Disclosure Date”) all material
distribution contracts, leases, supply and Third Party manufacturing contracts,
joint venture, partnership and shareholder agreements, debt agreements,
guarantees and related security agreements, non-competition contracts, asset
purchase agreements, settlement agreements and other material agreements of the
Company and its Subsidiaries (collectively the “Material Contracts”).  For purposes of this Section 4.6,
“material” means:


 


(i)            Third
Party distribution contracts with an annual payment or financial commitment, on
an individual basis, exceeding U.S.$ 80,000,000;


 


(ii)           leases
of personal property with an annual payment, on an individual basis, exceeding
U.S.$ 25,000,000;


 


25














 


(iii)                            supply
and Third Party manufacturing contracts and binding purchase or sale
commitments with a total annual payment or financial commitment, on an
individual basis, exceeding U.S.$ 80,000,000;


 


(iv)                           all
joint venture, partnership and stockholder agreements that involve a sharing of
profits, losses, costs or liabilities with a Third Party irrespective of the
value of the contract;


 


(v)                               agreements
under which the Company or any of its Subsidiaries has incurred, assumed or
guaranteed any indebtedness for borrowed money, sale and leaseback agreements
and factoring agreements and related security agreements, on an individual
basis, exceeding U.S.$ 50,000,000;


 


(vi)                            contracts
or commitments restricting the Company or any of its Subsidiaries from engaging
in or competing in any line of business;


 


(vii)                        agreements
for the sale or purchase of any assets of the Company or its Subsidiaries other
than in the ordinary course of business, or for the grant of any options or
preferential rights to purchase any assets, property or rights of the Company
or its Subsidiaries (other than inventory), in each case, for consideration in
excess of U.S.$ 80,000,000 or under which the Company or any of its
Subsidiaries has any continuing obligation;


 


(viii)                     research
and development agreements with total annual payments or financial commitments,
on an individual basis, exceeding U.S.$ 25,000,000;


 


(ix)                             material
license agreements pursuant to which the Seller, the Company, any Subsidiary of
the Company or any Affiliate of the Seller licenses any Intellectual Property
to or from any Third Party, which Intellectual Property is used exclusively in
the conduct of the business of the Company and its Subsidiaries;


 


(x)                                material
settlement agreements with respect to disputes concerning Intellectual
Property;


 


(xi)                             Single
Source Supply Contracts;


 


(xii)                          executory
contracts for capital expenditures with total annual payments or financial
commitments, on an individual basis, exceeding U.S.$ 40,000,000; and


 


26





















 


(xiii)                        any
other agreement with respect to the conduct of the business of the Company and
its Subsidiaries in Significant Countries that requires an annual payment of
more than U.S.$ 25,000,000 during the current term of such agreement and which
the Company or any of its Subsidiaries is not able to terminate on twelve (12)
months’ notice or less without penalty.


 


(b)                                The
execution and delivery of this Agreement by the Seller does not, and the
performance of this Agreement by the Seller will not, conflict with, result in
any breach of, constitute a default (or event which with the giving of notice
or lapse of time would become a default) under, require any consent under, or
give to others any rights of termination, acceleration or cancellation of any
of the Material Contracts other than (i) those conflicts, breaches,
defaults or events of default that would not materially adversely affect the
aggregate value of such Material Contracts to the business of the Company and
its Subsidiaries or otherwise have a Material Adverse Effect and (ii)(A) those
consents, the failure of which to obtain, and (B) the rights of
termination, acceleration or cancellation, the exercise of which, would not
materially adversely affect the aggregate value of such Material Contracts to
the business of the Company and its Subsidiaries or otherwise have a Material
Adverse Effect.


 


(c)                                 None
of the Company or any of it Subsidiaries is in breach of, or default under, any
of the Material Contracts to which it is a party and, to the Seller’s
Knowledge, no other party to any Material Contract is in breach thereof or
default thereunder other than those breaches that would not materially
adversely affect the aggregate value of such Material Contracts to the business
of the Company and its Subsidiaries or otherwise have a Material Adverse
Effect.


 


Section 4.7                         Insurance


 


To the Seller’s Knowledge, all material properties of the Company and
its Subsidiaries are currently covered by insurance or self insurance or
programs in such types and amounts as are consistent with customary practices
and standards of companies engaged in businesses similar to the business of the
Company and applicable Legal Requirements.


 


Section 4.8                         Real
Property


 


(a)                                 The
Company and its Subsidiaries has good and marketable indefeasible fee simple
title to all of the Owned Real Property free and clear of all Encumbrances,
other than Permitted Encumbrances and there are no outstanding options, rights
of first offer or rights of first refusal to purchase such Owned Real Property
or any portion thereof or interest therein. 
Neither the Seller nor any of its Affiliates owns any material real
property which is used exclusively in the business of the Company.  To 


 


27





















 


the Seller’s
Knowledge, neither the Company nor any of its Subsidiaries is a party to any
agreement or option to sell any Owned Real Property.


 


(b)                                Each
lease relating to Leased Real Property is a valid agreement enforceable against
the Company or its Subsidiary and to the Seller’s Knowledge, against the other
parties thereto.  None of the Company or
its Subsidiaries is in material default or breach, or has received a written
notice alleging that it is in material default or breach, under any lease
relating to the material Leased Real Property and, to the Seller’s Knowledge,
none of the other parties to such leases is in material default or breach
thereunder.  The transactions
contemplated herein do not require the consent of any other party to any
Specified Leases, will not result in a breach of or default under any Specified
Leases, or otherwise cause any Specified Leases to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the First Stage Closing or the Second Stage Closing, as applicable.


 


(c)                                 Other
than the Shared Site Agreements, there are no material agreements between the
Seller and its Affiliates (other than the Company and its Subsidiaries), on the
one hand, and the Company or any of its Subsidiaries, on the other hand,
providing for arrangements pursuant to which sites are shared between the
Seller or its applicable Affiliate (other than the Company and its
Subsidiaries), on the one hand, and the Company or its applicable Subsidiary,
on the other hand.


 


(d)                                To
the Seller’s Knowledge, from 1 January 2006 to the Signing Date or to
the Supplemental Disclosure Date, as applicable, the Company has not received
any written notice from any Governmental Authority or any Third Party that any
of the Real Property is not in compliance with all applicable Legal
Requirements, except for such failures to comply that, individually or in the
aggregate, would not have a Material Adverse Effect or materially adversely
affect the ability of the Seller to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement.  To the Seller’s Knowledge, from 1 January 2006
to the Signing Date or to the Supplemental Disclosure Date, as applicable, none
of the Company or its Subsidiaries has received any written threat of
condemnation or similar proceeding relating to the Real Property or any
material portion thereof.


 


Section 4.9                         Taxes


 


Solely as limited to Taxes relating to any Significant Country:


 


(a)                                 all
material Tax Returns that are required to be filed on or before the First Stage
Closing Date (in respect of the First Stage Acquisition) or the Second Stage
Closing Date (in respect of the Second Stage Acquisition) by or on behalf of
the Company and its Subsidiaries have been, or will be, 


 


28





















 


timely filed;
each such Tax Return is true and correct or will be true and correct when filed
in all material respects; and all Taxes shown to be due and payable on such Tax
Returns have been, or will be, timely paid or reserved for if payment occurs
according to applicable law after the applicable taxable period;


 


(b)                                there
are no outstanding written agreements or waivers extending the statute of
limitations applicable to any such Tax Return (other than extensions of time to
file Tax Returns obtained in the ordinary course);


 


(c)                                 all
material Taxes which the Company and its Subsidiaries is required by applicable
Legal Requirements to withhold or collect, including sales and use taxes, and
amounts required to be withheld for Taxes of employees, have been duly withheld
or collected and, to the extent required, have been paid over to the proper
Governmental Authorities or are held in separate bank accounts for such
purpose;


 


(d)                                no
Share to be sold is a “United States Real Property Interest” within the meaning
of Section 897(c)(1) of the Code;


 


(e)                                 no
election under U.S. Treasury Regulation Section 301.7701-3 of the Code has
been filed with respect to the Company;


 


(f)                                   since
1 January 2006, no written claim has been made by a Governmental Authority
in a jurisdiction where the Company has not filed Tax Returns that the Company
is or may be subject to material taxation by that jurisdiction;


 


(g)                                the
Company does not have any material Liability for the Taxes of any Person under
Regulation 1.1502-6 (or any similar provision of state, local or foreign law)
as a transferee or successor or by contract;


 


(h)                                the
Company is in compliance in all material respects with all outstanding rulings
and advance pricing agreements with each tax authority; and


 


(i)                                    (A) Subsection (A) of Section 4.9(i) of
the Seller Disclosure Letter sets forth the Company’s calculation as of the
Signing Date (prepared in good faith using the assumptions and principles
detailed in Section 4.9(i) of the Seller Disclosure Letter) of the
percentages that the Company and its Swiss Affiliates are deemed to own for
Swiss and U.S. income tax purposes of the intellectual property (the “Swiss
IP Ownership %”) of the products set forth on Section 4.9(i)(A) of
the Seller Disclosure Letter and (B) Subsection (B) of Section 4.9(i) of
the Seller Disclosure Letter sets forth the Company’s reasonable estimate as of
the Signing Date (prepared in good faith using the assumptions and principles
detailed in Section 4.9(i) of the Seller Disclosure Letter) of Swiss
IP Ownership % of the products set forth on Section 4.9(i)(B) of the
Seller Disclosure Letter.


 


29





















 


Section 4.10                  Litigation and
Other Proceedings; Orders


 


(a)                                 (i) As
of the Signing Date or as of the Supplemental Disclosure Date, as applicable,
there are no Proceedings involving an individual claim in excess of U.S.$
10,000,000 or claims in the aggregate in excess of U.S.$ 100,000,000 pending
against the Company or any of its Subsidiaries and (ii) since 1 January 2007
through the Signing Date or the Supplemental Disclosure Date, as applicable,
none of the Seller, the Company or any Subsidiary of the Company has received
written product liability claim or other claims demanding amounts individually
in excess of U.S.$ 10,000,000 or in the aggregate in excess of U.S.
$100,000,000 nor has any of the Seller, the Company or any Subsidiary of the
Company initiated a product recall in respect of the quality or fitness for use
of any material amount of  goods
produced, distributed, marketed or sold by the Company and its Subsidiaries (a “Product
Recall”) (it being understood and agreed that a product return in the
ordinary course of business does not constitute a Product Recall).  To the Seller’s Knowledge, as of the Signing
Date and as of the Supplemental Disclosure Date, as applicable, there are no
Proceedings involving Company Intellectual Property that involve a claim for
injunctive relief.


 


(b)                                As
of the Signing Date or as of the Supplemental Disclosure Date, as applicable,
to the Seller’s Knowledge, none of the Seller, the Company or any Subsidiary of
the Company is subject to any investigation, whether civil or criminal, order,
judgment, decree, injunction, stipulation, settlement agreement or consent
decree of or with any court or other Governmental Authority that imposes or
threatens to impose any material obligations on the conduct of the business of
the Company and its Subsidiaries.  None
of the Company or any of its Subsidiaries have entered into any settlement or
compromise for which the Buyer or its Affiliates may have continuing
obligations.


 


(c)                                 This
Section 4.10 does not relate to Proceedings arising under Environmental
Laws, such matters being the subject of Section 4.13 or with respect to
regulatory compliance, such matters being the subject of Section 4.18.


 


Section 4.11                  No Material
Adverse Change


 


On or after 1 January 2008 and through but excluding the Signing
Date, (i) there has been no Material Adverse Change and no event or events
shall have occurred that could reasonably be expected to result in such a
Material Adverse Change and (ii) the Company has conducted its business
only in the ordinary course.


 


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Section 4.12                   Licenses and
Permits


 


(a)                                 The
Company and its Subsidiaries possess all material Governmental Permits
necessary for the conduct of their business (including all Governmental Permits
under the Federal Food, Drug and Cosmetic Act of 1938, as amended (the “FDCA”)).
As of the Signing Date or as of the Supplemental Disclosure Date, as
applicable, to the Seller’s Knowledge, none of the Seller, the Company or any
Subsidiary of the Company has received written notice that the Company or any
of its Subsidiaries is in material violation of any term of any material
Governmental Permit or that any Governmental Authority intends to revoke or
rescind any material Governmental Permit related to the business of the Company
and its Subsidiaries.  The business of
the Company and its Subsidiaries complies in all material respects with the
Governmental Permits.


 


(b)                                To
the Seller’s Knowledge, the Company and each of its Significant Subsidiaries is
licensed or qualified to do business in each jurisdiction where the nature of the
properties owned, leased or operated by them and the business transacted by
them requires such licensing or qualification, except where any such failures
to be qualified or licensed, individually or in the aggregate, would not have a
Material Adverse Effect.


 


Section 4.13                  Environmental
Matters


 


(a)                                 To
the Seller’s Knowledge, the business of the Company and its Subsidiaries has
been conducted in material compliance with all applicable Environmental Laws.


 


(b)                                To
the Seller’s Knowledge, all material Environmental Permits required under all
applicable Environmental Laws for the continued operation of the business of
the Company and its Subsidiaries have been obtained and are valid.


 


(c)                                 To
the Seller’s Knowledge, as of the Signing Date or as of the Supplemental
Disclosure Date, as applicable, none of the Real Property, or any manufacturing
facility sold by the Company or any of its Subsidiaries within the five-year
period ending immediately prior to the Signing Date, is involved in or is
subject to any material pending or threatened Proceeding under any
Environmental Law.


 


(d)                                As
of the Signing Date or as of the Supplemental Disclosure Date, as applicable,
to the Seller’s Knowledge, no Person or Governmental Authority has asserted any
written claims, requests or demands against the Company or any Subsidiary in
amounts material to the business of the Company and its Subsidiaries for
damages, costs or expenses arising out of or due to the emission, disposal,
discharge or other release of any Hazardous Substances, or arising out of or
due to any injury to human 


 


31





















 


health or the
environment by reason of the current or past condition or operation of any
facility, or for offsite treatment, storage or disposal of Hazardous Substances
transported from the Real Property.


 


(e)                                 There
is no environmental condition, situation or incident on, at, under, in or
concerning any Real Property that could reasonably be expected to give rise to
any material Environmental Liability under any applicable Environmental Laws.


 


(f)                                   The
Seller has made (and will make) available to the Buyer, or has caused (and will
use its reasonable efforts to cause) the Company and its Subsidiaries to have
made available to the  Buyer, true and
complete copies of all material written environmental assessments,
correspondence, reports, data, analyses and compliance audits that have been
prepared by or on behalf of the Company and its Subsidiaries as of the Signing
Date and as of the First Stage Closing Date with respect to the Real Property
or any property formerly owned, operated or leased by the Company and its
Subsidiaries, in each case to the extent prepared since 1 January 2005 and
in the Seller’s, the Company’s or any Subsidiary of the Company’s possession or
control.


 


(g)                                The
Buyer acknowledges that (i) the representations and warranties contained
in this Section 4.13 are the only representations and warranties being
made with respect to compliance with or liability under any Environmental Law
or with respect to any environmental matters, including natural resources,
related in any way to the business of the Company and its Subsidiaries or to
this Agreement or its subject matter and (ii) no other representation
contained in this Agreement will apply to any such matters and no other  representation and warranty, express or
implied, is being made with respect thereto.


 


Section 4.14                  Governmental
Consents and Approvals


 


No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with or permit from, any Governmental
Authority is required to be obtained or made by or with respect to the Seller
or the Company in connection with the execution and performance of this
Agreement or the consummation of the transactions contemplated by this
Agreement and the Shareholders Agreement, other than (i) compliance with
and filings under the HSR Act, (ii) compliance under the Council
Regulation (EC) No. 139/2004, as amended, or the applicable national
competition laws of the member states, (iii) if applicable, compliance
with and filings under the Investment Canada Act and the Competition Act
(Canada) (“Competition Act”) and (iv) any additional consents and
filings required under any other applicable antitrust or competition law or regulation.


 


32





















 


Section 4.15                  Intellectual
Property and Know-How


 


(a)                                 The
Company or a Subsidiary of the Company owns all rights and interest in and has
all title to, or has a valid and enforceable license to use, the Company
Intellectual Property free and clear of all Encumbrances, other than
Encumbrances that do not adversely affect the ownership interest in, or the
value or use of, such asset for its current purposes.  The completion of the transactions contemplated
by this Agreement will not alter or impair the ownership or right of the
Company or its Subsidiaries to use any of the Company Intellectual Property.


 


(b)                                To
the Seller’s Knowledge, there are no facts or circumstances that would render
any of the Company Intellectual Property invalid or unenforceable.  From 1 January 2006 to the Signing Date
or to the Supplemental Disclosure Date, as applicable, (i) neither the
Seller nor, to the Seller’s Knowledge, the Company or any Subsidiary of the
Company has received a written claim that the Company Intellectual Property is
invalid or unenforceable, nor has any such claim been asserted in any pending
or, to the Seller’s Knowledge, threatened litigation or proceeding before any
Governmental Authority and (ii) none of the Company Intellectual Property
is or was subject to any pending or, to the Seller’s Knowledge, threatened
claims or proceedings for infringement, opposition, cancellation or
revocation.  All registration or
application fees (or, in the case of patents, maintenance fees) necessary to
maintain the Company Intellectual Property have been paid, all necessary
renewal applications have been filed and all other material steps necessary for
maintenance have been taken, other than such fees, renewal applications and
steps the failure of which to pay, file or take would not, individually or in
the aggregate, materially adversely affect the value or use of the Company
Intellectual Property.


 


(c)                                 The
Company or a Subsidiary of the Company owns all right and interest in, and all
title to, the Company Know-How free and clear of any Encumbrances other than
Encumbrances that do not materially affect the ownership interest in, or the
value or use of, such asset for its current purposes.  Neither the Seller nor any of its Affiliates
(other than the Company and its Subsidiaries) owns or licenses any Intellectual
Property or Know-How used primarily in the business of the Company and its
Subsidiaries.


 


(d)                                Except
as would not, individually or in the aggregate, materially adversely affect the
value or use of the Company Know-How, since 1 January 2006, to the Seller’s
Knowledge, the Company and its Subsidiaries have taken reasonable steps in
accordance with normal industry practice to maintain the confidentiality of the
Company’s confidential information, including the Company Know-How.


 


33





















 


(e)                                 To
the Seller’s Knowledge, (i) the conduct of the business of the Company and
its Subsidiaries does not violate any license or agreement, infringe,
misappropriate or otherwise violate any Intellectual Property or Know-How owned
by a Third Party and (ii) from 1 January 2006 to the Signing Date or
to the Supplemental Disclosure Date, as applicable, no suit, action or claim
has been asserted, threatened or is or was pending concerning any claim or
position that the Company or any of its Subsidiaries has violated an
Intellectual Property or Know-How right of a Third Party or is in material
breach or default under any Intellectual Property Agreement.


 


(f)                                   To
the Seller’s Knowledge, no Person has infringed the Company’s Intellectual
Property and/or the Company Know-How rights, except as would not, individually
or in the aggregate, have a Material Adverse Effect.


 


(g)                                Since
1 January 2007, to the Seller’s Knowledge, there have been no material
breaches of the Company’s or its Subsidiaries’ security procedures or any
material attempted or successful unauthorized incidents of access, use,
disclosure, modification, or destruction of information or interference with
systems operations in any information system or database of the Company or any
of its Subsidiaries, including any such breach or incident that required or
requires notice to any Third Party.


 


Section 4.16                  Employee Plans
and Personnel Matters


 


(a)                                 To
the Seller’s Knowledge, since 1 January 2006, each Company Plan has been
maintained, operated and administered in compliance in all material respects
with its terms and the applicable Legal Requirements of the relevant
jurisdiction (including the requirements for any funding and Tax-favored
treatment intended for such plan or applicable to plans of its type). To the
Seller’s Knowledge, no event, transaction or condition exists or has occurred
that is reasonably likely to result in the loss or material limitation of any
such Tax-favored treatment.


 


(b)                                All
material contributions, premiums and benefit payments in respect of the Company
Employees under or in connection with the Company Employee Plans due prior to
the Signing Date have been timely made.


 


(c)                                 To
the Seller’s Knowledge, there have been no acts or omissions by any party with
respect to the Company Employee Plans which have given rise to or may give rise
to material fines, penalties, taxes or related charges under applicable Legal
Requirements for which after the First Stage Closing Date or Second Stage
Closing Date, the Company, the Buyer or any of its other Subsidiaries could
reasonably be expected to be liable.


 


(d)                                As
of the Signing Date or as of the Supplemental Disclosure Date, as applicable,
there are no actions, suits, claims (other than routine claims for 


 


34





















 


benefits) or
investigations pending or, to Seller’s Knowledge, threatened, involving any
material Company Employee Plan or their assets for which the Company and its
Subsidiaries (after the First Stage Closing Date) or the Buyer, the Company and
their respective Subsidiaries (after the Second Stage Closing Date) could
reasonably be expected to incur any material Liability and no event,
transaction or condition exists or has occurred which could reasonably be
expected to give rise to any such actions, suits, claims (other than routine
claims for benefits) or investigations. 
The Company has no material liability with respect to any Plan other
than for contributions, payments or benefits due in the ordinary course of
business under the current Company Employee Plans.


 


(e)                                 As
of the Signing Date, neither the execution and delivery of this Agreement nor
the consummation of the First Stage Acquisition or Second Stage Acquisition
will (i) result in any material payment (including any material extra
income, material bonus payment or material enhanced redundancy or severance
payment from the Company or any of its Subsidiaries) becoming due on or after
the First Stage Closing Date or Second Stage Closing Date, as applicable, to
any director, officer, employee, or former employee, (ii) materially
increase any benefits otherwise payable under any material Company Plan or (iii) result
in any acceleration of the time of payment or vesting of any material benefits
under any material Company Plan.  The
Company and its Subsidiaries have made no agreement, undertaking or commitment
with any employee, director, officer, service provider or agent (whether
written or oral) to make such person fully or partially whole with respect to
any adverse Tax consequences relating to any Company Plan.


 


(f)                                   As
of 31 December 2007 and except as disclosed in the Company’s Form 20-F
for the fiscal year ending 31 December 2007, there are no material
unfunded liabilities under the Company Plans that provide any post retirement
medical, dental, vision, life, disability or other welfare benefits or
insurance coverage.


 


(g)                                As
of the Signing Date or as of the Supplemental Disclosure Date, as applicable,
to the Seller’s Knowledge, there are no: (i) material strikes, lockouts,
stoppages or work slowdowns pending or threatened against or involving the
Company or any of its Subsidiaries; or (ii) material unfair labor practice
charges, grievances or complaints or material judicial or administrative
proceedings pending or threatened by or on behalf of any Company Employees.


 


Section 4.17                  Compliance with
Legal Requirements


 


Except with respect to Legal
Requirements (i) arising under Environmental Laws (which are the subject
of Section 4.13), (ii) applicable to Company Employee Plans (which
are the subject of Section 4.16) and (iii)  in respect of regulatory


 


35


















 


compliance (which are the
subject of Section 4.18) to the Seller’s Knowledge, the Company and its
Subsidiaries are in material compliance with all Legal Requirements applicable
to the conduct of their business as currently conducted.  As of the Signing Date or as of the
Supplemental Disclosure Date, as applicable, since 1 January 2007, to the
Seller’s Knowledge, none of the Seller, the Company or any Subsidiary of the
Company has received written notice from a Governmental Authority of any
material violations with respect to Legal Requirements applicable to the
ownership or operation of their business as currently conducted, or any notice
that any material facility of the Company and its Subsidiaries is not in
material compliance with applicable Legal Requirements or requires any material
improvement, modification or alteration in order to lawfully continue any
aspect of the operations conducted at the facility.  To the Seller’s Knowledge, neither the
Company, nor any of its Subsidiaries, nor any of their respective directors,
officers, agents, employees or any other Persons acting on their behalf has, in
connection with the operation of their respective businesses, (i) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials, candidates or members of political parties or
organizations, or private counterparties, or established or maintained any
unlawful or unrecorded funds or taken any other action in violation of the
Foreign Corrupt Practices Act of 1977, as amended, (the “FCPA”) or any
other similar applicable law, (ii) paid, accepted, offered, promised,
authorized or received any unlawful contributions, payments, expenditures or gifts,
or (iii) violated or operated in noncompliance with any export
restrictions, anti-boycott regulations, embargo regulations or other applicable
domestic or foreign laws and regulations.


 


Section 4.18                  Regulatory
Compliance


 


To the Seller’s Knowledge:


 


(a)                                 As
to each product subject to the FDCA or similar Legal Requirements in any
non-United States jurisdiction that are developed, manufactured, tested,
distributed and/or marketed by the Company or any of its Subsidiaries (a “Medical
Product”), each such Medical Product is being developed, manufactured,
tested, distributed and/or marketed in compliance with all applicable
requirements under the FDCA and similar Legal Requirements, including those
relating to investigational use, pre-market clearance or marketing approval to
market a Medical Product, good manufacturing practices, labeling, advertising,
record keeping, filing of reports and security, and in compliance with the
Advanced Medical Technology Association Code of Ethics on Interactions with
Healthcare Professionals and the American Medical Association’s guidelines on
gifts to physicians, except for failures in compliance that individually or in
the aggregate have not had and could not reasonably be expected to have a
Material Adverse Effect.  As of the
Signing Date or as of the 


 


36





















 


Supplemental
Disclosure Date, as applicable, neither the Company nor any of its Subsidiaries
has received any notice or other communication from the Federal Food and Drug
Administration (the “FDA”) or any other Governmental Authority (A) contesting
the premarket clearance or approval of, the uses of or the labeling and
promotion of any products of the Company or any of its Subsidiaries or (B) otherwise
alleging any violation applicable to any Medical Product of any Legal
Requirement, in the case of (A) and (B), that individually or in the
aggregate have had or could reasonably be expected to have a Material Adverse
Effect.


 


(b)                                (i) No
Medical Product is under consideration by senior management of the Company or
any of its Subsidiaries for recall, withdrawal, suspension, seizure or
discontinuance, or has been recalled, withdrawn, suspended, seized or
discontinued (other than for commercial or other business reasons) by, the Company
or any of its Subsidiaries in the United States or outside the United States
(whether voluntarily or otherwise), in each case since 1 January 2006
through the Signing Date or the Supplemental Disclosure Date, as applicable and
(ii) as of the Signing Date or as of the Supplemental Disclosure Date, as
applicable, no proceedings in the United States or outside of the United States
(whether completed or pending) seeking the recall, withdrawal, suspension,
seizure or discontinuance of any Medical Product are pending against the
Company or any of its Subsidiaries or any licensee of any Medical Product which
individually or in the aggregate have had or could reasonably be expected to
have a Material Adverse Effect.


 


(c)                                 As
to each Medical Product of the Company or any of its Subsidiaries for which a
pre-market approval application, pre-market notification, investigational
device exemption or similar state or foreign regulatory application has been
approved, the Company and its Subsidiaries are in compliance with 21 U.S.C.
§§ 360 and 360e or 21 C.F.R. Parts 812 or 814, respectively, and all
similar Legal Requirements and all terms and conditions of such licenses or
applications, except for any such failure or failures to be in compliance which
individually or in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect. In addition, the Company and its
Subsidiaries are in substantial compliance with all applicable registration and
listing requirements set forth in 21 U.S.C. § 360 and 21 C.F.R. Part 807
and all similar Legal Requirements, except for any such failures to be in
compliance which individually or in the aggregate have not had and could not
reasonably be expected to have a Material Adverse Effect.


 


(d)                                No
article of any Medical Product manufactured and/or distributed by the Company
or any of its Subsidiaries is (A) adulterated within the meaning of 21
U.S.C. § 351 (or similar Legal Requirements), (B) misbranded within
the meaning of 21 U.S.C. § 352 (or similar Legal Requirements) or 


 


37





















 


(C) a
product that is in violation of 21 U.S.C. § 360 or § 360e (or similar
Legal Requirements), except for failures to be in compliance with the foregoing
that individually or in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect.


 


(e)                                 Neither
the Company nor any of its Subsidiaries, nor, through the Signing Date or the
Supplemental Disclosure Date, as applicable, any officer, employee or agent of
the Company or any of its Subsidiaries, has made an untrue statement of a
material fact or fraudulent statement to the FDA or any other Governmental
Authority, failed to disclose a material fact required to be disclosed to the
FDA or any other Governmental Authority, or committed an act, made a statement,
or failed to make a statement that, at the time such disclosure was made, could
reasonably be expected to provide a basis for the FDA or any other Governmental
Authority to invoke its policy respecting “Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (10 September 1991)
or any similar policy.


 


(f)                                   Neither
the Company nor any of its Subsidiaries, nor any officer, employee or agent of
the Company or any of its Subsidiaries, has been convicted of any crime or
engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or
any similar Legal Requirement or authorized by 21 U.S.C. § 335a(b) or
any similar Legal Requirement.  Neither
the Company nor any of its Subsidiaries, nor, any officer, employee or agent or
the Company or any of its Subsidiaries, has been convicted of any crime or
engaged in any conduct for which such person or entity could be excluded from
participating in the federal health care programs under Section 1128 of
the U.S. Social Security Act of 1935, as amended or any similar Legal
Requirements.


 


(g)                                Since
1 January 2006 through the Signing Date or the Supplemental Disclosure
Date, as applicable,  neither the Company
nor any of its Subsidiaries has received any written notice that the FDA or any
other Governmental Authority has (a) commenced, or threatened to initiate,
any action to withdraw its approval or request the recall of any Medical
Product, (b) commenced, or threatened to initiate, any action to enjoin
production of any Medical Product or (c) commenced, or threatened to
initiate, any action to enjoin the production of any Medical Product produced
at any facility where any Medical Product is manufactured, tested or packaged,
except for any such action that individually or in the aggregate has not had
and could not reasonably be expected to have a Material Adverse Effect.


 


Section 4.19                  SEC Filings


 


(a)                                 The
Company has filed (or, where permitted, furnished) all reports, schedules,
forms, statements and other documents (including exhibits and 


 


38





















 


all other
information incorporated therein) required to be filed (or furnished) by the
Company or any of its Subsidiaries with the SEC under the Securities Act, the
Exchange Act or SOX with respect to any fiscal period ending after 1 January 2006,
or with respect to any development, event or state of facts occurring since 1 January 2006
(such documents, together with any documents filed (or furnished) during such
period by the Company with the SEC on a voluntary basis, the “Company SEC
Documents”).  As of their respective
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act, the Exchange Act and SOX, in each case to
the extent applicable to such Company SEC Documents, and none of the Company
SEC Documents when filed (and, in the case of any registration statement under
the Securities Act, at the time it was declared effective) or, if amended prior
to the Signing Date or the Supplemental Disclosure Date, as applicable, as of
the date of such amendment, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. 
Except to the extent that information contained in any Company SEC
Document has been revised or superseded by a later filed Company SEC Document,
none of the SEC Documents contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.


 


(b)                                Neither
the Company nor any of its Subsidiaries has outstanding, or has arranged any
outstanding, “extensions of credit” to directors or executive officers within
the meaning of Section 402 of SOX.


 


(c)                                 The
Company maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (A) transactions are executed in
accordance with management’s general or specific authorizations; (B) access
to assets is permitted only in accordance with management’s general or specific
authorization; and (C) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.


 


(d)                                The
Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) are reasonably designed to ensure that all
information (both financial and non-financial) required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC, and that all such information is
accumulated and communicated to the Company’s management as appropriate to
allow timely decisions regarding required disclosure and to make the
certifications of the chief executive officer and 


 


39





















 


chief
financial officer of the Company required under the Exchange Act with respect
to such reports.


 


Section 4.20                  Brokers


 


Except for Credit Suisse Securities (Europe) Ltd., no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement
and the Shareholders Agreement based upon or arising from arrangements made on
behalf of the Seller and its Affiliates. 
The Seller is solely responsible for any fees, commissions and expenses
or other amounts which are or may become payable to Credit Suisse Securities
(Europe) Ltd. in connection with this Agreement or the Shareholders Agreement.


 


Section 4.21                  No Restrictions
on the Transactions


 


To the Seller’s Knowledge, except as expressly contemplated by this
Agreement or the Shareholders Agreement, there are no anti-takeover or similar
statute or regulation or provision of the articles of association or
organizational regulations, or other organizational or constitutive document or
governing instruments of the Company or any of its Subsidiaries that would prevent,
impede or delay the consummation of the transactions contemplated by this
Agreement and the Shareholders Agreement. No action by the Board of Directors
or the shareholders of the Company is necessary to approve the transactions
contemplated hereby and thereby.


 


ARTICLE 5.                      REPRESENTATIONS AND WARRANTIES OF THE BUYER


 


The Buyer hereby represents and warrants to the Seller as follows:


 


Section 5.1                         Organization
and Authority


 


The Buyer is a corporation duly organized and validly existing under the
laws of Switzerland and has all necessary corporate power and authority to
enter into this Agreement and the Shareholders Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement
and the Shareholders Agreement by the Buyer, the performance by the Buyer of
its obligations hereunder and thereunder and the consummation by the Buyer and
of the transactions contemplated hereby and thereby have been duly authorized
by all requisite corporate action on the part of the Buyer.  Each of this Agreement and the Shareholders
Agreement has been duly executed and delivered by the Buyer and (assuming due
authorization, execution and delivery by the Seller) constitutes a legal, valid
and binding obligation of the Buyer enforceable against the Buyer in accordance
with their respective terms.


 


40





















 


Section 5.2                         No
Conflict


 


Assuming the making and obtaining of all filings, notifications, consents,
approvals, authorizations and other actions referred to in Section 5.3,
neither the execution and delivery by the Buyer of this Agreement and the
Shareholders Agreement, nor the performance by the Buyer of its obligations
hereunder or thereunder, or the consummation of the transactions contemplated
hereby or thereby will (a) result in any breach of any provision of the
Buyer’s certificate or articles of incorporation or by-laws (or other similar
organizational documents), (b) result in any material breach of, or
constitute a default under, any material contract or order or judgment to which
the Buyer is a party or by which it is bound, or (c) violate any
applicable material Legal Requirement, other than such breaches, defaults or
violations which would not, individually or in the aggregate, prevent or
materially delay the consummation by the Buyer of the transactions contemplated
by this Agreement and the Shareholders Agreement.


 


Section 5.3                         Governmental
Consents


 


The execution and delivery of this Agreement by the Buyer do not, and
the performance of this Agreement and the Shareholders Agreement by the Buyer
will not, require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority other
than (i) compliance with and filings under the HSR Act, (ii) compliance
under the Council Regulation (EC) No. 139/2004, as amended, or the
applicable national competition laws of the member states, (iii)  if
applicable, compliance with and filings under the Competition Act and (iv) any
additional consents and filings required under any other applicable antitrust
or competition law or regulation.


 


Section 5.4                         Financing
of the Transactions


 


On the First Stage Closing Date (in respect of the First Stage Acquisition)
and the Second Stage Closing Date (in respect of the Second Stage Acquisition)
the Buyer will have, sufficient immediately available funds to pay, in cash,
the First Stage Purchase Price and the Second Stage Purchase Price,
respectively, and all other amounts payable by the Buyer pursuant to this
Agreement and the Shareholders Agreement or otherwise necessary to be paid by
the Buyer to consummate the transactions contemplated hereby and thereby.


 


Section 5.5                         Brokers


 


Except for Goldman Sachs International, no broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement and the
Shareholders Agreement based upon or arising from arrangements made on behalf
of the Buyer and its Affiliates.  The
Buyer is solely responsible for any fees, commissions and expenses or other
amounts which are or may become payable to Goldman Sachs International in
connection with this Agreement or the Shareholders Agreement.


 


41





















 


Section 5.6                         Investigation


 


(a)                                 The
Buyer acknowledges and agrees that it has made its own inquiry and
investigation and has formed an independent judgment concerning the Company and
its Subsidiaries and the Shares.


 


(b)                                In
connection with the Buyer’s investigation of the Company and its Subsidiaries
and the Shares, the Buyer has received from the Seller and the Company certain
projections, forecasts and other planning and budget information for the Company.  The Buyer acknowledges that there are
uncertainties inherent in attempting to make such projections, forecasts, plans
and budgets, that the Buyer is familiar with such uncertainties, that the Buyer
is taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and budgets so
furnished to it, and that the Buyer will not assert any claim against the
Seller, the Company and/or their respective Subsidiaries and Affiliates and/or any
of their directors, officers, employees or agents, respectively, or hold any
such entities and/or Persons liable with respect thereto; provided, however,
that this Section 5.6(b) will not apply to the representation and
warranty in Section 4.9(i)(B) but that representation and warranty
shall be limited by and subject to the qualifications and limitations in Section 4.9
of the Seller Disclosure Letter.


 


(c)                                 The
Buyer acknowledges and agrees that, except for the representations and
warranties contained in this Agreement, the Seller does not make any other
representations or give any other warranties, express or implied.


 


ARTICLE 6.                      INDEMNIFICATION


 


Section 6.1                         Indemnification
by the Seller


 


(a)                                 General
Principle:  If the First Stage
Closing occurs and, as applicable, if the Second Stage Closing occurs, in the
event of any breach of any representation or warranty by the Seller contained
in Article 4 of this Agreement as of the First Stage Closing Date (in
respect of the First Stage Acquisition) or the Second Stage Closing (in respect
of the Second Stage Acquisition) or in the event of any breach of any covenant
contained in this Agreement or the Shareholders Agreement by the Seller (a “Seller
Covenant Breach”), the Seller will indemnify the Buyer for the Buyer’s
Share of all losses, costs, damages and expenses (including reasonable
attorneys’ fees) (each, a “Loss”) (i) suffered by the Company and
its Affiliates (in the case of a breach of a representation and warranty
relating to the Company) or (ii) suffered by the Buyer and its Affiliates
(in the case of a breach of a representation and warranty relating to the
Seller and its Affiliates or in the case of a Seller Covenant Breach) (the
Buyer’s Share of (i) and (ii) being collectively referred to as the “Buyer
Incurred Damages”).  The Buyer will
use, and after the Second Stage Closing Date 


 


42





















 


will also use
its reasonable efforts to cause the Company and its Subsidiaries to use,
commercially reasonable efforts to mitigate any such Buyer Incurred Damages
(recognizing that prior to the Second Stage Closing Date the Buyer may have
limited ability to mitigate damages given its status as a minority
shareholder).


 


As used herein, the “Buyer’s
Share” of (i) a Loss suffered by the Company and its Affiliates means
a fraction, the numerator of which shall be the total number of Shares, and the
denominator of which shall be the total number of Common Shares then
outstanding; provided, however, that with respect to Losses incurred
prior to the Second Stage Closing, the portion of the Buyer’s Share that shall
be indemnifiable prior to the Second Stage Closing Date shall be limited to a
fraction of such Losses, the numerator of which shall be the total number of
First Stage Shares, and the denominator of which shall be the total number of
Common Shares then outstanding and (ii) of a Loss suffered by the Buyer
and its Affiliates (in the case of a breach of a representation and warranty
relating to the Seller and its Affiliates or in the case of a Seller Covenant
Breach) means 100%.


 


Any positive, incidental,
special, indirect or consequential damages, and any other action or relief,
including a right of rescission (Wandelungsrecht)
or revocation of this Agreement, loss of future revenue or income, or loss of
business reputation or opportunity, and any remedies based on a potential
breach of a duty to negotiate in good faith (culpa in
contrahendo) or based on a theory of material error (Grundlagenirrtum), is expressly excluded.  The Seller hereby waives any claim of
subrogation against, or contribution from, the Company or any of its
Subsidiaries in connection with any matter indemnified by the Seller
hereunder.  For the avoidance of doubt, Articles 200 (knowledge of the Buyer), 201
(duty to immediately check the purchased business and duty to immediately
notify defects) and 210 (time period within which a claim has to be brought) of
the Swiss Code of Obligations are herewith fully waived and replaced by the
provisions of this Agreement.  Notwithstanding anything contained
herein, there shall be no double recovery for any Losses suffered from facts,
circumstances or events giving rise to a breach, but the facts, circumstances
or events giving rise to a breach could (subject to the provisions hereof) form
the basis of a claim with respect to both the First Stage Shares and the Second
Stage Shares; provided that in the event of a breach of a representation
and warranty by the Seller as of the First Stage Closing Date that is
continuing through the Second Stage Closing Date, then Buyer Incurred Damages
relating to Losses suffered by the Company recoverable in connection with the
First Stage Acquisition in respect of such breach shall be calculated with
respect to the First Stage Shares, and Buyer Incurred Damages relating to
Losses suffered by the Company recoverable in connection with the Second Stage
Acquisition in respect of such breach shall be calculated with respect to the
Second Stage Shares.


 


43





















 


(b)                                De
Minimis:  No Buyer Incurred Damages
with respect to breaches of representations and warranties may be claimed by
the Buyer or will be reimbursable by the Seller or will be included in
calculating the aggregate Buyer Incurred Damages set forth in Section 6.1(c) other
than (i) in connection with the First Stage Acquisition, Buyer Incurred
Damages in excess of U.S.$ 2,000,000 and (ii) in connection with the
Second Stage Acquisition, Buyer Incurred Damages in excess of U.S.$ 5,000,000,
in either case resulting from any single claim or aggregated claims arising out
of the same facts, events or circumstances; provided that the foregoing
limitation shall not apply to any Buyer Incurred Damages arising from a breach
of the representations and warranties set forth in Sections 4.1, 4.2 and 4.3.


 


(c)                                 Threshold:
The Seller’s liability for indemnification under this Section 6.1 with
respect to breaches of representations and warranties will apply only to Buyer
Incurred Damages which, in the aggregate and subject to Section 6.1(b), (i) in
the case of a breach of the Seller’s representations and warranties as of the
First Stage Acquisition, exceed one and one-half percent (1.5%) of the First
Stage Closing Date Amount (the “First Stage Deductible”) and then only
to the extent the amount of such Buyer Incurred Damages exceeds such amount in
total and (ii) in the case of a breach of the Seller’s representations and
warranties as of the Second Stage Acquisition, exceed one and one-half percent
(1.5%) of the sum of the First Stage Closing Date Amount and the Second Stage
Closing Date Amount and then only to the extent the amount of such Buyer
Incurred Damages exceeds such amount in total, provided that the
foregoing limitations shall not apply to any Buyer Incurred Damages arising
from a breach of the representations and warranties set forth in Sections 4.1,
4.2 and 4.3 (such Buyer Incurred Damages arising from a breach of the Seller’s
representations and warranties (other than the representations and warranties
set forth in Sections 4.1, 4.2 and 4.3) as of the First Stage Acquisition and
which are timely claimed in accordance with Section 6.3 being referred to
as “First Stage Damages”).  For
the avoidance of doubt, First Stage Damages will be regarded as having been incurred
in respect of a breach of the Seller’s representations and warranties as of the
Second Stage Acquisition for purposes of calculating how much of the deductible
set forth in clause (ii) of the preceding sentence has been satisfied.


 


(d)                                Maximum
Recovery:  Notwithstanding anything
in this Agreement to the contrary, the Seller’s liability for indemnification
under this Section 6.1 with respect to breaches of representations and
warranties will not exceed (i) in connection with the First Stage Acquisition,
thirty percent (30%) of the First Stage Closing Date Amount and (ii) in
connection with the Second Stage Acquisition, thirty percent (30%) of the sum
of the First Stage Closing Date Amount and the Second Stage Closing Date
Amount; provided that in respect of any Buyer Incurred Damages arising
from a 


 


44





















 


breach of the
representations and warranties set forth in Sections 4.1, 4.2 and 4.3, the
foregoing limitations shall be increased to (x) in connection with the
First Stage Acquisition, one hundred percent (100%) of the First Stage Closing
Date Amount, and (y) in connection with the Second Stage Acquisition, one
hundred percent (100%) of the sum of the First Stage Closing Date Amount and
the Second Stage Closing Date Amount. 
For the avoidance of doubt, First Stage Damages will be regarded as
having been incurred in respect of a breach of the Seller’s representations and
warranties as of the Second Stage Acquisition for purposes of calculating how
much of the cap set forth in clause (ii) of the preceding sentence has
been satisfied.


 


(e)                                 Exclusions:  The liability of the Seller under this Section 6.1
will be excluded:


 


(i)                                   if
the Seller has, within sixty (60) days following receipt of the Buyer’s notice
of the breach of a representation or warranty, remedied such breach;


 


(ii)                                if
and to the extent that the Buyer and/or its Affiliates have been reimbursed for
such Buyer Incurred Damages by a Third Party (including reimbursement under any
insurance policy net of the amount by which insurance premiums have been
increased as a result of the claim);


 


(iii)                             if
and to the extent that such Buyer Incurred Damages arise from, or are increased
by, the enactment of any new legislation (including Tax legislation), or the amendment
of any existing laws or rules (including Tax law) after the First Stage
Closing Date (in respect of Buyer Incurred Damages in connection with the First
Stage Acquisition) or the Second Stage Closing Date (in respect of Buyer
Incurred Damages in connection with the Second Stage Acquisition);


 


(iv)                            if
and to the extent that such Buyer Incurred Damages arise from, or are increased
by, any act or omission by the Buyer or its Affiliates;


 


(v)                               if
and to the extent that allowance, provision or reserve in respect of any
specific Loss suffered by the Company was made in the 2007 Financial
Statements, but only up to the amount of such allowance, provision or reserve;
or


 


(vi)                            if
a MAC Determination Date has occurred and then the Buyer delivers a Buyer
Exercise Notice pursuant to Section 3.1, then to the extent that such
Buyer Incurred Damages arise from the facts, circumstances or events giving
rise to such Material Adverse


 


45














 


Change, but only to the extent such facts,
circumstances or events were known to the Buyer at the time the Buyer delivered
the Buyer Exercise Notice.


 


(f)            Subsequent
Receipt:  If the Seller reimburses
the Buyer or any of its Affiliates for Buyer Incurred Damages and the Buyer or
any of its Affiliates subsequently recovers from or is reimbursed by a Third
Party (including any insurer or Tax authority), in whole or in part, for
matters related to the same subject matter of such Buyer Incurred Damages, the Buyer
will promptly repay to the Seller the lesser of:


 


(i)            the amount equal to
the amount recovered from such Third Party less any out-of-pocket costs and
expenses (including the amount insurance premiums have increased as a result of
such claim) incurred by the Buyer or any of its Affiliates in recovering the
same; or


 


(ii)           the amount paid by the
Seller in respect of such claim.


 


(g)           Other:  Notwithstanding anything to the contrary
contained herein, no payment shall be made by the Seller pursuant to this Section 6.1
in respect of First Stage Damages except:


 


(i)            upon termination of
this Agreement without the Second Stage Closing having occurred, in which case
the Seller shall pay the Buyer, within two (2) Business Days after such
termination, an amount equal to the excess, if any, of the amount of First
Stage Damages over the First Stage Deductible, without interest; and


 


(ii)           if the Second Stage
Closing occurs, then First Stage Damages shall be treated as Buyer Incurred
Damages incurred in respect of the Second Stage Acquisition for purposes of
this Section 6.1 (including as provided in Sections 6.1(c) and
6.1(d)) and the Buyer shall have no right to set off the amount of any such
First Stage Damages against the Second Stage Purchase Price.


 


Section 6.2         Indemnification by the
Buyer


 


(a)           General
Principle:  If the First Stage
Closing occurs and, as applicable, if the Second Stage Closing occurs, in the
event of any breach of any representation or warranty by the Buyer contained in
Article 5 of this Agreement as of the First Stage Closing Date (in respect
of the First Stage Acquisition) or the Second Stage Closing Date (in respect of
the Second Stage Acquisition), or in the event of any breach of any covenant
contained in this Agreement or the Shareholders Agreement by the Buyer, the
Buyer will indemnify the Seller for all Losses suffered by the Seller (the “Seller
Incurred Damages”). The Seller will use and will cause its 


 


46

















 


Affiliates to
use commercially reasonable efforts to mitigate any such Seller Incurred
Damages.  Any positive, incidental,
special, indirect or consequential damages, and any other action or relief,
including a right of rescission (Wandelungsrecht)
or revocation of this Agreement, loss of future revenue or income, or loss of
business reputation or opportunity, and any remedies based on a potential
breach of a duty to negotiate in good faith (culpa in
contrahendo) or based on a theory of material error (Grundlagenirrtum), is expressly excluded.


 


(b)           Maximum
Recovery:  Notwithstanding anything
in this Agreement to the contrary, the Buyer’s liability for indemnification
under this Section 6.2 with respect to breaches of representations and
warranties will not exceed (i) in connection with the First Stage
Acquisition, thirty percent (30%) of the First Stage Closing Date Amount and (ii) in
connection with the Second Stage Acquisition, thirty percent (30%) of the sum
of the First Stage Closing Date Amount and the Second Stage Closing Date
Amount; provided that in respect of any Seller Incurred Damages arising from a
breach of the representations and warranties set forth in Sections 5.1 and 5.2,
the foregoing limitations shall be increased to (x) in connection with the
First Stage Acquisition, one hundred percent (100%) of the First Stage Closing
Date Amount, and (y) in connection with the Second Stage Acquisition, one
hundred percent (100%) of the sum of the First Stage Closing Date Amount and
the Second Stage Closing Date Amount. 
For the avoidance of doubt, Seller Incurred Damages arising from a
breach of the Buyer’s representations and warranties as of the First Stage
Acquisition will also be regarded as having been incurred in respect of a
breach of the Buyer’s representations and warranties as of the Second Stage
Acquisition for purposes of calculating how much of the cap set forth in clause
(ii) of the preceding sentence has been satisfied.


 


(c)           Exclusions:  The liability of the Buyer under this Section 6.2
will be excluded:


 


(i)            if the Buyer has,
within sixty (60) days following receipt of the Seller’s notice of the breach
of a representation or warranty, remedied such breach;


 


(ii)           if and to the extent
that the Seller and/or its Affiliates have been reimbursed for such Seller
Incurred Damages by a Third Party (including reimbursement under any insurance
policy net of the amount by which insurance premiums have been increased as a
result of the claim);


 


(iii)          if and to the extent
that such Seller Incurred Damages arise from, or are increased by, the
enactment of any new legislation (including Tax legislation), or the amendment
of any existing laws or rules (including Tax law) after the First Stage
Closing Date (in 


 


47

















 


respect of Seller Incurred Damages in
connection with the First Stage Acquisition) or the Second Stage Closing Date
(in respect of Seller Incurred Damages in connection with the Second Stage
Acquisition); or


 


(iv)          in respect of any Seller
Incurred Damages claimed in connection with the Second Stage Acquisition, to
the extent any such Seller Incurred Damages have been reimbursed by the Buyer
to the Seller pursuant to a claim in respect of Seller Incurred Damages in
connection with the First Stage Acquisition.


 


(d)           Subsequent
Receipt:  If the Buyer reimburses the
Seller for Seller Incurred Damages and the Seller subsequently recovers from or
is reimbursed by a Third Party (including any insurer or Tax authority), in
whole or in part, for matters related to the same subject matter of such Seller
Incurred Damages, the Seller will promptly repay to the Buyer the lesser of:


 


(i)            the amount equal to
the amount recovered from such Third Party less any out-of-pocket costs and
expenses (including the amount insurance premiums have increased as a result of
such claim) incurred by the Seller in recovering the same; or


 


(ii)           the amount paid by the
Buyer in respect of such claim.


 


Section 6.3         Survival and Notice of
Claims


 


(a)           The
representations and warranties of the parties contained in Article 4 and Article 5
of this Agreement will survive (x) with respect to the First Stage
Acquisition, until the earlier of (x) the eighteenth (18th) month anniversary of the First Stage
Closing Date and (y) the Second Stage Closing Date, and (ii) with
respect to the Second Stage Acquisition, until the eighteenth (18th) month anniversary of the Second Stage
Closing Date; provided, however, that any claim for
indemnification arising under or in connection with a breach of a
representation or warranty set forth in Sections 4.1, 4.2 and 4.3 will survive
until ninety (90) days after the expiration of the applicable statute of
limitations and, provided further, that any claim made with reasonable
specificity by the party seeking to be indemnified within the time periods set
forth in this Section 6.3 will survive until such claim is finally and
fully resolved.  For the avoidance of
doubt, if there is a breach of a representation of warranty as of the First
Stage Closing Date that is continuing through the Second Stage Closing Date,
the foregoing sentence shall not prevent the making of a claim for
indemnification in connection with the Second Stage Acquisition with respect to
such breach within the period described in clause (ii) of the preceding
sentence.  Except as set forth in the
preceding sentence, no claim may be asserted nor may any Proceeding be
commenced against either party for breach of any representation or warranty
contained herein, 


 


48

















 


unless written
notice of such claim or Proceeding is received by such party declaring whether
such claim is being brought in connection with the First Stage Acquisition or
the Second Stage Acquisition or both, and describing in reasonable detail the
facts and circumstances with respect to the subject matter of such claim or
Proceeding on or prior to the date on which the representation or warranty on
which such claim or Proceeding is based ceases to survive as set forth in this Section 6.3.  For the avoidance of doubt, provided that
written notice of a claim is made within the time limit defined in this Section 6.3,
the party asserting a claim has an additional period of 60 days following
the expiration of the remedy periods defined in Section 6.1(e)(i) and
6.2(c)(i) to institute proceedings pursuant to Section 10.11 of this
Agreement.


 


(b)           A
party seeking indemnification under this Article 6 will give the other
party notice of any matter which such indemnified party has determined has
given or could give rise to a right of indemnification under this Agreement,
within sixty (60) days of such determination, stating the amount of the Loss,
if known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises.  The failure to
provide such notice within the specified time period shall not relieve the
indemnifying party of any obligation in respect of the claim except to the
extent that the indemnifying party shall have been prejudiced thereby.


 


Section 6.4         Remedies


 


Subject to Section 10.10
hereof, the Buyer and the Seller acknowledge and agree that (i) following
the First Stage Closing (with respect to the First Stage Acquisition) and the
Second Stage Closing (with respect to the Second Stage Acquisition), the
indemnification provisions of Section 6.1 and Section 6.2 will be the
sole and exclusive remedies of the Buyer and the Seller for any breach by the
other party of the representations and warranties in this Agreement, and (ii) anything
herein to the contrary notwithstanding, no breach of any representation,
warranty, covenant or agreement contained herein will give rise to any right on
the part of the Buyer or the Seller, after the First Stage Closing or after the
Second Stage Closing to rescind this Agreement or any of the transactions
contemplated hereby.


 


Section 6.5         Third Party Claims


 


(a)           If
any claim is made by a Third Party against the Company or its Subsidiaries, the
Seller or the Buyer that, if sustained, would give rise to indemnification
under Sections 6.1 or 6.2 of this Agreement, the Seller or the Buyer, as the
case may be (the “Indemnified Party”), will promptly notify the other
party (the “Indemnifying Party”) in writing of the claim (but, where the
Buyer is the Indemnified Party, only with respect to claims made against the
Buyer or made against the Company or any of its 


 


49

















 


Subsidiaries
after the Second Stage Closing) and will afford the Indemnifying Party, or its
designee, the opportunity to defend or to settle the claim at the Indemnifying
Party’s sole expense (but, where the Buyer is the Indemnified Party, only with
respect to claims made against the Buyer). 
The Indemnifying Party will have the right to defend or, subject to
clause (b) below, settle, at its own expense and with counsel of its
choice, any such matter involving the asserted liability of the Indemnified
Party, if the Indemnifying Party promptly gives written notice of its intention
to do so to the Indemnified Party.


 


(b)           In the event that the
Indemnifying Party exercises the right to undertake any such defense against
any Third Party claim as provided above, the Indemnified Party may participate
in such defense at its own expense.  The
Indemnified Party will cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party, at the Indemnifying Party’s
expense, all witnesses, pertinent records, materials and information in the
Indemnified Party’s possession or under the Indemnified Party’s control
relating thereto as is reasonably requested by the Indemnifying Party.  Similarly, in the event that the Indemnified
Party is, directly or indirectly, conducting the defense against any such Third
Party claim, the Indemnifying Party will cooperate with the Indemnified Party
in such defense and make available to the Indemnified Party, at the
Indemnifying Party’s expense, all such witnesses, records, materials and
information in the Indemnifying Party’s possession or under the Indemnifying
Party’s control relating thereto as is reasonably requested by the Indemnified
Party.  No such Third Party claim may be
settled by the Indemnifying Party without the prior written consent of the
Indemnified Party unless such settlement provides for a full and unconditional
release of the Indemnified Party.  If the
Indemnifying Party elects to direct the defense of any such Third Party claim,
the Indemnified Party will not pay, or permit to be paid, any part of such Third
Party claim unless the Indemnifying Party consents in writing to such payment,
or unless the Indemnifying Party withdraws from the defense of such Third Party
claim or unless a final judgment, from which no appeal may be taken by or on
behalf of the Indemnifying Party, is entered against the Indemnified Party for
such Third Party claim.


 


Section 6.6         Treatment of Indemnity
Payments


 


The Seller and
the Buyer agree to treat all payments made under the indemnity provisions of
this Agreement, as adjustments to the First Stage Purchase Price and/or the
Second Stage Purchase Price, as applicable.


 


50

















 


ARTICLE 7.          OTHER COVENANTS OF THE
PARTIES


 


Section 7.1         Access to Information
Prior to the Second Stage Closing Date


 


From the
Signing Date until the Second Stage Closing Date, upon reasonable notice, the
Seller will, and will use its reasonable best efforts to cause the Company and
its Subsidiaries and their respective officers, employees, independent public
accountants and other representatives, (i) to afford the Buyer and its
representatives reasonable access, during normal business hours, to the
offices, properties and books and records of the Company and its Subsidiaries,
including financial and accounting information and working papers that the
Buyer may from time to time reasonably request given the nature and size of the
Buyer’s interest in the Company and the Buyer’s status as an IFRS reporting
company filing annual reports with the SEC on Form 20-F and (ii) to
furnish to the representatives of the Buyer such additional information
regarding the Company and its Subsidiaries as the Buyer and its representatives
may from time to time reasonably request; provided, however, that
such access will be provided upon reasonable notice, during normal business hours,
and in a manner that will not unreasonably interfere with the conduct of the
business of the Seller, the Company or any Subsidiaries of the Company, and
will not include any right by the Buyer or its representatives to investigate
or collect any samples of air, surface water, groundwater or soil at or from
such properties.  Notwithstanding
anything to the contrary in this Agreement, the Seller will not be required to
disclose, nor to use reasonable efforts to cause the Company or its
Subsidiaries to disclose, any information to the Buyer if such disclosure
would, in the Seller’s sole discretion, (i) cause significant competitive
harm to the business of the Company and its Subsidiaries if the transactions
contemplated hereby are not consummated, (ii) jeopardize any
attorney-client privilege or other legal privilege, (iii) contravene any
applicable Legal Requirement, fiduciary duty or binding agreement or (iv) raise
significant regulatory concerns.  Any
information obtained hereunder will be kept confidential, except as may be
necessary to allow the Buyer to prepare and publish its quarterly and annual
financial statements in accordance with applicable Legal Requirements.


 


Section 7.2         Access to Information
After the Second Stage Closing Date


 


The Buyer agrees
that it will, and after the Second Stage Closing Date will use its reasonable
efforts to cause the Company and its Subsidiaries to, cooperate with and make
available (including the right to make, at the Seller’s expense, photocopies)
to the Seller, during normal business hours, all financial statements, books
and records and information (without substantial disruption of their respective
businesses) retained and remaining in existence after the Second Stage Closing
Date relating to the Company or its Subsidiaries prior to the Second Stage
Closing Date.  Such cooperation and
information will include providing copies of, among other things, relevant Tax
Returns or portions thereof, together with accompanying schedules and related
work papers and documents relating to rulings or other determinations by Tax
authorities.  The Buyer will, and will
use 


 


51

















 


its reasonable
efforts to cause the Company and its Subsidiaries to, make its and their
employees available on a mutually convenient basis to provide explanations of
any documents or information provided hereunder.  The Buyer will, and will use its reasonable
efforts to cause the Company to, use reasonable efforts to make available to
the Seller the working papers of the Company’s independent public accountants
and will request that such accounting firm make its employees available on a
mutually convenient basis to provide explanations on any documents or
information provided by it and, to the extent applicable, by the Buyer, the
Company or any of its Subsidiaries.  The
Buyer will, and will use reasonable efforts to cause the Company and its
Subsidiaries to, retain all formal books and records relating to the Company
and its Subsidiaries for a period ending after the Second Stage Closing Date
until the earlier of (i) the applicable period specified in the Company’s
document retention policy or Tax law, or (ii) ten (10) years
following the Second Stage Closing Date; provided, however, that
if the Buyer decides to destroy, or to cause the Company or any of its
Subsidiaries to destroy, any such formal books and records prior to the tenth
(10th)
anniversary of the Second Stage Closing Date, the Buyer will notify the Seller
at least ninety (90) calendar days in advance of destroying any such books and
records in order to provide the Seller the opportunity, at the Seller’s cost
and expense, to access (in accordance with this Section 7.2) and remove
and retain all or any part of such books and records as the Seller may reasonably
request.  Any information obtained
hereunder will be kept confidential, except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
an audit or other proceeding.  The Seller
will bear all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees, but excluding reimbursement for salaries and employee
benefits) incurred in connection with the Buyer’s, the Company’s and its
Subsidiaries’ providing such information. 
Nothing in this Section 7.2 shall obligate the Buyer of the Company
to retain e-mails, voicemails, SMS messages or other electronic data for any
period of time that would be inconsistent with the Buyer’s or the Company’s (as
the case may be) internal procedures and practices.


 


Section 7.3         Certain Actions


 


The parties
will take the actions set forth in Section 7.3 of the Seller Disclosure
Letter.


 


Section 7.4         Further Action


 


(a)           Each
of the parties to this Agreement will execute and deliver such documents and other
papers, and, subject to Section 7.5, shall take such further actions and
do or cause to be done all things necessary, proper or advisable under
applicable Legal Requirements, as may be reasonably required to carry out the
provisions hereof and to give effect to the transactions contemplated hereby
and by the Shareholders Agreement.


 


52

















 


(b)           The
Seller and the Buyer will, and the Seller will use its reasonable efforts to
cause the Company and its Subsidiaries to, undertake to cooperate fully, as and
to the extent reasonably requested by the other party, in connection with the
filing of Tax Returns and any audit, litigation or other proceedings in order
to safeguard their interests vis-à-vis Third Parties.


 


(c)           During the period between the Signing Date
and the Second Stage Closing Date, the Seller and the Buyer, subject to
Section 7.5, will use all commercially reasonable efforts to take, or to
cause to be taken, all appropriate action, to do or cause to be done all things
necessary, proper or advisable under applicable Legal Requirements, and to
execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective
the transactions contemplated by this Agreement, including to use its
reasonable efforts to cause the Company and its Subsidiaries, as applicable, to
obtain all requisite consents of or waivers from Third Parties with respect to
the agreements listed in Section 4.6(b) of the Seller Disclosure
Letter.


 


(d)           To the extent that the sale of the Shares
causes a breach of any agreement, lease, license, permit or right or gives any
Person other than the Company or any of its Subsidiaries the ability to
terminate any such agreement, lease, license, permit or right, the Seller shall
use reasonable commercial efforts to obtain the consent of any Third Parties
required to prevent such breach or termination.


 


(e)           The Seller shall cause the Company to grant
to the Buyer, as promptly as practicable following the Signing Date but with an
effective date of the earlier of (x) the Second Stage Closing Date and
(y) the date on which this Agreement is terminated pursuant to
Section 9.5, registration rights with respect to the Shares that are no
less favorable to the Buyer than the registration rights currently existing in
favor of the Seller with respect to the Shares.


 


Section 7.5         Regulatory and Other
Authorizations


 


(a)           The Seller and the Buyer will (i) use
their reasonable best efforts to obtain (or to cause the Company to obtain) as
promptly as reasonably practicable all authorizations, consents, orders,
actions and approvals, and to make all filings with and to give all notices to
all Governmental Authorities required to consummate the transactions
contemplated by this Agreement, (ii) cooperate fully with the other party
hereto in promptly seeking to obtain all such authorizations, consents, orders,
actions and approvals and to make all such filings and give such notices and
(iii) provide such other information to any Governmental Authority as such
Governmental Authority may reasonably request in connection therewith.  Each party hereto agrees to make (and, in the
case of the Seller, to use its reasonable 


 


53

















 


efforts to cause the Company to make) promptly (but in no event later
than ten (10) Business Days after the Signing Date or the Exercise Notice
Date, as applicable) any required filings with respect to the First Stage
Acquisition and the Second Stage Acquisition, as applicable, pursuant to the
HSR Act and to supply (and, in the case of the Seller, to use its reasonable
efforts to cause the Company to supply) as promptly as reasonably practicable
to the appropriate Governmental Authorities any information and documentary
material that may be reasonably requested pursuant to the HSR Act.  The Buyer hereto agrees to make as promptly
as reasonably practicable (taking into account, in particular, the legitimate
interest of the Buyer and the Seller in carrying out adequate pre-notification)
following the Signing Date or the Exercise Notice Date, as applicable, its
filing(s) required to be made with member states of the European Community
in which such filing(s) are required and with the United Kingdom Office of
Fair Trading (in the event that the United Kingdom Office of Fair Trading
claims jurisdiction to review the transaction) and with the European
Commission, as applicable, and to supply as promptly as reasonably practicable
to the European Commission or any such member states any additional information
and documentary material that may be reasonably requested.  Each party hereto agrees to make (or, in the
case of the Seller, to use its reasonable efforts to cause the Company to make)
promptly following the Signing Date or the Exercise Notice Date, as applicable,
its filing(s), if applicable, under the Investment Canada Act and the
Competition Act with respect to the First Stage Acquisition and the Second
Stage Acquisition, as applicable, and to supply as promptly as reasonably
practicable to the appropriate Governmental Authorities any information and
documentary material that may be reasonably requested pursuant to the
Investment Canada Act or the Competition Act. 
The Buyer will pay all fees or make other payments to any Governmental
Authority in order to obtain any such authorizations, consents, orders or
approvals.


 


(b)           In addition, provided that the Buyer shall
not be required to take any action that would have a material adverse effect on
the business of the Company and its Subsidiaries and the Buyer’s Specified
Businesses, taken as a whole, the Buyer agrees to use its reasonable best
efforts to avoid or eliminate each and every impediment under any antitrust,
competition or trade regulation Legal Requirement that may be asserted by any
antitrust or competition Governmental Authority so as to enable the parties
hereto to close the transactions contemplated by this Agreement as promptly as
reasonably practicable, including negotiating, committing to and effecting by
consent decree, hold separate orders, or otherwise, the sale, divestiture or
disposition of the assets, properties or businesses of the Buyer and its
Affiliates (other than the Company and its Subsidiaries) and the entrance into
such other arrangements, as are necessary in order to avoid the entry of, and
the commencement of litigation seeking the entry of, or to effect 


 


54

















 


the dissolution of, any injunction, temporary restraining order or
other order in any suit or proceeding, which would otherwise have the effect of
materially delaying or preventing the consummation of the transactions
contemplated by this Agreement; provided that to the extent that any
such impediment is created or increased as a result of any acquisition by, or
entry into a Company board-approved joint venture by, the Company after the
First Stage Closing Date and having one or more of the effects listed above,
the Buyer shall not be required to take the actions listed above to the extent
relating to such new or increased impediment. Nothing contained in this
Agreement shall require the Seller to cause the Company or any of its
Subsidiaries to hold separate, or sell, divest or dispose of, any of the
assets, properties or businesses of the Company or any of its Subsidiaries or
to agree to any restriction on the ownership of such assets or properties or
the manner in which such businesses are conducted.


 


(c)           The Seller and the Buyer will each promptly
(or, in the case of the Seller, use its reasonable efforts to cause the Company
to) notify the other party of any communication that it or any of its
Affiliates receives from any Governmental Authority relating to the matters
that are the subject of this Agreement and permit, when practicable, the other
party to review in advance any proposed communication by such party (or the
Company) to any Governmental Authority. 
Neither the Seller nor the Buyer will agree to, and the Seller will use
its reasonable efforts to cause the Company not to agree to, participate in any
meeting with any Governmental Authority in respect of any filings,
investigation (including any settlement of the investigation), litigation, or
other inquiry unless it consults with the other party in advance and, to the
extent permitted by such Governmental Authority, gives the other party the
opportunity to attend and participate at such meeting.  The parties to this Agreement will (or, in
the case of the Seller, use its reasonable efforts to cause the Company to)
coordinate and cooperate fully with each other and the Company in exchanging
such information and providing such assistance as the other party (or the
Company) may reasonably request in connection with the foregoing (i.e., in
particular, in relation to all necessary merger control proceedings worldwide)
and in seeking early termination of any applicable waiting periods, including
under the HSR Act.  The Seller and the
Buyer will (or, in the case of the Seller, use its reasonable efforts to cause
the Company to) provide each other with copies of all correspondence, filings
or communications between them (or the Company) or any of their
representatives, on the one hand, and any Governmental Authority or members of
its staff, on the other hand, with respect to this Agreement and the
transactions contemplated by this Agreement; provided, however,
that materials may be redacted (w) to remove references concerning the
valuation of the Shares or the business of the Company and its Subsidiaries,
(x) as necessary to comply with contractual arrangements, (y) as
necessary to address reasonable privilege or confidentiality concerns


 


55














 


and (z) as necessary to
address competitive or regulatory concerns; however, both parties shall assess
on a case-by-case basis in good faith whether the redacted information may be
exchanged between outside competition counsel for the purpose of any merger
control proceedings.


 


(d)           Prior to the First
Stage Closing Date, the Buyer shall not enter into any transaction, or any
agreement to effect any transaction (including any merger or acquisition) that
might reasonably be expected to prevent, hinder or delay the consummation of
the transactions contemplated hereby or to make it more difficult, or to
increase the time required, to:  (i) obtain
the expiration or termination of the waiting period under the HSR Act, or any
other applicable antitrust or competition law or regulation, applicable to the
transactions contemplated by this Agreement, (ii) avoid the entry of, the
commencement of litigation seeking the entry of, or to effect the dissolution
of any injunction, temporary restraining order or other order that would
materially delay or prevent the completion of the transaction contemplated
hereby, or (iii) obtain all authorizations, consents, orders and approvals
of Governmental Authorities necessary for the consummation of the transactions
contemplated by this Agreement; provided, however, that if the
Buyer makes any acquisition subsequent to the First Stage Closing Date that has
one or more of the effects listed above, the Buyer shall use its reasonable
best efforts to avoid and eliminate each and every impediment to the
transactions contemplated by this Agreement under any antitrust, competition or
trade regulation Legal Requirement that may be asserted by any antitrust or
competition Governmental Authority or any other party arising from such
acquisition (including by agreeing to hold separate, or sell, divest or dispose
of any of the assets so acquired); provided that to the extent that any
such impediment is created or increased as a result of any acquisition by, or
entry into a Company board-approved joint venture by, the Company after the
Signing Date and having one or more of the effects listed above, the Buyer
shall not be required to take the actions listed above to the extent relating
to such new or increased impediment.


 


(e)           In addition, provided
that the Buyer shall not be required to take any action that would have a
material adverse effect on the business of the Company and its Subsidiaries and
the Buyer’s Specified Businesses, taken as a whole, the Buyer shall use its
best efforts to defend through litigation on the merits any claim asserted in
court by any party in order to avoid entry of, or to have vacated or
terminated, any decree, order or judgment (whether temporary, preliminary or
permanent) that would prevent the First Stage Closing prior to 1 January 2010,
or would prevent the Second Stage Closing prior to the date that is the
eighteenth (18th)
month anniversary of the first delivery of a Exercise Notice pursuant to Section 3.1(a).


 


56





















 


(f)            The Buyer and the
Seller will, or will cause their respective Affiliates to, notify their
respective employees in respect of whom notification is required under
applicable Legal Requirements or by contract of the transactions contemplated
by this Agreement and the Shareholders Agreement.


 


Section 7.6         Seller-Company Agreements


 


Without the
prior written consent of the Buyer, with respect to the prior to the Second
Stage Closing Date, the Seller shall not (and shall cause its Affiliates and
Seller’s Pension Funds not to) materially change the terms of, or manner of
providing, the Shared Arrangements or expand or reduce the scope of services
under the Shared Arrangements from that currently provided, in each case, in a
manner that is adverse to the Company and its Subsidiaries.


 


Section 7.7         Notifications


 


Until the First
Stage Closing or the Second Stage Closing, as applicable, each party hereto
will promptly notify the other party in writing of any fact, change, condition,
circumstance or occurrence or nonoccurrence of any event of which it is aware
that will or is reasonably likely to result in any of the conditions set forth
in Article 8 or Article 9, as applicable, of this Agreement becoming
incapable of being satisfied; provided, however, that subject to
the immediately following sentence, the delivery of any notice pursuant to this
Section 7.7 will not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. 
Notwithstanding anything in this Agreement to the contrary, the Buyer
shall not be entitled to indemnification pursuant to Section 6.1 with
respect to any matter set forth in the Seller Disclosure Letter in accordance
with this Agreement on the Signing Date or in the Final Data Room.  In addition, the Seller shall, at any time
and from time to time prior to the date that is at least one Business Day prior
to the Second Stage Closing Date, deliver to the Buyer modifications, changes
or updates to the Seller Disclosure Letter in order to disclose or take into
account facts, matters or circumstances that arise or occur at or prior to the
date of delivery and any such updated information provided to the Buyer in
accordance with this Section 7.7 shall be deemed to modify the
representations and warranties made in this Agreement with respect to the
Second Stage Acquisition; provided that no such modification, change or
update delivered after the First Stage Closing shall limit the Buyer’s right to
indemnification under Section 6.1 pursuant to the Second Stage Acquisition
with respect to a breach of a representation or warranty by the Seller as of
the First Stage Closing Date.


 


Section 7.8         Limitation on Purchases
and Sales of Common Shares


 


From the period beginning on
the Signing Date until the Second Stage Closing Date (or, if no Exercise Notice
shall have been delivered on or prior to 31 July 2011, until 31 July 2011)
neither the Seller nor the Buyer shall buy, sell or otherwise subject to a
security interest, pledge, hypothecation, mortgage or lien, 


 


57

















 


(or enter into any hedging
arrangement or derivative transaction with respect to) any Common Shares (or
any other shares of the Company), nor shall either of them register, request
registration of or take any action to begin the process of registering Common
Shares for sale pursuant to a registration statement filed with the SEC.


 


ARTICLE 8.          CONDITIONS PRECEDENT, WAIVER, AND TERMINATION
PROVISIONS OF FIRST STAGE ACQUISITION


 


Section 8.1         Conditions Precedent to
Performance of the Parties


 


The obligations
of the parties to consummate the First Stage Acquisition are subject to
fulfillment or waiver, at or prior to the First Stage Closing, of each of the
following conditions:


 


(a)           Regulatory
Requirements:  (i) If any
waiting period (and any extension thereof) under the HSR Act is applicable to
the First Stage Acquisition, such waiting period (and any extension thereof)
will have expired, (ii) (A) if the European Commission has
jurisdiction to examine the First Stage Acquisition, a decision will have been
adopted by the European Commission pursuant to Council Regulation (EC)
139/2004, as amended, declaring that the First Stage Acquisition is compatible
with the common market (either unconditionally or subject to the fulfillment of
certain conditions or obligations) or compatibility will have been deemed under
Article 10(6) of the European Commission Merger Regulation, and (B) if
notifications are required in one or more member states of the European
Community and, in the case of the United Kingdom, if the United Kingdom Office
of Fair Trading claims jurisdiction to review the transaction, then the
approval of such member state under the applicable national competition laws of
such member state shall have been obtained, (iii) if the transactions
contemplated by this Agreement are notifiable pursuant to Part IX of the
Competition Act, (A) an advance ruling certificate shall have been issued
in accordance with Section 102 of the Competition Act by the Commissioner
of Competition (the “Commissioner”) appointed under the Competition Act
or (B) the Buyer shall have been advised in writing by the Commissioner
that the Commissioner is of the view, at that time, that, in effect, grounds do
not exist to initiate proceedings before the Competition Tribunal under the
merger provisions of the Competition Act in respect of the transactions
contemplated by this Agreement and that any terms and conditions attached to
any such advice shall be acceptable to the Buyer acting reasonably (a “no-action letter”) and either the Commissioner shall have
issued a waiver under Section 113(c) of the Competition Act of the
obligation to notify the Commissioner under Part IX of the Competition Act
or the waiting period under Section 123 of the Competition Act shall have expired
or been waived; (iv) if the First Stage Acquisition is subject to review
under Part IV of the Investment Canada Act, the responsible 


 


58

















 


Minister under said Act shall
have, or, in accordance with the Act, shall be deemed to have, declared the
transactions to likely be of net benefit to Canada on terms acceptable to the
Buyer; and (v) any consents, authorizations, clearances, orders,
approvals, declarations and filings required to be made or obtained at or prior
to the First Stage Closing under any other applicable antitrust or competition
law or regulation and identified or described in Section 8.1(a)(v) of
the Seller Disclosure Letter shall have been made or obtained (and, in the case
of Australia and New Zealand, if the relevant authorities claim jurisdiction to
review the transaction under their national merger control rules, approval from
those relevant authorities shall have been obtained); and


 


(b)           No Order:  No Governmental Authority will have enacted,
issued, enforced or entered into any statute, rule, regulation, injunction or
other order (whether temporary, preliminary or permanent) that is in effect and
has the effect of making the First Stage Acquisition illegal or otherwise
restraining or prohibiting its consummation; provided, however,
that prior to asserting non-satisfaction of this Section 8.1(b), the Buyer
must have complied with its obligations under Sections 7.4 and 7.5.


 


Section 8.2         Conditions Precedent to
Performance of the Seller


 


The obligations
of the Seller to consummate the First Stage Acquisition will be subject to the
fulfillment or written waiver, at or prior to the First Stage Closing, of the
following conditions:


 


(a)           Agreements and
Covenants:  The agreements and
covenants contained in this Agreement to be complied with by the Buyer on or
before the First Stage Closing will have been complied with in all material
respects; and


 


(b)           Accuracy of
Representations and Warranties:  To
the extent relating to the First Stage Acquisition, the representations and
warranties of the Buyer contained in Article 5 shall be true and correct
as of the Signing Date and as of the First Stage Closing Date with the same
effect as if made at and as of such time.


 


Section 8.3         Conditions Precedent to
Performance of the Buyer


 


The obligations
of the Buyer to consummate the First Stage Acquisition will be subject to the
fulfillment or written waiver, at or prior to the First Stage Closing, of the
following conditions:


 


(a)           Agreements and
Covenants:  The agreements and
covenants contained in this Agreement to be complied with by the Seller on or
before the First Stage Closing will have been complied with in all material
respects;


 


59

















 


(b)           Material Adverse Change:  No Material Adverse Change shall have
occurred during the period beginning on the Signing Date and ending on and
including the First Stage Closing Date, and no event or events shall have
occurred during the period beginning on the Signing Date and ending on and
including the First Stage Closing Date that could reasonably be expected to
result in such a Material Adverse Change;


 


(c)           Accuracy of
Representations and Warranties:  To
the extent relating to the First Stage Acquisition, (x) the representations
and warranties of the Seller contained in Sections 4.1, 4.2, 4.3 and 4.4 shall
be true and correct as of the Signing Date and as of the First Stage Closing
Date with the same effect as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
and (y) the representations and warranties of the Seller in Sections 4.5
through 4.21 shall be true and correct (disregarding all qualifications and
exceptions contained therein relating to materiality, Material Adverse Effect,
Material Adverse Change or any similar standard or qualification) as of the
Signing Date and as of the First Stage Closing Date with the same effect as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date) except where the failure of such
representations and warranties to be so true and correct would not have a
Material Adverse Effect; and


 


(d)           Board Representation.  An individual designated by the Buyer and an
additional individual designated by the Seller shall have been elected to the
Board of Directors of the Company, the effect of which election shall be
conditional upon the occurrence of the First Stage Closing.


 


Section 8.4         Waiver; Determination of
Satisfaction of Conditions


 


The Buyer may
waive all or any of the conditions set forth in Section 8.3, the Seller
may waive all or any of the conditions set forth in Section 8.2, but
neither the Buyer nor the Seller may waive the conditions set forth in Section 8.1
without the prior written consent of the other party.


 


Section 8.5         Termination Prior to the
First Stage Closing


 


(a)           This Agreement may be
terminated at any time prior to the First Stage Closing:


 


(i)            by either the Seller
or the Buyer if the First Stage Closing has not occurred by 1 January 2010;
provided, however, that the right to terminate this Agreement
under this Section 8.5(a)(i) will not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of,
or has resulted in, the failure of the First Stage Closing to occur by this
date, including, in 


 


60

















 


particular, the Buyer’s failure to fulfill
its obligations under Section 7.5(b);


 


(ii)           by either the Seller or
the Buyer in the event that any Governmental Authority has enacted, issued,
enforced or entered into any statute, rule, regulation, injunction or other
order, restraining, enjoining or otherwise prohibiting the First Stage
Acquisition that will have become final and nonappealable; provided, however,
that the Buyer’s right to terminate this Agreement under this Section 8.5(a)(ii) will
not be available to the Buyer if the Buyer has failed to fulfill any of its
obligations under Section 7.5(b);


 


(iii)          by the mutual written
consent of the Seller and the Buyer; or


 


(iv)          by either the Buyer or
the Seller, if an Event of Insolvency occurs with respect to the other party.


 


(b)           In the event of
termination of this Agreement under Section 8.5(a) by written notice
to the other party, this Agreement will become void and there will be no
liability on the part of either party to this Agreement except (i) that
Sections 8.5(b), 10.2, 10.4, 10.5, 10.8, 10.9 and 10.11 will survive any
termination of this Agreement and (ii) to the extent that such termination
results from the wilful and material breach by a party of any of its
representations and warranties contained in this Agreement, or from the breach
by a party of any of its covenants or agreements set forth in this Agreement.


 


ARTICLE 9.          CONDITIONS PRECEDENT, WAIVER, AND TERMINATION
PROVISIONS OF SECOND STAGE ACQUISITION


 


Section 9.1         Conditions Precedent to
Performance of the Parties


 


The obligations
of the parties to consummate the Second Stage Acquisition are subject to fulfillment
or waiver, at or prior to the Second Stage Closing, of each of the following
conditions:


 


(a)           First Stage Closing:  The First Stage Closing shall have occurred;


 


(b)           Regulatory
Requirements:  (i) Any waiting
period (and any extension thereof) under the HSR Act applicable to the Second
Stage Acquisition will have expired, (ii) if the European Commission has
jurisdiction to examine the Second Stage Acquisition, a decision will have been
adopted by the European Commission pursuant to Council Regulation (EC)
139/2004, as amended, declaring that the Second Stage Acquisition is compatible
with the common market (either unconditionally or subject to the fulfillment of
certain conditions or obligations) or compatibility will 


 


61

















 


have been deemed under Article 10(6) of
the European Commission Merger Regulation, provided that if a referral
is made by the European Commission to one or more member states of the European
Community pursuant to Art. 9 of Council Regulation (EC) 139/2004, as amended
(or if one or more Member States has jurisdiction to review the Second Stage
Acquisition), then the approval of such member state under the applicable
national competition laws of such member state shall have been obtained; (iii) if
the transactions contemplated by this Agreement are notifiable pursuant to Part IX
of the Competition Act, (A) an advance ruling certificate shall have been
issued in accordance with Section 102 of the Competition Act by the
Commissioner appointed under the Competition Act or (B) the Buyer shall
have been advised in writing by the Commissioner that the Commissioner is of
the view, at that time, that, in effect, grounds do not exist to initiate
proceedings before the Competition Tribunal under the merger provisions of the
Competition Act in respect of the transactions contemplated by this Agreement
and that any terms and conditions attached to any such advice shall be
acceptable to the Buyer acting reasonably (a “no-action
letter”) and either the Commissioner shall have issued a waiver
under Section 113(c) of the Competition Act of the obligation to
notify the Commissioner under Part IX of the Competition Act or the
waiting period under Section 123 of the Competition Act shall have expired
or been waived; (iv) if the Second Stage Acquisition is subject to review
under Part IV of the Investment Canada Act, the responsible Minister under
said Act shall have, or, in accordance with the Act, shall be deemed to have
declared the transactions to likely be of net benefit to Canada on terms
acceptable to the Buyer; and (v) any consents, authorizations, clearances,
orders, approvals, declarations and filings required to be made or obtained at
or prior to the Second Stage Closing under other applicable antitrust or
competition law or regulation as determined by the Buyer and the Seller
determined on the basis of Section 9.1(b)(v) of the Seller Disclosure
Letter, after giving effect to then-applicable specific country revenues of the
Company and the Buyer and relevant Legal Requirements as they exist at such
time, will have been made or obtained (and in the case of Australia and New
Zealand, approval from the relevant national merger control authorities shall
have been obtained); and


 


(c)           No Order:  No Governmental Authority will have enacted,
issued, enforced or entered into any statute, rule, regulation, injunction or
other order (whether temporary, preliminary or permanent) that is in effect and
has the effect of making the Second Stage Acquisition illegal or otherwise
restraining or prohibiting its consummation; provided, however,
that prior to asserting non-satisfaction of this Section 9.1(c), the Buyer
must have complied with its obligations under Sections 7.4 and 7.5.


 


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Section 9.2         Conditions Precedent to
Performance of the Seller


 


The obligations
of the Seller to consummate the Second Stage Acquisition will be subject to the
fulfillment or written waiver, at or prior to the Second Stage Closing, of the
following conditions:


 


(a)           Agreements and
Covenants:  The agreements and
covenants contained in this Agreement and the Shareholders Agreement to be
complied with by the Buyer after the First Stage Closing and on or before the
Second Stage Closing will have been complied with in all material respects; and


 


(b)           Accuracy of
Representations and Warranties:  To
the extent relating to the Second Stage Acquisition, the representations and
warranties of the Buyer contained in Article 5 shall be true and correct
as of the Second Stage Closing Date with the same effect as if made at and as
of such time.


 


Section 9.3         Conditions Precedent to
Performance of the Buyer


 


The obligations
of the Buyer to consummate the Second Stage Acquisition will be subject to the
fulfillment or written waiver, at or prior to the Second Stage Closing, of the
following conditions:


 


(a)           Agreements and
Covenants:  The agreements and
covenants contained in this Agreement and the Shareholders Agreement to be
complied with by the Seller after the First Stage Closing and on or before the
Second Stage Closing will have been complied with in all material respects;


 


(b)           Material Adverse
Change:  No Material Adverse Change
shall have occurred during the period beginning on the First Stage Closing Date
and ending on and including the Second Stage Closing Date, and no event or
events shall have occurred during the period beginning on the First Stage
Closing Date and ending on and including the Second Stage Closing Date that
could reasonably be expected to result in such a Material Adverse Change; provided
that if a MAC Determination Date has occurred and then the Buyer delivers a
Buyer Exercise Notice pursuant to Section 3.1, the Buyer shall be deemed
to have waived the condition set forth in this Section 9.3(b) with
respect to the issue that gave rise to the Material Adverse Change that
permitted the delivery of such notice.


 


(c)           Accuracy of
Representations and Warranties:  The
representations and warranties of the Seller contained in Sections 4.1, 4.2,
4.3 and 4.4 shall be true and correct as of the Second Stage Closing Date with
the same effect as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), and (y) the
representations and warranties of the Seller in Sections 4.5 through 4.21 shall
be true and correct (disregarding all qualifications and exceptions contained
therein relating to materiality, Material Adverse Effect, Material 


 


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Adverse Change or any similar
standard or qualification) as of the Second Stage Closing Date with the same
effect as if made at and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such date) except where the failure
of such representations and warranties to be so true and correct would not have
a Material Adverse Effect.


 


(d)           Board Representation.  Each of the five Buyer Designees replacing
the five Seller Designees pursuant to Section 2.1(f) of the
Shareholders Agreement shall have been elected to the Board of Directors of the
Company, the effect of which election shall be conditional upon the occurrence
of the Second Stage Closing.


 


Section 9.4         Waiver; Determination of
Satisfaction of Conditions


 


The Buyer may
waive all or any of the conditions set forth in Section 9.3, the Seller
may waive all or any of the conditions set forth in Section 9.2, but
neither the Buyer nor the Seller may waive the conditions set forth in Section 9.1
without the prior written consent of the other party.


 


Section 9.5         Termination After the
First Stage Closing and Prior to the Second Stage Closing


 


(a)           This Agreement may be
terminated at any time after the First Stage Closing and prior to the Second
Stage Closing:


 


(i)            by either the Seller or
the Buyer if the Second Stage Closing has not occurred by the date that is the
eighteenth (18th)
month anniversary of the Exercise Notice Date; provided, however,
that the right to terminate this Agreement under this Section 9.5(a)(i) will
not be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or has resulted in, the failure of the
Second Stage Closing to occur by this date, including, in particular, the Buyer’s
failure to fulfill its obligations under Section 7.5(b);


 


(ii)           by either the Seller or
the Buyer in the event that any Governmental Authority has enacted, issued,
enforced or entered into any statute, rule, regulation, injunction or other
order, restraining, enjoining or otherwise prohibiting the Second Stage
Acquisition that will have become final and nonappealable; provided, however,
that the Buyer’s right to terminate this Agreement under this Section 9.5(a)(ii) will
not be available to the Buyer if the Buyer has failed to fulfill any of its
obligations under Section 7.5(b);


 


(iii)          by the mutual written
consent of the Seller and the Buyer;


 


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(iv)          by either the Buyer or
the Seller in the event that the Exercise Notice Date has not occurred on or
prior to 31 July 2011; or


 


(v)           by either the Buyer or
the Seller, if an Event of Insolvency occurs with respect to the other party.


 


(b)           In the event of
termination of this Agreement under Section 9.5(a) by written notice
to the other party, this Agreement will become void and there will be no
liability on the part of either party to this Agreement except (i) that Article 6
(to the extent the provisions therein relate to the First Stage Acquisition)
and Sections 6.1(g), 9.5(b), 10.2, 10.4, 10.5, 10.8, 10.9 and 10.11 will
survive any termination of this Agreement and (ii) to the extent that such
termination results from the wilful and material breach by a party of any of
its representations and warranties contained in this Agreement, or from the
breach by a party of any of its covenants or agreements set forth in this
Agreement.


 


ARTICLE 10.       MISCELLANEOUS


 


Section 10.1       Entire Agreement


 


This Agreement
and the Shareholders Agreement, together with the Seller Disclosure Letter and
all other documents referred to herein, constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
the Shareholders Agreement and supersedes any and all prior agreements,
negotiations, correspondence, undertakings, understandings and communications
of the parties with respect to the subject matter of this Agreement and the
Shareholders Agreement, with the exception of the confidentiality agreement
between the parties dated 15 January 2008 (the “Confidentiality
Agreement”), to which Section 10.8 applies.


 


Section 10.2       Transaction Costs


 


Except as
otherwise provided herein, the parties to this Agreement will pay their own
costs and expenses (including legal, accounting and other fees) relating to
this Agreement.  Any notary fees and/or
registration costs will be borne by the Buyer. 
The Buyer shall bear the cost of any Swiss securities transfer stamp tax
(Umsatzabgabe) applicable to the
transfer of the Shares as contemplated hereby.


 


Section 10.3       Modifications


 


This Agreement,
including this undertaking itself, may not be amended or modified except by a
document in writing duly executed by the parties hereto.  The parties agree that they jointly
negotiated and prepared this Agreement and the agreements contemplated hereby
and that neither this Agreement nor any agreements contemplated hereby will be
construed against any party on the grounds that such party prepared or drafted
the same.


 


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Section 10.4                    Notices


 


Notices
hereunder will be in writing in the English language.  Notices will be deemed to have been received (a) upon
receipt of a registered letter, (b) the next Business Day following proper
deposit with an internationally recognized express overnight delivery service,
or (c) upon confirmation of a facsimile transmission; provided that
for purposes of delivering an Exercise Notice pursuant to Section 3.1,
such an Exercise Notice shall only be delivered by the Special Notice
Procedure.  All other notices shall be
addressed as follows:


 


If to the
Seller:


 


Nestlé S.A.

Avenue Nestlé 55

1800 Vevey

Switzerland

Attention:  Group General Counsel

Facsimile:  + 41 21 924 4592


 


With a copy
to:                                                             Cravath,
Swaine & Moore LLP

825 Eighth Avenue

Worldwide Plaza

New York, New York 10019

Attention: Alan C. Stephenson, Esq.
                  Robert I. Townsend, Esq.

Facsimile: (212) 474-3700


 


If to the
Buyer:


 


Novartis AG

Lichstrasse 35

4056 Basel

Switzerland

Attention:  Group General Counsel

Facsimile:  +41 61 324 7826


 


With a copy
to:                                                             Allen &
Overy LLP

1221 Avenue of the Americas

New York, New York 10020

Attention: Daniel P. Cunningham, Esq.
                  Eric S. Shube, Esq.

Facsimile:  (212) 610-6399


 


or to such
other address as may be hereafter communicated in writing by the Seller to the
Buyer or vice versa in a notice given in accordance with this Section 10.4.  The Buyer and the Seller shall share equally
the cost of the Special Notice Procedure.


 


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Section 10.5                    Public
Announcements


 


Except as
required by Legal Requirements or by the requirements of any stock exchange on
which the securities of a party hereto are listed, no party to this Agreement
will make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without prior notification to the other party
and the Company, and the parties to this Agreement will consult with the Company
and cooperate as to the form, timing and contents of any such press release,
public announcement or disclosure.


 


Section 10.6                    Severability


 


Each provision
of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement will be held
to be unenforceable or invalid under applicable law, such provision will be
ineffective only to the extent of such unenforceability or invalidity, and the
parties will negotiate in good faith to modify this Agreement so that the
unenforceable or invalid provision is replaced by such valid and enforceable
provision which the parties consider, in good faith, to match as closely as
possible the invalid or unenforceable provision and to achieve the same or a
similar economic effect and to give effect to the parties’ original
intent.  The remaining provisions of this
Agreement will continue to be binding and in full force and effect.


 


Section 10.7                    Assignment


 


No party hereto
may assign, in whole or in part, or delegate all or any part of its rights,
interests or obligations under this Agreement without the prior written consent
of the other party.  Any assignment or
delegation made without such consent will be void.  Notwithstanding the foregoing, the Buyer
shall be entitled to assign its rights under this Agreement to any one of its
Affiliates that is directly or indirectly wholly owned (each a “Buyer
Designated  Affiliate”) to be the
purchaser or transferee of some or all of the Shares, provided  that no such assignment shall release the
Buyer from its obligations under this Agreement.  The Buyer shall be responsible for and shall
pay or reimburse the Seller for any incremental Tax liabilities and other
reasonable out-of-pocket costs and expenses resulting solely from the
substitution of a Buyer Designated Affiliate for the Buyer as the purchaser of
Shares in accordance with this Section 10.7.


 


Section 10.8                    Confidentiality
Agreement


 


The terms of
the Confidentiality Agreement are hereby incorporated herein by reference and
except for Section 6 thereof, which the parties agree shall terminate
automatically upon the effectiveness of this Agreement, will continue in full
force and effect until the First Stage Closing Date, at which time the Buyer’s
obligations to the Seller under the Confidentiality Agreement will
terminate.  If, 


 


67

















 


however, the
First Stage Closing is not consummated, the Confidentiality Agreement will
remain in full force and effect, in which case neither party will declassify
said information.  At or as promptly as
reasonably practicable after the First Stage Closing, each of the parties
hereto shall enter into a confidentiality agreement with the Company on terms
and conditions as shall be reasonable to protect the confidentiality of any
information provided to such party by the Company and its Subsidiaries but
providing for reasonable exceptions that permit disclosure of such information
to the extent necessary to comply with such party’s reporting obligations under
applicable Legal Requirements or applicable securities exchange rules, and
which confidentiality agreements shall supersede all prior confidentiality
agreements between the Company and such party.


 


Section 10.9                    Governing Law


 


This Agreement
will be governed by and construed in accordance with the laws (without regard
for principles of conflict of laws) of Switzerland with the exclusion of the
Vienna Convention on the International Sale of Goods dated 11 April 1980.


 


Section 10.10             Specific Performance


 


Each party
acknowledges and agrees that the other party would be irreparably damaged if
the provisions of this Agreement are not performed in accordance with their
terms and that any breach of this Agreement and the non-consummation of the
transactions contemplated hereby by either party could not be adequately
compensated in all cases by monetary damages alone.  Accordingly, in addition to any remedy to
which such other party may be entitled under Section 10.11, provisional
measures and injunctive relief necessary to protect the possibility of each
party to seek specific performance from the other from the tribunal referred to
in Section 10.11 can be sought from any competent court.


 


Section 10.11             Dispute Resolution


 


Any party
hereto will give the other party written notice of any and all disputes arising
out of or in connection with the present Agreement.  The parties will attempt to resolve all such
disputes promptly by negotiations between their respective executive officers
who have authority to settle such disputes. 
If any such dispute has not been resolved by such negotiation within
forty-five (45) days after the receipt of written notice of such dispute, such
dispute will be finally settled under the Rules of Arbitration of the International
Chamber of Commerce (Paris) by three (3) arbitrators appointed in accordance
with such Rules, with the Buyer and the Seller each appointing one arbitrator,
and the arbitrators so elected appointing the president of the tribunal within
thirty (30) days.  The proceedings will
be held in English.  The place of
arbitration will be Zurich, Switzerland. 
Any award, judgment or decree of such tribunal shall be enforceable
against any party hereto in any court of competent jurisdiction.  For the avoidance of doubt, the Special
Arbitration Procedure shall be used exclusively for the determination of 


 


68

















 


whether or not
a Material Adverse Change has occurred (whether such determination is made in
connection with Section 3.1(c), or in connection with a dispute as to
whether Section 8.3(b) or Section 9.3(b) shall have been
satisfied).


 


Section 10.12             Counterparts;
Facsimile Signature


 


This Agreement
is executed in one (1) or more counterparts, by original or facsimile (or
other such electronically transmitted) signature, each of which will be deemed
an original, but all of which will constitute one and the same instrument.


 


Section 10.13             Certain Other
Covenants of the Seller


 


At the Second Stage Closing, the Seller will
sell, transfer and deliver to the Buyer, and the Buyer shall purchase from the
Seller (for no consideration in addition to the Second Stage Purchase Price)
all shares of capital stock in Alcon Laboratories (Thailand) Ltd. Beneficially
Owned by Nestlé Trading (Thailand) Ltd., an Affiliate of the Seller, and all
shares of capital stock in any other Subsidiary of the Company Beneficially
Owned by the Seller at such time.


 


Section 10.14             Rights Cumulative


 


All rights and
remedies of each of the parties under this Agreement will be cumulative, and
the exercise of one or more rights or remedies will not preclude the exercise
of any other right or remedy available under this Agreement or applicable law.


 


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69

















 


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


 


 


	
  NESTLÉ S.A.,

  	
  NOVARTIS AG,

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:  

  	
   

  	
   

  	
  By:  

  	
   

  
	
  Name:    Peter Brabeck-Letmathe

  	
   

  	
  Name:   

  	
  Dr. Daniel Vasella

  
	
  Title:      Chairman and 

  	
   

  	
  Title:     

  	
  Chairman and 

  
	
  Chief Executive Officer

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:    James Singh

  	
   

  	
  Name:

  	
  Dr. Raymund Breu

  
	
  Title:      Executive Vice President and

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
  Chief Financial Officer